After reading this on LIBOR by Bloomberg:

The cost of borrowing in dollars overnight in London jumped ..

The London interbank offered rate, or Libor, that banks charge each other for such loans rose 157 basis points to 3.94 percent today, the British Bankers' Association said. The corresponding rate for euros climbed 22 basis points to 4.27 percent, the highest in four days. The Tokyo interbank rate stayed at the highest level this year and the Libor-OIS spread, a gauge of cash scarcity among banks, widened to a record.

``There's still a massive lack of confidence in this market and the more we talk about it, the more it becomes a self- fulfilling prophecy,'' said Jan Misch, a money-market trader in Stuttgart, Germany, at Landesbank Baden-Wuerttemberg. ``Sentiment hasn't improved much and rates remain at elevated levels.''

`Government-Led Injection'

``It's shocking [indeed!] to see that the money market is still in the condition that it's in, despite measures by central banks to unfreeze it,'' said Vincent Chaigneau, head of foreign exchange and interest rate strategy Societe Generale SA in London. ``A global government-led capital injection into banks may be needed.''

Libor, set every morning in London, determines prices for financial contracts valued at $393 trillion as of Dec. 31, 2007, or $60,000 for every person in the world, and helps set consumer interest rates on everything from home loans to credit cards.

The constant references to "confidence" and "sentiment" in all the coverage of the crisis seems awfully vacuous, and LIBOR (along with the TED spread, one factor of which is LIBOR) seem to be treated as if they were objective realities, like a thermometer reading. The idea seems to be that sentiment drives LIBOR, but what LIBOR was being used to drive sentiment instead?

So I googled "LIBOR manipulated and came up with a lot of hits.

Anybody with any actual knowledge of finance tell me whether this is possible? Because at this point, anything seems possible.

Not to be foily, but it looks to me like LIBOR is the dial on an electric shock device that's been wired directly to the world's financial stones. So, it would be interesting to no if there's a not-yet-visible hand on the dial. Eh?

Readers?

UPDATE Note: To be fair, a cursory reading of the links suggests that if anything, the banks have manipulated LIBOR in the past to suggest that the cost of money was lower than it should have been. I just don't know enough to assess any of this. What I do know is that (a) the interested parties are completely untrustworthy and that (b) it's very likely that our famously free financial press is at least as bad as our famously free political press. So again, I'm asking a real question, not a rhetorical one. Although I forgot: (c) I'm never cynical enough.