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JP Morgan Sold Investors MBS Covered By "SACK OF SHIT" Loans... Then Shorted All Those With Exposure: A Goldman-AIG Redux

Tyler Durden's picture


Today's mortgage fraud stunner comes from Bloomberg's Jody Shenn who reports on the ongoing lawsuit between Ambac and former Bear Stearns mortgage unit EMC, now part of JP Morgan. In what can only be classified as fraud-cum-double dipping-cum-AIG/Goldman, "JPMorgan Chase & Co. demanded that a lender repurchase bad
mortgages even as it resisted calls to buy back the loans from bonds
created by Bear Stearns. “That would be pretty bad” if true, said Joshua Rosner, an analyst at
New York-based research firm Graham Fisher & Co. He said such
allegations show why “investors and consumers have a right to be
distrustful of the banks’ statements." The bottom line is that JPM, which has so far been able to escape largely unscathed from the fraudclosure scandal, is about to take front and center. The reason: the very first line of the just released Exhibit 1 to the Ambac lawsuit: "In mid-2006, Bear Stearns induced investors to purchase, and Ambac as a financial guarantor to insure, securities that were backed by a pool of mortgage loans that - in the words of the Bear Stearns deal manager - was a "SACK OF SHIT." But the stunner, and nothing short of a full-blown scandal if proven true, is that Bear Stearns (aka JPM) after funneling misrepresented loans with Ambac's insurance, "implemented a trading strategy to profit from Ambac’s potential demise by “shorting” banks with large exposure to Ambac-insured securities." This needs its own congressional hearing right now, followed by a few wristslaps. After all such wholesale fraud can never possibly be prosecuted in the world's most advanced country.

(photo credit William Banzai)

More from the lawsuit:

Within the walls of its sparkling new office tower, Bear Stearns executives knew this derogatory and distasteful characterization aptly described the transaction. Indeed, Bear Stearns had deliberately and secretly altered its policies and neglected its controls to increase the volume of mortgage loans available for its "securitizations" made in patent disregard for the borrowers' ability to repay these loans. After the market collapse exposed its scheme to sell defective loans to investors through these transactions, Bear Stearns implemented an across-the-board strategy to disregard its contractual promises to disclose and repurchase defective loans. In what amounts to flagrant accounting fraud, Bear Stearns' improper strategy was designed to avoid and has avoided recognition of its vast off-balance sheet exposure relating to its contractualfollowing the taxpayer-financed acquisition by JP Morgan repurchase obligations - thereby enabling its senior executives to reap tens of millions of dollars in compensation." Surely in non-banana republics heads would roll. What happens, however, when the heads are the same ones that rule said banana republic?

Maybe it is time to increase JPM's very modest $1.5 billion in litigation reserves?

 EMC’s lawyers on Jan. 14 argued against letting Ambac file the proposed amended complaint. EMC has also asked Katz to reconsider his ruling.

JPMorgan last quarter set aside $1.5 billion in litigation reserves to cover costs related to buying back faulty mortgages. Chief Executive Officer Jamie Dimon said it will take years to resolve the disputes and to determine the ultimate cost to his bank.

It’s going to be a long ugly mess, but it won’t be life- threatening to JPMorgan,” he told analysts on a Jan. 14 conference call.

The bank also ignored the findings of mortgage-review firm Clayton Holdings LLC in abandoning mortgage repurchases that Bear Stearns had been considering in early 2008 stemming from a pool of 596 of loans in bonds guaranteed by Ambac, according to the insurer’s amended complaint.

Clayton found that 56 percent of the loans involved “material” breaches of Bear Stearns’s contractual promises, according to the filing, which cited a copy of a November 2007 document from the review firm to the company.

Some beg to differ with Dimon's assessment of the situation:

Proof that the bank ignored a third-party review is “major, that’s
hugely newsworthy,” said Isaac Gradman, a San Francisco-based consultant
and formerly a lawyer at Howard Rice Nemerovski Canady Falk &

And the stunner: this is nothing short of the AIG-Goldman parasitic relationship (from the amended Ambac vs EMC filing presented below):

Knowing that its fraudulent and breaching conduct was resulting and would result in grave harm to Ambac, Bear Stearns then implemented a trading strategy to profit from Ambac’s potential demise by “shorting” banks with large exposure to Ambac-insured securities.  (The “shorts” were bets the banks’ shares or holdings would decrease in value as Ambac incurred additional harm.)  In late 2007, Bear Stearns Senior Managing Director Jeffrey Verschleiser boasted that “[a]t the end of October, while presenting to the risk committee on our business I told them that a few financial guarantors were vulnerable to potential write downs in the CDO and MBS market and we should be short a multiple of 10 of the shorts I had put on ... In less than three weeks we made approximately $55 million on just these two trades.”

And more unbelievable disclosures from the Ambac filing. We apologize for the length, but this will be the story of the next few weeks:

As discovery of Bear Stearns’ files and depositions of its employees have revealed, Bear Stearns secretly adopted certain practices and policies, and abandoned others, to (i.) increase its transaction volume by quickly securitizing defective loans before they defaulted, (ii). Conceal from Ambac and others the defective loans so it could keep churning out securitizations, (iii.) obtain a double-recovery on the defective loans it securitized, (iv.) disregard its obligations to repurchase defective loans, and (v). profit on Ambac’s harm.”

“...Bear Stearns utilized due diligence firms to re-undewrite loans for its securitizations that it knew were not screening out loans that were defective and likely to default.  As Bear, Stearns & Co. Managing Director Jeffrey Verschleiser stated in no uncertain terms to fellow Senior Managing Director Michael Nirenberg in March 2006, “[we] are wasting way too much money on Bad Due Diligence.”  Almost exactly one year later nothing had changed, and in March 2007, Verschleiser reiterated with respect to the same due diligence firm that “[we] are just burning money on hiring them.” Despite this recognition, Bear Stearns did not change firms or enhance the diligence protocols.  Thus, as one of its due diligence consultants frankly admitted, “[a]bout 75 percent of the time, loans that should have been rejected were still put into the pool and sold.” 

“Moreover, even while criticizing its due diligence firms for failing to adequately detect defective loans, Bear Stearns routinely overrode their conclusions that loans should not be purchased for securitizations, and went ahead and purchased and securitized those loans (up to 65% of the time in the third quarter of 2006 according to one firm’s report).  Bear Stearns ignored the proposals made by the head of its due diligence department in May 2005 to track the override decisions, and instead took the opposite tack, adopting an internal policy that directed its due diligence managers to delete the communications with its due diligence firms leading to its final loan purchase decisions, thereby eliminating the audit trail.”  Source: Deposition

“Bear Stearns disregarded loan quality to appease its trading desk’s ever-increasing demand for loans to securitize.  In fact, Bear, Stearns & Co. Senior Managing Director Mary Haggerty issued a directive in early 2005 to reduce the due diligence “in order to make us more competitive on bids with larger sub-prime sellers.” Source: Emails

“In full recognition that its due diligence protocols did not screen out defective loans and were merely a façade maintained for marketing purposes, Bear Stearns’ trading desk needed to quickly transfer the toxic loans from its inventory and into securitizations befor the loans defaulted.  So as early as 2005, Bear Stearns quietly revised its protocols to allow it to securitize loans before the expiration fo the thirty- to ninety-day period following the acquisitions of the loans by EMC, referred to as the “early payment default” or “EPD” period.  Bear Stearns previously held loans in inventory during the EPD period because, as Bear Stearns’ Managing Director Baron Silverstein recently acknowledged, loans that miss a payment shortly after the loan origination (i.e., within the EPD period) raise “red flags” that the loans never should have been issued in the first instance.  The revised policy enhanced Bear Stearns’ earnings by increasing the volume of loans it sold into the securitizatoins – but materially increased the riskiness of loans sold to the securitizations.  Nonetheless, as its executives uniformly conceded, Bear Stearns never once disclosed the changes in its due diligence and securization policies to investors...”

“And it gets worse.  Not satisfied with the increased fees from the securitizations, Bear Stearns executed a scheme to double its recovery on the defective loans.  Thus, when the defective loans it purchased and then sold into securitizations stopped performing during the EPD period, Bear Stearns confidentiality (i) made claims against the suppliers from which it purchased the loans (i.e., the “originators” of these loans) for the amount due on the loans, (ii) settled the claims at deep discounts, (iii) pocketed the recoveries and (iv) left the defective loans in the securitizations.  Bear Stearns did not tell the securitization participates that it made and settled claims against the suppliers.  Nor did it review the loans for breaches of EMC’s representations and warranties in response to the “red flags” raised by the EPDs.  Bear Stearns thus profited doubly on defective loans it sold into securitizations.  Indeed, the increase in loan volume from the securitization of defective loans proved to substantial, and the recovered secured on those defective loans proved so lucrative that, by the end of 2005, the Bear Stearns’ trading desk mandated ahat all loans were to be securitized before the EPD period expired.”

“The secret settlement of the claims on the securitized loans was a win-win for Bear Stearn and its suppliers, but a loss for the securitizations.  It was a win for the suppliers in that they settled in confidence all claims with respect to the defective loans at a fraction fo the full amount that would have been due had the loans been repurchased from the securitization.  Conversely, if they did not comply with Bear Stearn’s repurchase demands, Bear Stearns cut off the financing it extended for the origination of additional defective loans.  The secret settlement was a win for Bear Stearns, which (i) reinforced its relations with the suppliers that it depended on to provide the precious fodder for future securitizations by settling at the discounted amount, and (ii) pocketed the recovery from the suppliers. It was a loss to the securitization participants, which were not notified of the defective loans in the securitizations and did not receive the benefit from the repurchase of defective loans from the securitizations.” Source: Email traffic, which includes the co-head of fixed income

“By mid-2006, Bear Stearns’ repurchase claims agains the suppliers of the loans had risen to alarming levels, prompting warnings from its external auditors and counsel.  In a report dated August 31, 2006, the audit firm PriceWaterhouseCoopers advised Bear Stearns that its failure to promptly evaluate whether the defaulting loans breached EMC’s representations and warranties to the securization particpants was contrary to “common industry practices, the expectation of investors and ... the provisions in the [deal documents].”  Shortly thereafter, Bear Stearns’ internal counsel advised Bear Stearns’ management that it was breaching its contractual oblications by failing to contribute to the securitizations the proceeds it recovered pertaining to the loans in the securitizations.  Bear Stearns did not disclose to Ambac either of the findings.”

“By January 2007, the Bear Stearns internal audit department reported in 2006 it had resoled “$1.7 billion of claims, an increase of over 227% from the previous year,” and that “$2.5 billion in claims were filed, reflecting an increase of 78% from the prior year.”  The “majority” of the claims pertained to loans with EPDs...”

“...the Bear Stearns analyst working on the deal more accurately described the deal in internal correspondence as a “going out of business sale.”  Another called it a “DOG”.”

“By late 2007, Ambac began observing initial sings of performance deterioration in the Transactions, and requested from Bear Stearns the loan files for 695 non-performing loans, which were drawn from each of the SACO Transactions.  Ambac reviewed the loan files for compliance with EMC’s representaitons and warranties and discovered widespread breaches of representation and warranties in almost 80% of the loans examined, with an aggregate principal balance of approximately $40.8 million across all the Transactions.  Ambac provided EMC with its findings and asked EMC to comply with its contractual obligations to cure or repurchase the non-compliant loans.  In disregard of its contractual obligations, EMC refused and continues to refuse to do so, even though Bear Stearns itself had identified widespread breaches in the very same loans sample.” 

Indeed, unbeknownst to Ambac until the discovery in this case, Bear Stearns engaged a consultant to preemptively review the same loan files Ambac requested in late 2007.  After an iterative review process between Bear Stearns and its consluting firm to whittle down the breach rate, they still concluded that 56% of the loans were defective.  In breach of its clear contractual obligations, Bear Stearns did not advise Ambac of its conclusions or provide Ambac or any other securitization participant with “prompt notice” of the breaches identified as was required to do so.  Bear Stearns instead adopted a strategy to reject as a matter of course Ambac and other insurers’ repurchase demands, regardless of Bear Stearns’ own findings.”

“Knowing that its fraudulent and breaching conduct was resulting and would result in grave harm to Ambac, Bear Stearns then implemented a trading strategy to profit from Ambac’s potential demise by “shorting” banks with large exposure to Ambac-insured securities.  (The “shorts” were bets the banks’ shares or holdings would decrease in value as Ambac incurred additional harm.)  In late 2007, Bear Stearns Senior Managing Director Jeffrey Verschleiser boasted that “[a]t the end of October, while presenting to the risk committee on our business I told them that a few financial guarantors were vulnerable to potential write downs in the CDO and MBS market and we should be short a multiple of 10 of the shorts I had put on ... In less than three weeks we made approximately $55 million on just these two trades.”  Bolstered by this success, Bear Stearns carried this trading strategy into 2008.  On February 17, 2008, a Bear Stearns trader told colleagues and Defendant Verschleiser, “I am positive fgic is done and ambac is not far behind.” The next day, in the same emal chain, the trader again wrote to Defendant Verschleiser to clarify which banks had large exposures to Ambac, asking “who else has big fgic or abk [Ambac] exposures besides sog gen?”  As it was “shorting” the banks holding Ambac insured securities, Bear Stearns continued to conceal the defects it discovered and deny Ambac’s requests repurchase demands relating to collateral that back the securities in the Transaction.”

“Bear Stearns’ derogatory characterization of the loan pools it securitized is consistent with Ambac’s on-going analyses of the loans in the Transactions.  After conducting the initial review noted above, Ambac reviewed a random sample of 1482 loans, with an aggregate principal balance of approximately $88.2 million, selected across all four Transactions.  The results of that review are remarkable.  Of these 1,482 loans, 1,351, or over 91%, breached one or more of the representations and warranties that EMC had made to Ambac.  As of June 2010, Ambac’s loan-level review consisted of 6,309 loans, of which it identified 5,724 loans across the Transactions that breached one or more of EMC’s representations and warranties.  Bear Stearns (now JP Morgan) – acting with authority to perform EMC’s obligations under Transactions – has to date “agreed” to repurchase only 52 loans, or less than 1%, of those breaching loans, but has in fact not repurchased a single one.”

In a nutshell: JPM committed fraud through misrepresentation, then wilfully and maliciously traded against the entities it had sold misrepresented securities to, and lastly, when even all this failed to rescue the failed bank, it was rescued, courtesy of the US taxpayers. Only in America will this lead to absolutely no jail time whatsoever.



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Tue, 01/25/2011 - 11:55 | 902706 Turd Ferguson
Turd Ferguson's picture

If anyone is looking for my latest attempt at knife-catching, you'll find it here. You'll also find a link to a terrific new piece from John Embry that is to be released on Friday.

Sorry for the spam. Now back to your regularly scheduled blog.

Tue, 01/25/2011 - 12:13 | 902829 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Turd it is not spam.  We know you.  We like you.  You are our friend.  You give us insight and talk with us.

Tue, 01/25/2011 - 12:36 | 902937 Turd Ferguson
Turd Ferguson's picture

Thanks, Jimi. I junked you for good measure.

Tue, 01/25/2011 - 13:14 | 903104 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Duly noted. 

Junks away!

Tue, 01/25/2011 - 13:46 | 903231 Turd Ferguson
Turd Ferguson's picture

Jimi: I'm at double digits in junks! A new personal best!!

Tue, 01/25/2011 - 15:19 | 903547 Fearless Rick
Fearless Rick's picture

Turd, I junked you in a pique of misplaced affection for your blog, as in "You Always Junk the One You Love," or, via CSNY, "Junk the One You're With."

Maybe "Junk is a Many-Splendored Thing."

Tue, 01/25/2011 - 16:58 | 903952 egdeh orez
egdeh orez's picture

Karma's a bitch, Bear Stearns and JPM RIP

Tue, 01/25/2011 - 19:05 | 904315 Triggernometry
Triggernometry's picture

"What's Junk got to do with it?"

Tue, 01/25/2011 - 12:15 | 902839 tickhound
tickhound's picture

Along those lines... Zeitgeist Moving Forward on youtube for those interested. Fine flick. Now back to the rat race.

Tue, 01/25/2011 - 13:31 | 903185 atomicwasted
atomicwasted's picture

What is it about this "Zeitgeist" thing that makes me think of Raelians and El Ron Hubbard?

Tue, 01/25/2011 - 14:32 | 903368 OnTheFelt
OnTheFelt's picture

Because you're a fucking moron who is afraid to think for himself.  Did you really just compare Zeitgeist to Ron Hubbard?

No, you're right the complete assualt and destablization of the citizens on Earth by powerful cabals who institute endless ponzi schemes for their financial gain is a good thing and should not be discussed much less examined and understood.



Tue, 01/25/2011 - 14:59 | 903417 Quixotic_Not
Quixotic_Not's picture

Probably one of Karl Dickenger's ditto-heads...for them anything that isn't KD approved is tin.

What a transparent charade ol' Karl is; Just another wannabe dictator waiting for his brown shirt uprising!

Where did "his" Tea Party go wrong?  ROFL

Tue, 01/25/2011 - 12:29 | 902904 bankonzhongguo
bankonzhongguo's picture

Is this a surprise to anyone anymore?  This is EXACTLY why the wheels are coming off America.  Its not the money, its the complete failure of the government to enforce the law.  Its confidence.  Where are the prosecutions?  Its beyond negligence now.  Its worse, the government has become a co-conspirator in criminal activity a la POMO.

Good Christ.  We all could go on and on.

DOJ is spending their time rounding up tired half dead Italian mafia and paroling the sky for AQ.  Meanwhile, Beasts are running wild across the land drinking the blood of your children in some Hieronymus Bosch painting.

Tue, 01/25/2011 - 12:41 | 902952 B9K9
B9K9's picture

I think you might be missing the point. It's not that the power-elite didn't realize the wheels would come off. In fact, the entire point of the exercise is abandoning the rule of law was to avoid precisely this outcome.

In other words, according to Ben's thesis, the Fed should have been able to avert deflation and get the inflationary game going again. If he had been successful, ZH or other finblogs wouldn't even exist. Imagine a scenario where homes valued at $500k in 2008 had appreciated another 15% or so over the ensuing 3 years. Everyone of these mortgages would have been flipped & re-rolled/packaged, there wouldn't be any mammoth unrecorded loss reserves, etc.

The real question becomes: what's the difference between armageddon occurring 3 years ago vs today? I would suggest that time frame gave the dual citizens who engineered this fiasco enough time to ship real assets safely offshore.

Tue, 01/25/2011 - 13:01 | 903075 MachoMan
MachoMan's picture

Bingo.  It also gave the rest of us time to prepare...  although, their plans and means are likely far better than ours...

I think you can even make a decent argument for postponing armageddon for as long as possible...  In the end, I think a few more years of debt fueled lunacy will likely have an immaterial effect on the outcome.  Of course, it would obviously be best for the people to have this information so that they could make an informed decision to choose this path, collectively...  I suspect their answer would be the same...  but, of course, if everyone knew (believed?), then we would have collapsed already.  I would be inclined to take whatever path did not allow the principal actors in all this mess to leave with their spoils, but I didn't get to vote...

Tue, 01/25/2011 - 13:09 | 903111 B9K9
B9K9's picture

Yep, consider hearing a doctor tell you that you have 3-5 years left to live. Are you going to become Mother Teresa or Amy Winehouse?

For the last three years, many of us who have repeatedly pointed out what is going on and what will eventually occur have actually had a pretty fun time, notwithstanding the mental anguish of seeing one of humanity's greatest experiments in self-government ride off into the sunset.

So, break open the liquor cabinet and party on. There will be time enough for discipline & hardship.

Tue, 01/25/2011 - 15:31 | 903596 Fearless Rick
Fearless Rick's picture

Right on, dude! Amazingly, I just got an $874 judgement and warrant against my tenants and kept them in the house. Kicker is they pay or go on March 4. They lived it up until I and the rule of law caught up with them. Being that the house they rent from me is my only property, I have the edge, being on top of things.

Meanwhile, the home I inherited from my deceased father back in July 2009, is still in foreclosure (closing in on one year from initial filing with no additional motions by BAC) and I'm living in it. The race is on between BAC and the county and me for who gets the goods. County can foreclose Jan. 1, 2012, unless I pay back taxes. If I am still here a year from now, guess I'll pony up the dough to the taxing authorities and wonder whether I should file failure to proceed against BAC, who actually has no standing in FC.

Wow! You're right. This is fun. My bet it BAC goes tits up and I eventually file for quiet title while they're in the middle of too many lawsuits and bankruptcy proceedings.

I'm having lobster and wine tonight... if I'm still sober enough to cook in three hours.

Tue, 01/25/2011 - 12:42 | 902953 eatthebanksters
eatthebanksters's picture


Tue, 01/25/2011 - 12:54 | 903038 MachoMan
MachoMan's picture

Our watchmen literally do nothing but watch men while on the clock (tranny porn for those of you wanting more specifics).  The institutions are staffed with incompetent feet on the ground and immoral regulatory turnstiles at the administrative level.  The expectation for them to do anything is futile.


Tue, 01/25/2011 - 14:49 | 903286 Quixotic_Not
Quixotic_Not's picture

Here's more of the "Best government you can buy":



Washington, D.C., Jan. 25, 2011 – The Securities and Exchange Commission today charged Merrill Lynch, Pierce, Fenner & Smith Incorporated with securities fraud for misusing customer order information to place proprietary trades for the firm and for charging customers undisclosed trading fees.


To settle the SEC’s charges, Merrill has agreed to pay a $10 million penalty and consent to a cease-and-desist order.

Without admitting or denying the SEC’s findings {i.e. guilt}, Merrill consented to the entry of a Commission order that censures Merrill, requires it to cease-and-desist from committing or causing any violations and any future violations of Sections 15(c)(1)(A), 15(g), and 17(a) of the Securities Exchange Act of 1934 and Rule 17a-3(a)(6) thereunder {Merrill's gonna have to invent a new scam!}, and orders it to pay a penalty of $10 million.


Just gotta love a country where the kleptomaniacs can rob the citizenry and count on the .GOV to masterfully sweep their shit under the carpet, all without admitting a god damn fucking thing and only paying a trifle in tribute!


What a joke!


Carry on with your indignant anger and disgust ZHers...I'm sure the pigmen are shaking in their boots!  ROFL

Tue, 01/25/2011 - 12:45 | 902974 Mark McGoldrick
Mark McGoldrick's picture

There are two John Emby links that are attached.  The one from last summer was embarrassingly wrong.

That article was a prediction that gold was about to go parabolic due to supply shortages (Isn't funny how every commodity these days are about to go parabolic due to supply concerns?)  In fact, gold only moved 15% - and that was in the face of a massive blogosphere fear-mongering campaign centered around hyperinflation, the evisceration of currencies, Hindenburg Omens, sovereign defaults and multi-trillions in quantitative easing.     

All that: 15% gold move. Sort of lame.  Krispy Creme Donuts moved 200%. There is a lesser known cartoon on YouTube that explains - quite convincingly - that JPM is short 75% of all outstanding yeast contracts on the COMEX.  

The parabolic move was in silver, which moved >50% in mere months and was never mentioned in his article.  Once he realized that the "scare the shit out of everyone about silver" campaign was gaining traction, he started barking about silver instead.     

My favorite quote of his from that link:  the public is being bombarded with misinformation and propaganda.   

Tue, 01/25/2011 - 12:49 | 902993 Turd Ferguson
Turd Ferguson's picture

"embarrassingly wrong."?

Whew. I guess it all depends on your perspective. I DO like your avatar, however.

Tue, 01/25/2011 - 13:05 | 903094 whatz that smell
whatz that smell's picture

unleash the zombie lawyers!!!

Tue, 01/25/2011 - 12:57 | 903037 tmosley
tmosley's picture

I would like to remind you and everyone else that this is options expiration week.  Your entry point will be Thursday or Friday, not today nor tomorrow.

Don't get too caught up in TA.  Yes, the EE spends a lot of time painting charts, but they will abandon all of that in order to try to force options holders out of the money.  This desperate push down in the face of a record number of longs standing for delivery in JANUARY of all months shows how spooked the EE is.  They won't be able to keep it up through next month.  It looks to me like the bears are going to be proven right here.  Your big prediction is likely to come true, probably before mid-March.

I would suggest you and all other paper traders take this opportunity to follow Harvey's advice and GTFO of paper trading and take delivery THIS WEEK.  Premiums are already rising, meaning your paper gold and silver buys less real gold and silver.  You can still get generic silver fairly cheaply, but that is liable to change quickly.  When premiums go up, they tend to go up a dollar at a time, which is a big jump in price.  

Don't wait too long.  I already have a big stash, so I can afford to wait, or even miss out on the price move if supply suddenly disappears or if premiums jump significantly.

Tue, 01/25/2011 - 13:05 | 903092 Mark McGoldrick
Mark McGoldrick's picture

Are you trying to do a technical analysis of manipulation?  

The only thing less predictable than charting a manipulated market is charting the manipulation, itself. 


Tue, 01/25/2011 - 14:20 | 903339 tmosley
tmosley's picture

No.  Past experience has taught us that when open interest remains at abnormally high levels, the price will fall during options expiration.  This is due to the big shorts trying to scare away the tiny longs.  These fall used to take a long time to recover from, but now you see prices return to their pre-opex week levels within a few days.

I rarely look at charts, but rather try to understand the reasoning and actions of those few who move the market up (the BoS) and down (the EE).  I do this in order to find the optimum entry points for buying more physical.  The easy way to buy is to understand the pattern and simply buy around noon time on the last Thursday of the month, which is likely to be near the low for said month (but check the options and futures expiration schedules to make sure you have the right Thursday).  This is good for regular investors like myself.  Those looking for a good entry point to bring in a large amount of cash should look to the jobs report, as per Andrew Maguire.

Tue, 01/25/2011 - 15:37 | 903419 Mark McGoldrick
Mark McGoldrick's picture

Past experience has taught us that when open interest remains at abnormally high levels...

But the opposite is true.  Open short interest is declining. 

Here is the report from December, showing 23% short:

Here is the current report from January, showing 20% short:

Going back a year, here is the one from January 2010, show a whopping 32%

As you can see, the open short interest has actually declined quite significantly in silver, whether you're considering YoY comparisons or monthly comparisons.  And that begs the question, why all the sudden hype about silver?  Why not palladium - it has a much more alarming short ratios.  Or gold?  Why has gold faded in the past few months, yet its short contracts are 33% higher than silver?  If you look at the silver data, the hype doesn't fit reality. The only way you can make the silver propaganda work is if you pull out charts/ratios from thousands of years before the legend of Jesus Christ - and that is just dumb.  

That is the power of propaganda.  

And all of this doesn't even include the fact that options expiration was last week (see stormsailor's comment below).  

Tue, 01/25/2011 - 15:58 | 903657 tmosley
tmosley's picture

Perhaps I wasn't clear.  What I mean is that normally longs would be covering en masse right now so they don't have to take delivery.  This is not happening.  This indicates that, just like in December, many of them are piling on and standing for physical delivery or a nice fat cash bribe (as happened in December).

You idiots who claim to know when opex is would do well to actually look it up yourself before making yourselves look like bloody fools.

Funny you should talk about propaganda, when you IMMEDIATELY fall for propaganda that caters to your bias, without doing one iota of fact checking yourself.  The above link is the first link on google for "gold options expiration calender".  You should be ashamed of yourself.

Tue, 01/25/2011 - 16:10 | 903734 Mark McGoldrick
Mark McGoldrick's picture

Actually, I think it's an easy mistake to make:

But you're right, I didn't fact check the dates, and I shouldn't have included that last sentence until I verified it.  I assumed it was correct.

As far as "not doing one iota of fact checking", that is incorrect.  My entire post is linked to the CFTC. 


Tue, 01/25/2011 - 16:18 | 903785 tmosley
tmosley's picture

I was referring to your edit (referencing the false opex date), not the body of your post.

Tue, 01/25/2011 - 13:21 | 903148 surferthx1138
surferthx1138's picture

Thanks tmosley! Always with the interesting 'heads-up'. I for one love the chance to squeeze some love from the 'manipulation machine', feels good even if I only cover.

Tue, 01/25/2011 - 14:59 | 903462 stormsailor
stormsailor's picture

op-ex was last thursday and friday

Tue, 01/25/2011 - 15:39 | 903623 Fearless Rick
Fearless Rick's picture

I was wondering if anyone was paying attention. Stormsailor wins the de Bunk Award for honesty in markets for today. Yeah, if you follow mosely's advice (wrong) you deserve to be burned, fried, and broiled to a crisp.

Kinda like telling people in Ohio in 2004 that election day is Wednesday so they won't show up. Gotta love those Republicans.

Carry on. And ignore the four posts before stormsailor's.

Tue, 01/25/2011 - 14:20 | 903336 Spalding_Smailes
Spalding_Smailes's picture

The silver market’s conflicting signals

Talk to the precious metal bugs, and you’ll soon come across the story that there is a growing disconnect between what’s happening in the futures market and the physical market.

This, they say, is particularly the case for silver, where rumours of retail shortages have been doing the rounds since about the start of the year.

On top of that, the silver forward market, as assessed by the London Bullion Market Association, did something relatively unusual last week. It flipped into backwardation — a situation which sees the price for physical silver today (spot) become more expensive than that for delivery in the future.

This is reflected in a negative silver forward rate. On Tuesday, for example, the three-month rate was still sitting stubbornly negative at minus 0.09750 per cent, having gone as negative as minus 0.17000 per cent on January 20.

Now, due to the financial characteristics of gold and silver — albeit less so in silver’s case due to greater industrial use — this backwardation structure is not the norm. Prices usually ascend into the future to compensate cash buyers for the missed opportunity of collecting an overnight interest rate, less the cost of storage which is borne by the holders of the physical metal.

While backwardation in the LBMA rate is not unprecedented, the scale and severity of the recent flip has been, say market participants .

The last time the three-month rate fell as dramatically was in October 2008, and even then it only turned negative (went into backwardation) in January, remaining so until March 2009:

A tale of two silver markets.

But here’s the thing. While, backwardation normally suggests market tightness, in reality there have been some conflicting messages coming from the market in terms of supply and demand.

On one hand, supporting the case for tightness, data from the US mint last week showed that sales of American Eagle silver coins hit a monthly record of 4.6m coins in January, surpassing the record struck in November last year — even before the month was over.

Traders also point to the unusual situation of a premium having developed in the price of North American silver versus that traded in London.

On the other hand, according to Suki Cooper, precious metals analyst at Barclays Capital, the broader supply and demand picture currently looks healthy.

What’s more, the fall in silver price since the beginning of the year has been convincingly matched by robust outflows from silver exchange traded products (ETPs) — denoting lower demand from the investment universe.

As Cooper told FT Alphaville:

Backwardated markets tend to reflect current supply tightness or a sharp increase in the near term demand with low inventories. But, at the moment silver is finding conflicting interest in terms of investment demand.

The outflows out of iShares’ Silver Trust, for example, have only very recently abated, noted in the Trust’s shares outstanding:

But then again, could it be that it is ETP redemptions — encouraged by falling prices — that are contributing to high demand for physical spot silver delivery to ETP authorised participants?

Either way, the plot thickens.

Tue, 01/25/2011 - 14:22 | 903344 Spalding_Smailes
Spalding_Smailes's picture


Lease rates in the London bullion market have risen precipitously. Well, it's not so much that lease rates are rising - they're pretty cheap compared with their year-ago levels - it's more that forward rates are at historic lows.

 Forward rates determine the pricing of bullion transactions in the over-the-counter market. A decline in forward rates implies one of two things: There's either a scarcity of metal available for swap or lease transactions, or there's heavy forward selling.

So, which is it? Well, we can gather some clues from the COMEX market. The latest Commodity Futures Trading Commission data show commercial accounts engaging in heavy selling and long liquidation. To boot, money managers have built their largest short position since August 2009 (and, if you're a contrarian, small speculators have taken up their strongest long position in a year and a half).

Given all that, the aroma wafting from the gold market seems to be a harbinger of a sell-off. Technically, gold's stalled now. Key support for the February COMEX contract sits at $1,120 after bulls backed off from a test of the halfway point for the contract's December swoon. A close below that level makes the sell-off case.

If February's price closes below the $1,111 level, the December low at $1,075 then becomes the bears' target.

No guarantees, of course, but at that point, bulls will have to consider how much they're in love with a four-figure gold price. How's that smell?

Tue, 01/25/2011 - 17:07 | 903982 Confuchius
Confuchius's picture

And, SS, how many thousands of tonnes are you trading in for infinite supplies of unbacked and worthless toilet paper? Or: Are you merely a central bankster talking his book?

Tue, 01/25/2011 - 11:58 | 902712 TruthInSunshine
TruthInSunshine's picture

"JPMorgan Chase & Co. demanded that a lender repurchase bad mortgages even as it resisted calls to buy back the loans from bonds created by Bear Stearns. “That would be pretty bad” if true, said Joshua Rosner, an analyst at New York-based research firm Graham Fisher & Co.


That would be pretty bad, and how.


Tue, 01/25/2011 - 12:00 | 902748 tonyw
tonyw's picture

Why doeasn't everyone with a pension investment that has been affected by this send a recorded (signed for) letter to their pension fund demanding it takes action before time runs out for them to initiate proceedings otherwise they will be held liable?


Tue, 01/25/2011 - 12:13 | 902828 MsCreant
MsCreant's picture

My bet is all of it went into offshore accounts where they bought PMs with it. It's gone. Not even a sack of shit. A sack of empty. 


Tue, 01/25/2011 - 12:44 | 902970 eatthebanksters
eatthebanksters's picture

Think back on the ratio of insider selling to buying over the last year...that tells the story.

Tue, 01/25/2011 - 11:55 | 902720 BrianOFlanagan
BrianOFlanagan's picture

too big to jail

Tue, 01/25/2011 - 12:00 | 902749 bigdumbnugly
bigdumbnugly's picture

yep.  JPM.  Just a Pile of Manure.

Tue, 01/25/2011 - 12:15 | 902837 Sudden Debt
Sudden Debt's picture

+10 :)

Tue, 01/25/2011 - 12:52 | 903024 velobabe
velobabe's picture

manure has value.

JPM has no value whatsoever, in any form†

Tue, 01/25/2011 - 14:56 | 903453 Pee Wee
Pee Wee's picture

But think of the bouses paid out of the US treasury to these crooks in broad daylight.

Complete ass-raping of fellow countrymen (women and children) for a buck.  

No shame among thieves.

No shame in law enforcement either...

Tue, 01/25/2011 - 11:55 | 902721 Xibalba
Xibalba's picture

What documents?

Tue, 01/25/2011 - 11:57 | 902725 jus_lite_reading
jus_lite_reading's picture

AND AND "Consumer CONfidence Index Hits 8 Month Highs"


MORE BULLSHIT than you can shake a stick at!

Tue, 01/25/2011 - 11:56 | 902727 Sudden Debt
Sudden Debt's picture

These guys should be shot or put on the electric chair.




That US president of yours is surely a piece of crap. like ours.


Tue, 01/25/2011 - 12:00 | 902745 Alcoholic Nativ...
Alcoholic Native American's picture

Redistribution of Wealth!  We got a socialist here!

Such executive powers should be confined to Armaggedal threats to the Universe such as Al-Qaeda only. 

Tue, 01/25/2011 - 14:03 | 903284 Rodent Freikorps
Rodent Freikorps's picture

He said confiscate it,not give it to the proles.

Party is at his house.

Tue, 01/25/2011 - 12:18 | 902847 countryboy42
countryboy42's picture

BHO= The square root of stupid

Joe Biteme= The worlds only living brain donor.

Tue, 01/25/2011 - 12:36 | 902940 TheGreatPonzi
TheGreatPonzi's picture

Only average Joes go to the electric chair, the crimes of high finance, which make far more victims, are the crimes of a conqueror.

Tue, 01/25/2011 - 12:45 | 902975 eatthebanksters
eatthebanksters's picture

Who is your prez?

Tue, 01/25/2011 - 11:57 | 902730 Quinvarius
Quinvarius's picture

That is cool that JPM hid this for so long while saying everything was great.

Tue, 01/25/2011 - 12:07 | 902794 MsCreant
MsCreant's picture

In this shell game, there is something nasty waiting for you under every shell. There are not enough shells to hide all the nasty. Or is it that each shell is empty...

Tue, 01/25/2011 - 12:24 | 902884 tonyw
tonyw's picture

It's the opposite of what you are betting on, as a villain you should understand that:-)

Tue, 01/25/2011 - 12:34 | 902930 Arius
Arius's picture

welcome to the American Casino aka wal street

Tue, 01/25/2011 - 13:59 | 903265 TruthInSunshine
TruthInSunshine's picture

Seriously, you really did just slander/libel all casinos, everywhere.

And don't compare Wall Street to the Mafia, either. The Mafia has limits to their ruthlessness, and effectively polices itself against those who break the rules.

Wall Street thrives on human misery and suffering.

Tue, 01/25/2011 - 12:51 | 903017 whatz that smell
whatz that smell's picture

i love playing "hide the nasty".

Tue, 01/25/2011 - 11:59 | 902743 MonsterZero
MonsterZero's picture

What ever happened to buyer beware?  Good for them for making a profit off of this, this is the american dream right here.

Tue, 01/25/2011 - 12:04 | 902771 Careless Whisper
Careless Whisper's picture

whatever happened to getting arrested for mail fraud, wire fraud, rico, securities fraud, and about a dozen other offenses?

Tue, 01/25/2011 - 14:31 | 903359 Incubus
Incubus's picture

money and lack of morals happened. 


on another note: A pet peeve of mine is when people say that power corrupts.  Power is just power -- if a 'corruption' happens, it's because that person wasn't capable of handling any sort of 'power.'


And it seems that a lot of these people in power are failures; it's only a sign that this society is in its deathbed.  The next one won't be any better because all of the rats are already off of the ship: when this one sinks, they'll just as easily infest the next. 


edit: I don't know who junked you, but it wasn't me.

Tue, 01/25/2011 - 12:01 | 902752 Ragnarok
Ragnarok's picture

Over/under on the settlement to be reached. 

Tue, 01/25/2011 - 12:26 | 902894 topcallingtroll
topcallingtroll's picture

Total for jpm or just this specific lawsuit?

Tue, 01/25/2011 - 12:02 | 902754 jtmo3
jtmo3's picture

And yet, even with missed earnings from other companies and lawsuits against banks, JPM climbs and the market will soon be green. Commodities falling hard. PM's down. Treasury yields down. We're off to see the wizard.....the wonderful wizard of oz.........


Rally on dude.

Tue, 01/25/2011 - 12:01 | 902755 Careless Whisper
Careless Whisper's picture

whoever continues to do business with these "bankers", gets what they deserve.


Tue, 01/25/2011 - 12:06 | 902774 jus_lite_reading
jus_lite_reading's picture

Crime pays big bonuses

Tue, 01/25/2011 - 12:18 | 902851 Sean7k
Sean7k's picture

Yeah, can't say this comes as a surprise. The surprise would be if it was investigated, found to be an actual crime and someone actually was prosecuted- instead of a minor settlement with no admittance of culpability. Of course, this would require a rule of law and a judicial system that wasn't compromised.

Tue, 01/25/2011 - 12:01 | 902758 In Fed We Trust
In Fed We Trust's picture

That's the last straw!  Onto the the next flight to Davos, and I will personally hunt down Dimon, drag him into the street and demand an apology, infront of all the other bankers!


Tue, 01/25/2011 - 12:01 | 902759 docj
docj's picture

And because everything is bullish for equities ...

Tue, 01/25/2011 - 12:02 | 902762 A Man without Q...
A Man without Qualities's picture

We don't know what indemnities JPM sought from the Treasury as part of the agreement to buy Bear Stern.  It is not beyond the realms of possibility that all litigation costs related to MBS issued by BS were to be borne by the Treasury, aka the taxpayer.  

Dimon says I'll pay $1 per share or $10 per share without the baggage?


Tue, 01/25/2011 - 13:07 | 903106 Rick64
Rick64's picture

 Agree, and it looks like the majority of the fraud was committed before the takeover of BS which would exempt JPM from any criminal charges as part of the agreement of buying them. I would conclude that the government knew of this fraud and this was their way of sweeping it under the rug.

Tue, 01/25/2011 - 13:49 | 903238 A Man without Q...
A Man without Qualities's picture

I very much doubt the government knew of this specific fraud, and I doubt JPM did either, but they both knew there had been some pretty dirty stuff going on, but Geithner needed a quick fix to prevent the whole thing collapsing.  I suspect JPM got a better deal for BS than for WaMu which was more predatory than a rescue.


Tue, 01/25/2011 - 14:57 | 903427 Rick64
Rick64's picture

 How did JPM and others get these deals at bargain prices and with government financial backing? Why are there no prosecutions against the fraud? Mostly because these institutions know the government is and was complicit, offer a few scapegoats and some fines. I believe they (NYFRB, FED, Dept. of Treasury, JPM, GS) did know, but this is speculation on my part.

Tue, 01/25/2011 - 22:20 | 904803 MakesMeChunder
MakesMeChunder's picture

Interesting take Rick64.  Do you (or anyone else reading this entry) know of what the culture is like at JPM these days for former BSC employees.  Is it one big happy family?  Looking forward to the replies...

Wed, 01/26/2011 - 11:26 | 906047 Rick64
Rick64's picture

 I don't know, but it can't be to bad. 

  While serving as Chairman of the Executive Committee for Bear Sterns, Greenberg saw the collapse of the company in March of 2008. He was subsequently involved in the talks with JPMorgan Chase, who bought out the failing Bear Sterns at $2 a share on March 24, 2008.[1] On April 24, 2008, it was reported in Fortune that Greenberg agreed to join JPMorgan Chase & Co. as vice chairman of Bear’s retail business.

Tue, 01/25/2011 - 12:04 | 902768 RobotTrader
RobotTrader's picture


Sheesh, nothing ever changes.

Pretty much the same old, same old games which have been played since the 1920's.

- Well connected PigMen always find a way to profit in a collapse.

- Joe Six gets screwed

- Alpha Dog Thugs on Wall St. get rich than ever

- Despite the horrors reported here, JPM is Fed-sponsored and TPTB-supported, so it will never fail.

- Fractional reserve Ponzi Pyramid lending remains intact and is still growing today.

- OTC Derivatives Parabola keeps going up, up, up, up

It's "Wash, Rinse, Repeat" over and over in the Age of Infinite Fiat.


Tue, 01/25/2011 - 12:06 | 902782 jus_lite_reading
jus_lite_reading's picture

Well,  Robot I must say I agree with you 100%. Carry on.

Tue, 01/25/2011 - 12:06 | 902785 Careless Whisper
Careless Whisper's picture

same old games

i think a legit prosecutor may disagree with that.

Tue, 01/25/2011 - 12:07 | 902796 JW n FL
JW n FL's picture


for once I have to say... ummm no not so much... JPM is bigger than the FED by multiples of 100's of %...

so the FED is the tail that gets wagged, not the other way around.

Thanks for the Bitches as always, JW

Tue, 01/25/2011 - 14:07 | 903291 samsara
samsara's picture

JPM is bigger than the FED by multiples of 100's of %...

I think a subtle point is missing in statements like this.

JPM, et al    OWN the Fed.   Who are the StockHolders?

And Yes, The owners; (ie Rockefeller/Rothchilds et al) are bigger than the Fed.

Tue, 01/25/2011 - 13:51 | 903245 JonNadler
JonNadler's picture

good job Robo, distract them gold bugs with some feminine charm baby so they don't take advantage of the buying opportunuty...errr, i mean the beginning of the collapse of gold bak to 199

Tue, 01/25/2011 - 14:07 | 903295 lieutenantjohnchard
lieutenantjohnchard's picture

mr nadler, you may not be aware of the fact but old catfish mouth robo uber bull wanna be (trademark), after relentless mocking of jim sinclair and eric king, is now a p/m bull. yes, it's true. as of thursday last, while jim was at his gold mine digging gold, old catfish mouth from his flea bitten apartment in los angeles said it was time to buy p/m's.

no word yet if he actually had the courage to buy 50 shares gdx or not.

Tue, 01/25/2011 - 12:04 | 902772 aztrader
aztrader's picture

The fraud is so deep within these banks that it would probably almost impossible to dig it all up.  They will simply claim that Bear Stearns is the guilty party and that they knew nothing of this and walk away clean.   In the event that something does come of it, the Fed and Treasury will protect JPM at any cost. 


Every day a new scam is uncovered, yet after 2 years, still no indictments................

Tue, 01/25/2011 - 12:04 | 902773 NOTW777
NOTW777's picture

and JP wants to discuss a dividend?  how about jail?

Tue, 01/25/2011 - 12:18 | 902850 Sudden Debt
Sudden Debt's picture

I wonder if BAC will give a dividend

THAT would be news :)

Tue, 01/25/2011 - 13:02 | 903079 velobabe
velobabe's picture

i never saw the dark knight, cause i thought it was scary.

i have seen JPMorgue, and it is the real stuff scary, petrifying.

Tue, 01/25/2011 - 13:18 | 903140 JW n FL
JW n FL's picture

in the scene above... after he says that wonderful line... nothing happens...

JP is a $800T some say 4 x's that large, Monster.

Tue, 01/25/2011 - 12:06 | 902788 Oh regional Indian
Oh regional Indian's picture

JPM Just print Money

Just think about this. JPM will use TARP/QEx money to pay the fines on their highly illegal and profitable chicanery.

That's a double rub and salt on an open wound. Not good.

Anyone getting angry? Don't. Point-less.

Get preparing. Participate in this casino with play money only, after all, it's what th ebig boys are doing.


Tue, 01/25/2011 - 12:10 | 902808 satansanus
satansanus's picture

wheres those cocksuckers bankerfaggots that said I had no proof f banks shorting their products.


There is so much proof you dirty lil wannabes are gettin steamrolled. Analcyst and his pack o bitches cryin about bein achievers.


Tue, 01/25/2011 - 12:10 | 902812 Bob
Bob's picture

Tyler, you're on fire today!  Great shit.

Tue, 01/25/2011 - 12:11 | 902819 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Tyler is funny/entertaining.

The world is serious and set for uprising.

Plants are illegal.

People can not be in love.

The fascist governments think they know best.

Pronounce them dead on arrival.

Gold is monie.

Buy silver.

Tue, 01/25/2011 - 12:12 | 902824 Cdad
Cdad's picture

So...wait a minute...does that make three JP Morgan bailouts...or four?  No, five I think.


Bernanke Banana Splits all around...for all my friends!


Tue, 01/25/2011 - 12:15 | 902836 John McCloy
John McCloy's picture

So what is the penalty for JPM this time around?

Maybe we should teach them a real lesson and name one of their Senior Execs to Chief of Staff for the President...Oh wait a minute.

Tue, 01/25/2011 - 14:26 | 903355 williambanzai7
williambanzai7's picture


Tue, 01/25/2011 - 12:17 | 902846 lunaticfringe
lunaticfringe's picture

Indeed. That article of yours yesterday fired my ass up- all over this.

So we will have some bullshit by the thugocracy, a shakedown for some civil fines, if the statute of limitations indeed hasn't run out. Amazing hw this shit is finally being addressed at a point in Captain Transparency's term when it is getting close to re-election time.

My question is...Obama where the fuck were you- Mr. Change guy in 2008? Did you miss the greatest fraud in the history of man?


Tue, 01/25/2011 - 12:21 | 902865 MsCreant
MsCreant's picture

They have to know how this crap works to get elected, don't you think?

Tue, 01/25/2011 - 12:51 | 903016 eatthebanksters
eatthebanksters's picture

He's putting on his kneepads so he can suck Jamie's dick one more time...

Tue, 01/25/2011 - 12:19 | 902855 topcallingtroll
topcallingtroll's picture

The fraud is so vast that as put it the authorities cant open it up because it involves everyone. Who was the zerohedge author of the control fraud article? That would be a good link for those who missed it. It also explains why the authorities are reluctant to do anything. Only civil juries have a chance of punishing the wrongdoers, but it will be stockholders punished by putbacks, not the miscreants who created them and shorted them. Dont get excited if two or three minor players face criminal trial.....we must look forward not backward as obama likes to say.

Tue, 01/25/2011 - 14:15 | 903326 Rotwang
Rotwang's picture

Mr. Black.

Tue, 01/25/2011 - 12:22 | 902856 TruthInSunshine
TruthInSunshine's picture

"The corruption is viral and no one [especially from Goldman Sachs, JP Morgan, Citi, Bank of America, Countrywide, AIG, Bear Stearns, Lehman, Ambac, Freddie, Fannie, etc.] will go to jail..."


Is the Financial System Corrupt? USAWatchdog


I'll take "uhmmm....Yes!" for $2,000, Alex.

Tue, 01/25/2011 - 12:23 | 902876 SpeakerFTD
SpeakerFTD's picture

Mary Haggerty, come on down.   You're the first entrant to Let's Make A Deal (to avoid 20 to life).

Tue, 01/25/2011 - 12:25 | 902885 Fazzie
Fazzie's picture

 Does this call for another Kabuki theatre production on capitol hill with some corrupt congressman saying the word "shitty" ad naseum while doing absolutely nothing to the supposed crooks?


 How about a pretend SEC investigation with stern wrist slapping threats at least?



Tue, 01/25/2011 - 12:34 | 902923 tonyw
tonyw's picture

hey, no actual wrist slapping those fancy watches might get broken.


Tue, 01/25/2011 - 12:25 | 902888 AnAnonymous
AnAnonymous's picture

Selling through misrepresentation is  common sports in the US. Started with Manhattan and stuff.

Makes it impossible to punish Morgan for being a true American.

Tue, 01/25/2011 - 12:34 | 902926 ak_khanna
ak_khanna's picture

The Taxpayer Rape countinues unabated on a daily basis. The Taxpayers are so quite about it that it appears they have started enjoying it.

It is an uphill task to gather political will to effectivel­­­­­­y control the too big to fail banksters. They have a lot of influence on the political class, the rule makers and the rule enforcers due to their enormous purchasing power. So irrespecti­­­­­­­­­ve of the position in the government­­­­­­­­­, everyone works for the benefit of the banksters.

The politician­­­­­s around the world are auction items which can be sold to the highest bidder. They will do whatever they can for the lobbyist paying them the maximum money or votes, be it the unions, the banksters, the richest corporatio­­­­­ns or individual­­­­s. They are in the power seat to extract maximum advantage for themselves in the small time frame they occupy the seat of power.

The rest of the population is least of their concerns. The only activity they do is pacify the majority of the population using false statistics and promises of a better future so that they do not lynch them and their masters while they are robbing the taxpayers.

Tue, 01/25/2011 - 12:55 | 903043 AnAnonymous
AnAnonymous's picture

The politician­­­­­s around the world are auction items which can be sold to the highest bidder.


Hardly surprising if you might consider
Loyalties go to the highest of bidders


They saw it all in the 1980s (casino economy, unaffordable future, bought loyalties and  more) Nobody can pretend not being warned.

 ABC, HOW TO BE A MILLIONAIRE 1985 (25 years ago)


Tue, 01/25/2011 - 12:34 | 902928 lunaticfringe
lunaticfringe's picture

All robbers, no cops. I am holding Mr. Durden accountable for last night's fishing trip and my lack of sleep.

Tue, 01/25/2011 - 12:37 | 902943 Arius
Arius's picture

Cops cost money - we are broke; there is no money to publish M3 and store the original mortgage loans (BURN them!)

Tue, 01/25/2011 - 12:35 | 902932 Thunder Dome
Thunder Dome's picture

The banks aren't required to have real balance sheets. The general public is beyond dumb.  What difference will another smoking gun make?  The Morgue, Goldman, BAC, Citi et al DO NOT lose!

Tue, 01/25/2011 - 12:36 | 902939 A_MacLaren
A_MacLaren's picture

Not another case of banksters acting badly...  </sarc>

Tue, 01/25/2011 - 12:37 | 902941 buzzsaw99
buzzsaw99's picture

In fraud we trust.

Tue, 01/25/2011 - 12:37 | 902944 ReallySparky
ReallySparky's picture

Have faith Friends of ZH, when this economy blows up any day now, the sheeple will expect heads to roll and folks to go to jail.  There will not be another public bail out.  That would start riots.  Some days I get so disgusted, but I know that soon these gangsters will do the time.  I do find solice in the fact that there are many talented, greedy attorneys who only can see dollar signs and they will not relent.  God bless them, and they should profit from bringing these crimes into the day light.

Tue, 01/25/2011 - 12:39 | 902950 Hondo
Hondo's picture

I'm sure JPM is complaining to the FED that they can't let this happen it will wreck the markets, the economy ............ and my bonus!!!

Tue, 01/25/2011 - 12:50 | 903008 Cdad
Cdad's picture

Right you are.  I have a headline here that Barney Frank is complaining that that the crackdown on debit card fees proposed by the Fed must be amended...the suggestion being that it is too punitive.

There you go...

Tue, 01/25/2011 - 12:51 | 903020 gwar5
gwar5's picture

Yes!  We still have no bananas!

Tue, 01/25/2011 - 12:52 | 903028 bob_dabolina
bob_dabolina's picture

Speaking of AIG, their stock price has had an amazing start to 2011. Did Cramer have any calls on that?

Tue, 01/25/2011 - 12:57 | 903042 juwes
juwes's picture

Shorting is what people with large accounts do to bet against stocks.

PCLN has gone parabolic.  Look at the 10 or 5 year chart.  The excessive shorts were all ram-rodded and there is nothing left to prop up this fraud. Here's a put option strike price that can be purchased cheaply each month:

FEB '11  $330 put bid .80 ask $1.00.

Parabolic reversals can be 25 to 50% drop in weeks or even days.  You won't see a chance like this too often.  And since each contract costs you a hundred bucks, it isn't a stressful trade.

Tue, 01/25/2011 - 12:56 | 903052 whatz that smell
whatz that smell's picture

it's all good.... just read this article:

embrace your fear and unleash your inner derivatives!

when i sell you a bag of shit after i promised you a bag of gold, i go to jail... when GS or JPM does it, it's good business...

WTF? go long fluffers!

Tue, 01/25/2011 - 12:57 | 903054 TheGoldBug
TheGoldBug's picture

This is just a distraction. A new stealth form of monetization. Plus JPM earns some rating points, being a sudden victim.

Tue, 01/25/2011 - 13:02 | 903077 snowball777
snowball777's picture

Yes, one should always look at the variance on number and placement of fires in a county where firemen are paid per fire handled.

Tue, 01/25/2011 - 13:05 | 903095 Quintus
Quintus's picture

Wow.  'JP Morgan' and 'Sack of Shit' finally appears in the same headline.  Not quite in the way I'd structure the sentence, but close.

Tue, 01/25/2011 - 13:06 | 903098 afriend2u
afriend2u's picture

Is this story supposed to shock someone. NOT @ ZERO HEDGE!! Are you kidding me. A TBTF shafted everyone it could find with a multi-pronged strap on, made a ridiculous amount of money at the expense of others, lied about it and begged for a tax payer funded bailout when it all went to hell. This story is really the WHOLE story on the mortgage meltdown/economic crisis. At some point it wasn't about packaging performing mortgage products for sale. It was about packaging garbage for sale and, finding any way to cover up the fact that it was garbage, levering up to an insane risk and then betting against the garbage (which is far easier than actually packaging a PERFORMING product). 

The more I read on ZERO HEDGE and elsewhere, the more I realize not only what happened and why, but that nothing will be allowed to get in the way of the current "recovery". NOTHING!

This story is the tip of the iceberg. GS, JPM, BOA, CITI... you name it; they all have the same hidden stories. But... whatever happens, if every story turns out to be true. If every transaction of every piece of garbage any financial institution has ever bought is determined to be invalid and subject to a buy back revision, the TBTF's will not be allowed to fail. Crisis will pass all necessary legislation/policy...the now deemed "success" of TARP will guarantee it. TARP II... QE to the sqaure root of pi times infinity.

There is no turning back from this "recovery". NOTHING can be allowed to stop it. Because there is NO second chance. There is nothing left to pull us out of the second dip. Anything that threatens the "recovery" will be squashed by any and all means necessary.

Yes... I know... the world's current financial system is doomed anyway, but then what's the point of posting anything.. news, comments or anything else. Tyler could just state the obvious in two words "We're f'd" and then shut the sight down.

Long live ZERO HEDGE!


Tue, 01/25/2011 - 14:02 | 903279 surferthx1138
surferthx1138's picture


The information on these sites (ZH ranking high) is indeed valuable, and an oddly guilty fun. I treat the whole system we live in like a board game. Enjoy it for what it is, a game (albeit one with a shitty cash system and massive imbalances.) The information that surrounds this particular ‘game’ we are all in goes in many directions, pick one and learn from it. Then ramp that knowledge back into a way to cash in on the game. 

I take all that I think I know about the game (combined with some healthy forehead smacking) and try to tear $ out of the hands of the claw that is in charge of the dice of our current game. Many do this by direct service to the system (work) or by using leveraging knowledge. For every $10 I can clear out I figure that is $10 less for the claw.

Juvenile and simplistic? Yes; but it keeps me from getting to caught up in all the stink so I can enjoy my day when I walk away.

Whether I am happy or seriously f*ing mad, I always say thanks to all those helping me make more and more $ from the claw! 

When this game is over, and it will be ... over. The money you made in the game will no longer be usable in what ever is next. So I live and I learn and I am ready to move on. Knowledge and rudimentary alliances are the only thing transferable from one game to the next.

NOTE: Games Designer Position open for “The Claw”: a MMORGP in which game physics are random and wildly arcane economics method that guarantees suspense at every turn! Life time subscribers to the system will receive no less than five massive character upheaval events guaranteed reset your level and/or loot. Send applications to [Under construction].


Tue, 01/25/2011 - 13:06 | 903099 indio007
indio007's picture

How many times was Bear Stearns bailout since there inception? Five ... six time? They most give the worlds best BJ over there or something.

Tue, 01/25/2011 - 13:07 | 903107 Dr. Porkchop
Dr. Porkchop's picture

It seems like there is no turning back now, no way to fix it, cuz the fix is already in. Everyone is on the take. Fraud and Austerity are the future.



Tue, 01/25/2011 - 13:11 | 903121 Seasmoke
Seasmoke's picture

did anyone ever hear of the story of the scorpion and the frog

Tue, 01/25/2011 - 13:25 | 903164 Caviar Emptor
Caviar Emptor's picture

Goldman's Russian bond deals with LTCM were the model for all future "Short-the-buyer-of-your-own-toxic-crap" scams. Once Goldman and other big fish saw that the Fed would indeed panic and  step in, the sky was the limit. JPM was just a me-too story. 

"What if we could sell the United States Treasury trillions of toxic loans and short their bonds? Would the Fed step in?" Oh wait a minute, I forgot, it already happened!!! Notch another one. 

Tue, 01/25/2011 - 13:26 | 903170 tellsometruth
tellsometruth's picture

C & P from bloomberg article: :

A survey released today by New York-based public relations firm Edelman showed the percentage of respondents in India who said they trusted banks rose to 87 percent, while in Germany, Ireland, the U.K. and U.S., trust in banks tumbled to 25 percent or less. In China, trust in banks soared to 90 percent, the study showed.


i found the slide show intersting...  hmmm can the FED print trust?

Tue, 01/25/2011 - 13:42 | 903224 Caviar Emptor
Caviar Emptor's picture

Notice a pattern? Places on the rise have 'faith' in financial 'enablers' (read loan peddlers), because lending into a rising economy produces 'magic'. When the cycle is compete and economies on the decline (UK, US), 'faith' is lost as the former 'enablers' having grown a credit pyramid that collapses become abusive and simply become 'enablers' of declining economics 

Tue, 01/25/2011 - 13:35 | 903176 Waterfallsparkles
Waterfallsparkles's picture

Trebel Damages if they have commited fraud.  What about all of the Ambc Shareholders.  That Company was Murdered for their gain.  The Bank took the repurchase of the bad loans and put it in their pocket and did not pay that money to Ambc, which caused them to fail.

I wonder if JPM has put aside enough money for Trebel Damages.

Every earnings report or every time the stock would go up JPM Analysis would downgrage the stock or Moodies would lower their rating.  JPM must have had a huge Short position on Ambc.  Just amazing having a short position on a Stock and failing to pay them the money for all of the Mortgages that had been re purchased by the Originator. 

Ambc and all Shareholders should be made whole.

Criminal behavior in my opinion.

Tue, 01/25/2011 - 13:44 | 903229 In Fed We Trust
In Fed We Trust's picture

Off topic:

And tonight Obama to announce a freeze on spending, a ban on earmarks, and a 3 for 1 reverse split on the Dow!

Hello Dow 36,000!

Seen it on the Drudge.

Obama speaks tonight.

Tue, 01/25/2011 - 13:38 | 903213 lunaticfringe
lunaticfringe's picture

Well we got the SEC watching porn, guys like Dodd buying Irish cottages with investor dough from Countrywide, politicians accepting millions of dollars from banks. It is a co-opted and corrupt piece of shit from top to bottom.

Just tell me who we hang first and I'll get started. I own rope. Expecting men in suits to come seize it from me.

Tue, 01/25/2011 - 13:41 | 903219 lunaticfringe
lunaticfringe's picture

Btw, Tyler, you had me from "sack of shit."

Tue, 01/25/2011 - 14:00 | 903270 lizzy36
lizzy36's picture

The only thing that would shock me now, is if a perp walk actually occured.

Alas, one believes, that West Wing season 2 has now started. The bankers, have shown remorse (bob diamonds words not mine) and have been invited into the adminstration, with both fists.

Nothing will change, and the kleptocrats will continue to rape and pillage, because Obama needs a second term, and they are going to give him one. After all when all is said and done, why woldn't they?


Tue, 01/25/2011 - 14:20 | 903340 lieutenantjohnchard
lieutenantjohnchard's picture

keep the faith. if we see another leg down i think the flood tide of anger will demand justice.

Tue, 01/25/2011 - 14:55 | 903445 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Nobody wants to plant the corn.  Everybody wants to raid the barn.

Tue, 01/25/2011 - 14:34 | 903375 dxj
dxj's picture

Capitalistic remedy: Putbacks. Make them eat their own dog food. Let them pay their executives in the same MBS crap they sold. I applaud Credit Suisse for doing this in 2008.

Tue, 01/25/2011 - 14:48 | 903410 explodinghead
explodinghead's picture

Some ZeroHedger's more eloquent than I should give it a go and make there own State of The Banana Republic.  They would never see the light of day but it would be fun to watch them on youtube anyway.

Tue, 01/25/2011 - 14:50 | 903420 JW n FL
JW n FL's picture

The FCIC was created by Congress in 2009 to research and report on the origins of the 2007-2009 crisis that rocked world financial markets and its final report will be released on Thursday.

Partisan divisions have been evident throughout the committee's existence.

The main report to be released Thursday is expected to be endorsed by only the six Democratic members of the 10-member panel, with three Republican members releasing a separate minority report. A fourth Republican plans to unveil a report of his own.

Tue, 01/25/2011 - 16:44 | 903895 Lord Koos
Lord Koos's picture

One of the things that Republicans on the committee strenuously objected to was the use of the term "shadow banking" in the report.  What assholes.

Tue, 01/25/2011 - 14:52 | 903431 Blano
Blano's picture

The amount of time it took me to read this will be greater than the amount of jail time issued over it.

Tue, 01/25/2011 - 15:22 | 903561 midtowng
midtowng's picture

Didn't all the Wall Street banks do this?

Tue, 01/25/2011 - 16:43 | 903892 fockewulf190
fockewulf190's picture

Where is CRS when you need them?  Since the head chumps at the JP Morgue don´t give a flying fuck about law and order, how about a nice drug induced abduction and dumpoff south of the border and sell them off to the cartels.  They are probably worth 10x their weight in manipulated gold. 

Tue, 01/25/2011 - 18:31 | 904229 But then what d...
But then what do I know's picture

I thought ZH readers were not naive. How can anyone expect a government that used $1T of people's money to bail out greedy and dishonest banks to now bring them to justice and in essence to their knees????? That would beat the purpose of the first exercise, wouldn't it??


Tue, 01/25/2011 - 22:23 | 904818 suckerfishzilla
suckerfishzilla's picture

I'm taken aback by the fact that Bear Stearns was allowed to cry bankruptcy after pocketing commissions on the sale of MBS's to Ambac and then to add insult to injury take short positions on the firms that they knowingly exposed to this worthless paper to profit again.  Only about 1% of the nation is concerned about this.  That is the real tragedy of it all.

Thu, 01/27/2011 - 03:07 | 908681 blindman
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