DOJ Picks Up Where FERC Left Off: Begins Investigation Of JPMorgan's "Enronesque" Energy Market ManipulationSubmitted by Tyler Durden on 08/19/2013 18:50 -0400
On July 30, when FERC announced that it had agreed to resolve it allegations of JPMorgan manipulation of the energy market for a $410 million fine, with the bank neither admitting nor denying guilt, we posited that the only question on Jamie Dimon's mind was whether to pay the fine from petty cash or just to charge it on his corporate Amex. Three weeks later he may have some other questions swirling in his head, such as "whose Christmas lobbying stocking did I not fill with campaign donations?" after the WSJ reported that it is no longer FERC, but the DOJ itself, led by Preet Bharara, which is investigating whether JPM manipulated energy markets. Ironically, this is a deja vu of the SAC take down by the same Bharara, when a few months after SAC settled with the SEC it was shocked to be crushed by the Department of Justice which pulled an "Arthur Anderson" on it and for all intents and purposes shut it down (although with nobody sent to prison). It remains to be seen if Bharara will have the balls to take this prosecution to the next level and whether after he made SAC into Arthur Anderson, he will make JPMorgan into the New Normal's Enron and whether Jamie Dimon or Blythe Masters will be the next Lay and/or Skilling. One can hope.
Greed; corporate arrogance; lobbying influence; excessive leverage; accounting tricks to hide debt; lack of transparency; off balance sheet obligations; mark to market accounting; short-term focus on profit to drive compensation; failure of corporate governance; as well as auditors, analysts, rating agencies and regulators who were either lax, ignorant or complicit. This laundry list of causes has often been used to describe what went wrong in the credit crunch crisis of 2008-2010. Actually these terms were equally used to describe what went wrong with Enron more than twenty years ago. Both crises resulted in what at the time was the biggest bankruptcy in U.S. history — Enron in December 2001 and Lehman Brothers in September 2008. Naturally, this leads to the question that despite all the righteous indignation in the wake of Enron's failure did we really learn or change anything?
Trough-feeding debtism faces the need to clean up its detritus.
There was a time when Jamie Dimon liked everyone to believe that his JPMorgan had a "fortress balance sheet", that he was disgusted when the US government "forced" a bailout on it, and that no matter what the market threw its way it would be just fine, thanks. Then the London Whale came, saw, and promptly blew up the "fortress" lie. But while JPM's precarious balance sheet was no surprise to anyone (holding over $50 trillion in gross notional derivatives will make fragile fools of the best of us), what has become a bigger problem for Dimon is that slowly but surely JPM has not only become a bigger litigation magnet than Bank of America, but questions are now emerging if all of the firm's recent success wasn't merely due to crime. Crime of the kind that "nobody accept or denies guilt" of course - i.e., completely victimless. Except for all the fines and settlements. Here is a summary of JPM's recent exorbitant and seemingly endless fines.
The Only Question On Jamie Dimon's Mind This Morning (As JPM Neither Admits Nor Denies It Is The Next Enron)Submitted by Tyler Durden on 07/30/2013 08:33 -0400
Now that the previously reported "fine" of $400 million which the firm just got slapped with following its manipulation of various energy markets, is fact...
- JPMORGAN AGREES TO PAY $410 MLN TO SETTLE U.S. ENERGY PROBE
... One may say JPM has just admitted it is the next Enron. One would be wrong: "JPMVEC admits the facts set forth in the agreement, but neither admits nor denies the violations." In other words, JPM is a Schrodinger Enron: it admits the facts that the company best known for manipulating electricity - a charge which in 2000 was enough to crush the company, and which is now a fine equal to 0.4% of the firm's $99.5 billion in revenues - but neither admits nor denies this. But the biggest question plaguing Jamie Dimon this morning, is whether he will pay the $410 million FERC find with a personal check... or petty cash.
Lets face it, shysters exist....it's our job to ensure we stay well clear of them. Here are some RED FLAGS to look out for!
While Chanos' last year's short on HP has not been a tremendous success (yet), it seems the market is more acquiescent to the famous China bear's short call on CAT (among other things due to its infamous major exposure to China). As we noted in detail most recently first two months ago and then one month ago, things at the industrial company are not going at all well, but Chanos notes some more important concerns:
- CHANOS: SHORT CATERPILLAR INC.
- CHANOS: SAYS CATERPILLAR HAS ‘ACCOUNTING ISSUES’
- CHANOS SAYS CATERPILLAR IS TIED TO WRONG PRODUCTS IN WRONG TIME
- CHANOS: WILL FACE A SERIES OF SUPERCOMMODITY HEADWINDS
- CHANOS: ACCOUNTING FOR BUCYRUS DEAL MAY HAVE BOOSTED CAT EPS
- CHANOS: EARNINGS DRIVER FOR CAT MAY HAVE BEEN ONCE IN LIFETIME
For now, CAT is down around 2.2% on the day and while he believes global growth (and CAT's geographic bets) will hurt, it is the accounting for Bucyrus which makes the Enron billionaire most nervous.
Larry Summers has been failing up since he entered the public sphere. The reults have been catastrophic for many main street Americans.
The last two weeks oil inventories fell by a record 20 million barrels, this event has never happened in 30 years of historical data. Something just doesn`t add up here...
Giant Banks Take Over Real Economy As Well As Financial System … Enabling Manipulation On a Vast ScaleSubmitted by George Washington on 07/10/2013 01:37 -0400
Big Banks Move Into Uranium Mining, Petroleum Products, Aluminum, Ownership and Operation Of Airports, Toll Roads, and Ports, and Electricity
When Charles Ponzi was around, it took just a tad longer to rake in the cash and commit financial fraud, escaping with the proceeds to better climates. Today, the internet and the power of the virtual world have made the transfer of funds so much quicker.
- Bonds Tumble With Stocks as Gold Drops in Rout on Fed (BBG)
- Bernanke Sees Beginning of End for Fed’s Record Easing (BBG)
- Gold Tumbles to 2 1/2 Year-Low After Fed as Silver Plummets (BBG)
- PBoC dashes hopes of China liquidity boost (FT)
- U.S. Icons Now Made of Chinese Steel (WSJ)
- Emerging Markets Crack as $3.9 Trillion Funds Unwind (BBG)
- Everyone joins the fun: India sets up elaborate system to tap phone calls, e-mail (Reuters)
- China Manufacturing Shrinks Faster in Threat to Europe (BBG)
- More on how Syria's Al-qaeda, and now US, supported "rebels", aka Qatar mercenaries, operate (Reuters)
- Echoes of Mao in China cash crunch (FT) - how dare a central bank not pander to every bank demand?
Bulls and Bears. It’s all about predicting when that upturn or that downswing in the market is going to take place and when you need to sell or buy that stock to hit the jackpot and make the millions. People have been doing it for centuries and that doesn’t look like it is going to stop right now. There have been dozens of financial crises over the centuries and each of them has had an effect on the lives of people to varying degrees.
And Other Stunning Facts I Learned Last Night ...
Through most of the 20th century, America led something of a charmed life, at least when compared with the disasters endured by almost every other major country. We became the richest and most powerful nation on earth, partly due to our own achievements and partly due to the mistakes of others. The public interpreted these decades of American power and prosperity as validation of our system of government and national leadership, and the technological effectiveness of our domestic propaganda machinery - our own American Pravda - has heightened this effect. Author James Bovard has described our society as an “attention deficit democracy,” and the speed with which important events are forgotten once the media loses interest might surprise George Orwell.