other than talking about liebore. here's how it works. each one has to tell the british banking association the lowest interest rate at which it thinks another bank would lend it money. how does each bank determine their own rate? it's a complicated process that involves a multitude of factors like investor confidence, the money supply, the human anus, and yanking things out of it. but mostly just those last two. then -- (cheers and applause). round of applause for the human anus. then that libor rate is used to set interest rates everywhere on earth. of course not everywhere, just places that use money. i believe emperor penguins on the ice shelf are not affected. now here's the wrinkle. the banks that determine libor also employ traders who bet on what that rate will be. they're not supposed to talk to each other but you'll never guess what happened. >> leaders at banks were conspiring to fudge the data to boost their own trading profit. one part of barkleys would say to another could you submit data that makes us look -- that either is

today that federal reserve ben bernanke and secretary geithner should both be discussed to prepare liebor when they testify this month. in parliament hearings they defended themselves and their bank by claim can british regulators knew and approved of some libor manipulations. some said, and i quote: >> it seems to have led to this question of parliament to bank of england deputy governor paul tucker: >> you cat gorily refute the suggestion that this conversation might reasonably have led someone to suppose you were inviting barclay's to join the pack and underreport libor? >> absolutely. >> for more let's go to tracy avalay and economist geoff madrick author of a book whose title could not be more appropriate: "the age of greed." a remarkable title and the right one diced. tracy, let's begin with you. give us a criminal primer pronouncing it from the british way. what was libor? how was it set, and why do we care so much about it. >> i think it's important to understand what's at steak because a lot of people won't have heard of libor but it's massive in the finance arecial stem an inter

move not too worrying but does mean a rising cost of capital for companies who have loans tied to lieboreearly test and small warning sign of the impact rising rates can have on companies, particularly those in europe and asia yet to exes persons rising scentral bank rates yet. this chart shows how corporate spreads in europe have risen suggesting rising corporate risk but still below their highs of the last year and much less pronounced spike than in liebore recently guys >> those factors that you laid out there, are any of them potentially somewhat fleeting? is this a transition period with things likes the tax law, treasury bill issuance and repatriation effect going to work through the system here or do we have to get used to these levels >> very good question and the ultimate answer we'll see in three to six months time or something, but all of them or certainly one of them you can see as being fleeting the repatriation of u.s. dollars from abroad if that's a one off move and then as companies start earning more tax the sort of coffers of u.s. dollars of foreign companies will rise a

. >> liebor day. he said he cut the deficit $1.7 trillion. but the fact-checkers say maybe not so.mittee for responsible budget kind of the referee in these things, predicts that when that fiscal year ends in 25 days from now. it's going to show it's more. $2 billion. >> steve: 2 trillion. >> ainsley: 1.7 trillion. they are saying no at the end of this month we will see that it's up $2 trillion. mike pence was on the campaign trail and says he was criticizing biden's run away spending. the economy is in a downward spiral. and exploding federal deficit, inflation and erasing any wage increases. that's the thing he could say i cut it 1.7 trillion. but when you factor in erase guilty any wage increases and spending and spending money we don't have then that increases it another $2 trillion. >> also, over the weekend, the "wall street journal" came out with a poll and i'm sure you saw a little bit of it, head to head, donald trump and joe biden are tied right now. and the question is joe biden too old to run for president? 73% of americans say yes. he is just too darn old. he made a jo

you noticed liebore, short-term rates, commercial paper, what was the issue when commercial paper roserisis? do you remember how that played out? >> it buwas messy, no bank want to do business with another bank. short-term money markets froze up. this is different that it's a regulatory change. regardless of what the reason is, lie bore is up 52 basis points year over year -- >> everything. you could look at all the libor. >> exactly. >> so this is a tightening and i don't see the market falling apart, i don't see the firms like the ges of the world, you know, their cost to borrow has gone up as you pointed out more than a tightening would have caused. the world didn't come to an end, did it? >> the market has tightened. regardless of what yellen says or does on friday or in september, short-term libor markets have tightened policy by an additional 25 basis points. >> you know, peter, i'm going to go on record and i've been on record, there's only one thing that can happen right now and that's a flatter yield curve. i don't see any other way around it. real quickly, with around it. we'