London Inte Bank Offered Rate. This is the rate at which banks charge interest if a consumer borrows money for short term. Calculations are based on 10 currencies and 15 different intervals of time, of at least 30 days. This rating is very nearly 0% always, but has been manipulated in a way similar to collusion.
LIBOR is completely unregulated, no authorities outside the British Banking Authority can manipulate or constrain it. That means that traders arbitrarily have the ability to manipulate it. A higher libor will cost borrowers more for things like car loans or mortgages, while other consumers earn more money if they have pension or a 401K. The most important ramification is that loans are influenced by LIBOR, which is why higher libor means less home sales.
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