Robert Reich's very clear explanation of LIBOR and what it means to the U.S.--from The Guardian
Most importantly, Wall Street will almost surely be implicated in the scandal. The biggest Wall Street banks – including the giants JP Morgan Chase, Citigroup and Bank of America – are likely to have been involved in similar manoeuvres. Barclay's couldn't have rigged the Libor without their witting involvement. The reason they'd participate in the scheme is the same reason Barclay's did – to make more money.In fact, Barclays' defence has been that every major bank was fixing Libor in the same way, and for the same reason. And Barclays is "co-operating" (giving damning evidence about other big banks) with the justice department and other regulators in order to avoid steeper penalties or criminal prosecutions, so fireworks in the US can be expected.
There are really two different Libor scandals, and both are about to hit America's shores. The first has to do with a period just before the financial crisis, around 2007, when Barclays and, presumably, other major banks submitted fake Libor rates lower than the banks' actual borrowing costs in order to disguise how much trouble they were in. This was bad enough. Had American regulators known then, they might have taken action earlier to diminish the impact of the near financial meltdown of 2008.
But the other scandal is worse, and is likely to get the blood moving even among Americans who assume they've already seen all the damage Wall Street can do. It involves a more general practice – starting around 2005 and continuing until … who knows, it might still be going on – to rig the Libor in whatever way necessary to assure the banks' bets on derivatives would be profitable. This is insider trading on a gigantic scale. It makes the bankers winners and the rest of us – whose money they've used to make their bets – losers and chumps.
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It would amount to a rip-off of almost cosmic proportions – trillions of dollars that average people would otherwise have received or saved on their lending and borrowing that have been going to the bankers instead.
http://www.guardian.co.uk/commentisfree/2012/jul/08/american-libor-banking-scandal-us
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"In the rapidly spreading scandal of LIBOR (the London inter-bank offered rate) it is the very everydayness with which bank traders set about manipulating the most important figure in finance. They joked, or offered small favours. “Coffees will be coming your way,” promised one trader in exchange for a fiddled number. “Dude. I owe you big time!… I’m opening a bottle of Bollinger,” wrote another. One trader posted diary notes to himself so that he wouldn’t forget to fiddle the numbers the next week. “Ask for High 6M Fix,” he entered in his calendar, as he might have put “Buy milk”."
They were asking billion-dollar favors as if they were asking a buddy to help them move... and these few people had their thumbs on the scales of hundreds of millions of people's lives!
I am just stunned. Thank you for that EXCELLENT article. The more I read about this, the less abstruse, less complicated, and less theoretical this racketeering seems to be. I heard an expert on NPR the other day say with absolute confidence that people WILL go to prison for this.
P.S. I love your sweet hedgehog picture! 
Edited to add: I was so amazed by that entire article that one sentence above didn't quite sink in right away: "Coffees will be coming your way." 
The entire world economy could be influenced by someone buying someone else a coffee? It really is a game to them, isn't it? It's as if the rest of us simply do not exist in their eyes.
