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JPMorgan: What's the Fuss?

rcwhalen's picture





 

 

Watching the media frenzy around JPMorgan, one is reminded how much of life is an illusion, a running cognitive deficit we all share and contribute to in our own way.  Politicians such as Senator Carl Levin (D-MI) solemnly proclaim the need for more regulation.  But never once does this deficit spending liberal from America’s rust belt ever admit that the destructive fiscal behavior of Washington ultimately sets the example for Wall Street. 

 

“What they're saying now is that the hedging by JP Morgan, if that's what it was, was okay, but the execution was poor,” notes one long-time Washington observer of the banking industry.  “If this crisis were ever going to wind down, which it isn't, there would have to be accountability for failure.  Even in the Freddie case, when Freddie said, look, we made more money than we thought, it didn't wash.  And BTW, Bandit at Citigroup is the Dr. Stragelove of banking.  This is obvious.”

 

The same Washington sage continues, reflecting the conventional wisdom: “The problem with the Volcker rule is that there should be no exceptions.  If someone wants to run a hedge fund, and someone in CT will give them the money, they should do it.”

 

Unfortunately what JP Morgan was doing is precisely how the bank makes more than half of its annual profit.  The creation, trading and arbitrage of risk exposures is a big business for JPM and one that the bank has done well – albeit from the position of market monopoly in OTC derivatives.  When the bank admits to a $2-4 billion loss, how big was the notional amount?  Three digits. 

 

One financial markets professional who operates under the moniker Nom de Plumber puts the situation in perspective:

 

“The CIO has earned tremendous net profits over the past several years, despite this $2BLN loss.  How?   The core business of JPM is taking calculated risks.   Shareholders and regulators would be irrational to expect gains without also accepting inevitably occasional, albeit sizeable, losses.”

 

But going back to the point about cognitive dissonance in the media and political realms a la our brother Barry Ritholtz, the fact is that neither Paul Volkcer, nor regulators nor the Big Media seems to understand that the activities of the CIO at JPMorgan was pretty much SOP at the bank for years.  What JPM wants you to believe is an isolated error was and is in fact the single largest profit center in the bank.  Again Nom de Plumber

 

“The CIO is essentially a proprietary trading desk, funded with retail branch deposits.   Proprietary trading desks, like those at JPM, Merrill Lynch, Deutsche Bank, and even Lehman, actually generated substantial profits throughout the credit crisis.   By contrast, their presumably “safe” customer facilitation businesses, like home mortgage origination, CMBS lending, and ABS warehousing, generally suffered the critical---sometimes fatal---losses.   Examples include Bear Stearns, BofA, Countrywide, Citibank, WAMU, Wachovia, RBS, and Lehman.   (Fannie Mae, AIG, and Freddie Mac were in this camp, via their guarantee franchises.)     History, ironically, simply dispels the Volcker-rule bias against proprietary trading.”

 

While JPM spins this tale as a outlier and the media complies in this task perfectly, in fact this is really how a lot of the market generates profits.  Thus not only will implementation of the Volcker Rule have no impact on the risk taking and true risk exposures of the largest banks, but the reduction in liquidity in many markets in the short run may actually cause the next systemic crisis.  

 

The fact is that the vast expansion of the US money supply over the past three decades makes such financial alchemy necessary for the TBTF banks to generate even nominal profits.  In risk adjusted terms, all of the TBTF banks such as JPM have negative equity returns.  And the Fed keeps these zombies alive in order to preserve the Treasury’s ability to issue debt.  In that sense, nothing has changed in Washington since Abraham Lincoln created national banks to finance the Civil War.  Again the Washington sage:  

 

“You're close to unveiling how the cartel administered by FRBNY channels money to these chronically insolvent thieves. Corzine managed to get admitted to this club and was building a house of cards along the Hank Paulson model when he slipped up… This is why the crisis will continue to grow and never end.  These people are in charge, and they know it.  Henry Blodgett and others have touted Jamie Dimon as the ideal Secretary of the Treasury, and in a sense he is.  He would follow the tradition of Don Regan, Robert Rubin, and Hank Paulson, all of whom caused and sustain this destructive circumstance that has built derivatives exposure up to $14 trillion.”

 

That $14 trillion in exposure exists because the financial world cannot earn sufficient returns on all of those little green pieces of paper printed by the Fed by investing solely in the real economy.  That is why the real takeaway from the JPM disclosures is not that it was an aberration, but that this is the core business of Wall Street today.  So when you hear Joe Nocera, Paul Krugman and others waxing effusive about the need for regulation, beware.  Again Nom de Plumber:

 

“This JPM loss, whether $2BLN or even $5BLN, is modest in both absolute and relative terms, versus its overall profitability and capital base, and especially against the far greater losses at other institutions.  In practical current terms, the hit resembles a rounding error, not a stomach punch.    As either taxpayers or long-term JPM investors, we should be more grateful than sorry about the JPM CIO Ina Drew.   If only other institutions could also do so “poorly”………”

 

Amen

 


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Tue, 05/15/2012 - 17:30 | Link to Comment ThisIsBob
ThisIsBob's picture

Who got their money?

Tue, 05/15/2012 - 17:47 | Link to Comment AldousHuxley
AldousHuxley's picture

lesson learned: don't lose Rockefeller money.

 

 

 

Tue, 05/15/2012 - 15:16 | Link to Comment malek
malek's picture

Wow, a relatively poor article by rcwhalen - one where he falls short and doesn't offer the full picture in a clear way.

Getting too close to the sun, Icarus style?

Tue, 05/15/2012 - 15:11 | Link to Comment Manny
Manny's picture

I think people should relax and give Jamie Dimon a break. Its only 2 Billion. The bankers are used to screwing the taxpayers for Trillions. So whats a few billion of their "own" money.

Tue, 05/15/2012 - 15:25 | Link to Comment fourchan
fourchan's picture

dimon will be the first ceo getting a billion dollar bonus. he is fucking rediculous!

Tue, 05/15/2012 - 14:55 | Link to Comment Eric L. Prentis
Eric L. Prentis's picture

Jamie Dimon, stop the insanity, resign already.

Tue, 05/15/2012 - 15:23 | Link to Comment LouisDega
LouisDega's picture

Exactly. Whats the fuss? They still have free coffee and pastries at my local branch, The Bank tellers are super helpful and most important, The 12 dollars and 36 cents in my savings account is safe. Whats the fuss?

Tue, 05/15/2012 - 13:59 | Link to Comment SILVERGEDDON
SILVERGEDDON's picture

 

JPMorgan bought out the assets of MF Global in a friendly take over back in 2012, announced this morning by the White House Special Reporting Goon Squad. John Corzine had replaced Ben Bernanke at the Fed in the summer of 2012, and Ben became head of an investigationary team that hunted down that missing MF Global money for the poor bastards that got fucked over by some low end expendable cleaning staff, and interns back in the day. Curiously enough, not one red cent was ever recovered.

  All liabilities pertaining to MFGlobal had been swept under the newly woven "carpet of lies "campaign conceived by Secretary of State Ina Drew, and will not be seen by the light of day - ever - again - period - they promise. Any assets of course, were purchased by JPMorgan for one dollar, and an expired McDonalds coupon for a McCoffee, due to the risk involved in strip mining free assets and spending them on severance packages for phoney London Whale fall guys 'n girls.

The above was the summary of a ten year investigation into banking practices, concluded in 2022, at the cost of 3 trillion dollars to the taxpayer. President for Life, Mittens Rommely, celebrated the landmark event by increasing the medication of the FEMA camp survivors of the 2012 global economic meltdown free of charge. This was done in a fiscally prudent manner by reducing their GMO food rations to 800 calories per day for a year or two, subject to change without notice, to reduce the incentive to protest the wonderful news.

 

Tue, 05/15/2012 - 13:25 | Link to Comment OC Money Man
OC Money Man's picture

 

 

JP MORGAN FIASCO MEANS HIGHER INTEREST RATES AHEAD

If there was an Academy of Motion Picture Arts and Sciences Award for the best acting performance by a CEO, Jamie Dimon of J.P. Morgan Bank would surely win the Oscar for his dismissal of a $2 billion off-shore derivative loss as “a complete tempest in a teapot.”  Dimon tried to use all his theatrical skills to distract the American public from discovering that the U.S. Federal Reserve’s policy of loaning money to banks at zero-interest-rates has made derivative trading wildly profitable, but made lending to American businesses less profitable.  As fallout from the J.P. Morgan fiasco exposes the bloated derivative activities of major banks, the Federal Reserve will be forced to terminate the zero interest rate policy and let rates rise to retard bank speculative actions.  Higher interest rates will stimulate banks to make more commercial and industrial loans, resulting in higher U.S. economic growth.

Achilles Macris, J.P. Morgan’s CIO in their London office, began using the bank’s access to cheap capital from the Fed to amass a huge over-the-counter derivative gamble that high yield and sovereign debt interest rates would fall, after MF Global suffered a $1.2 billion loss on similar bets and was forced to file for bankruptcy last October 30th.  Morgan’s gamble became very profitable after December 21 when the European Central Bank (ECB) began making $640 billion of three year loans at 1% interest, referred to as “Long Term Refinancing Operations” (LTROs), available to the banks of Portugal, Ireland, Italy, Greece and Spain (PIIGS).  By the end of December, J.P. Morgan’s total derivative exposure was $70.2 trillion on just $1.8 trillion of bank assets, according to the U. S. Controller of the Currency.  Morgan is reported to have continued heavy derivative buying in January and February.  Its profits soared again when the ECB announced LTRO2 as another $714 billion in three year low-interest loans to PIIGS banks.  

The stock of J.P. Morgan vaulted from $29 per share in December to $45 a share in March as rumors swirled that Achilles Macris and his London team of 6 had already made $2-3 billion as high yield and sovereign debt interest rates continued to fall.  A jubilant Jamie Dimon announced that J.P. Morgan would increase its dividend and buy back $15 billion of its stock.

Everything seemed rainbows and unicorns for J.P. Morgan until two weeks ago, when France and Greece elected hardcore leftist candidates who want to abandon austerity spending cuts and increase social welfare spending.  Interest rates on the PIIGS sovereign debt shot back up and J.P. Morgan appears to have suffered a $4-5 billion loss.  It also appears the bank has been unable to limit its losses to $2 billion by selling out of their enormous derivative positions.   

Jamie Dimon tried to dismiss the losses by promising heads will roll, but Congressional hearings will soon illuminate to American taxpayers that the Fed has provided the capital that has allowed America’s three largest banks to engage in $173 trillion in leveraged derivative speculation:

Bank

JP Morgan Chase Bank

Citibank National Bank

Bank of America

Derivative Position

$70,1517,56,000,000

$52,102,260,000,000

$50,102,260,000,000

Total Assets

$1,811,678,000,000

$1,288,658,000,000

$1,451,890,000,000

Leverage Ratio

38.5

40.3

33.4


The derivative exposure of these three banks alone exceeds 11 times the American economy and 2.7 times the economies of all the nations on earth.  On December 30th, the derivatives leverage ratio of these three banks stood at 37 times.  Menacingly, this leverage ratio exceeds the average leverage ratio of 32 times assets for Lehman Brothers, Bear Stearns and Merrill Lynch, shortly before the shock of their collapse instigated the start of the Great Recession in 2008.  

After five years of miserable unemployment and virtually no growth, it seems clear the Federal Reserve’s $2 trillion increase in bank lending at zero interest rates has been better at expanding the international derivatives markets than expanding the American economy.  The Federal Reserve owns much of the blame for this phenomenon.  By keeping interest rates so low, banks were unable to make a rate of return above their cost of capital on traditional lending.

Kansas City Federal Reserve Bank President Thomas Hoenig in a recent interview warned that an extended period of ultra-low interest rates invites speculative behavior: “When you have zero rates that go on indefinitely, you are inviting future problems.”  The recent J.P. Morgan derivatives fiasco has demonstrated that the Fed’s zero interest rate policy has encouraged risky financial speculation that is highly dangerous and potentially destructive.  It’s time for the Fed to let interest rates rise, so banks can get back to the business of financing America’s real-economy. 

Feel free to forward this Op Ed and follow our Blog at www.chrissstreetandcompany.com

 

Tue, 05/15/2012 - 13:08 | Link to Comment dirtbagger
dirtbagger's picture

I fail to understand why it is such a political issue to separate deposits and mundane banking functions from investment and hedging activities. 

If JPM thinks they are such astute traders, then why do they not form a separate entity that keeps depositers, bondholders, shareholders, and taxpayers from cleaning up their opaque and hidden malinvestments.  

One stiputlation - hedgie investors and directors should have unlimited liablity, so their yachts, vacation homes, and Cayman Island accounts can be seized and used for restituion if their bets go bad.  Enforcing real capitlism would solve these types of problems in a heartbeat.  

Tue, 05/15/2012 - 17:56 | Link to Comment blindman
blindman's picture

15 May 2012
SP 500 and NDX Futures Daily Charts - RNN Interviews Bill Black on JPM
http://jessescrossroadscafe.blogspot.com/2012/05/sp-500-and-ndx-futures-...
.
[KR288] Keiser Report: Countdown to Armageddon
http://maxkeiser.com/
.

William Black on The JP Morgan Debacle
http://geraldcelentechannel.blogspot.com/2012/05/william-black-on-jp-mor...
.
Gary Null - The Natural Living Show
More info about the Pentagon attack on 911. Guest: Barbara Honegger, a former White House Policy Analyst and Special Assistant to the Assistant to the president for Domestic Policy. She has written about the attack on the Pentagon during 911. First hour of a 2-hour show. More....
Monday May 14 12:02pm and 1:00 pm continued interview / part 2
http://archive.wbai.org/#ankor2

Tue, 05/15/2012 - 13:48 | Link to Comment Carl Spackler
Carl Spackler's picture

I fail to understand why it is such a political issue to separate deposits and mundane banking functions from investment and hedging activities. 

Hear you loud and clear, but every bank's Treasury has to deal with investment and hedging activities every day. It's called asset and liability management, the most fundamental function of depository institution, and it happens every day.

The real issue is not whether to separate investment (and any hedging) activities from the bank, it is how investment and hedging activities should be carried out for the bank.  Every depository takes risks every time it invests excess cash or buys liquid assets to maintain a pool of future liquidity.

JPMC made a conscious decision to make CIO into a risk-taking profit center (i.e., the how), for the purpose of either taking other market positions, whether fully or slightly offset by their organic credit and market risk positions created by the bank's other business activities.  As it turns out, they were not offsetting other organic risks but taking very large and leveraged positions which now trade against them. Result...big losses. 

Once the machine was turned on to do what it was set up to do, they started on the path to future trading losses.  Fitch nailed it...insufficient risk management framework, insufficient appetite for risk, and poor execution and monitoring of risk management (while believing they were infalliblewhen it came to managing risk).

One may presume that as the CIO group made profit for the bank during past years, risk management oversight loosened, and the CIO gained more autonomy, thereby allowing them to build even bigger or more complex positions, due to their past successes.

 

Tue, 05/15/2012 - 13:02 | Link to Comment W10321303
W10321303's picture

Bankers and Wall Street - Psycho Parasites!

PMorgan Chase, the nation’s largest bank, is under fire after losing at least $2 billion in derivatives trading it was warned carried high risk. The loss has renewed calls for tougher regulation of Wall Street, with critics saying JPMorgan could have avoided it under regulations the bank opposed. We’re joined by former financial regulator, white-collar criminologist, and University of Missouri-Kansas City Professor William Black, author of "The Best Way to Rob a Bank is to Own One." Black says JPMorgan’s latest woes stem from the flaws endemic to "too big too fail." "Allowing [banks] to be this big, even conservative economists call this crony capitalism," Black says. "The only way this can work is to shrink the systemically dangerous institutions — this is the 20 largest banks in the United States — down to the point that they no longer pose a systemic risk, they are no longer too big to fail, and therefore, they will no longer have this implicit federal subsidy that completely distorts competition [and] ... destroys democracy, because these giant institutions have so much political power."http://www.democracynow.org/2012/5/15/crony_capitalism_after_lobbying_ag...

Tue, 05/15/2012 - 12:50 | Link to Comment Carl Spackler
Carl Spackler's picture

Yes, Christopher Whalen, was duped this time. He fell into the trap of actually "paying attention to the man behind the curtain."

And, Dimon's kimono was not fully opened this past weekend...just enough effort to try to get people to say ho hum and go away.

While the number released to the public by Dimon does not appear to be material or of grave consequence, on the surface and relative to other, current JPMC net income, the firings imply a much bigger problem behind the scenes and, especially, since these same people are presumed to have made more for the bank over the past many years than they lost on this one strategy.  If it is immaterial, why fire the firm's money makers???   

(Uh...because the problem is bigger and your need for them as your scapegoat is now much more valuable than their future earnings power is for you....damn the torpedoes...so get this behind us now and figure out later how to make the 50% of net we will lose by axing them)

First...IF a substantial portion of the book was not liquidated prior to Dimon's public statement (probably was not when considering JPMC was thet market in this particular CDS contracct), then the IG9 divergence on Monday is an even harsher blowtorching (to use Tyler's description) with much bigger losses to be recognized.

Second... with the CIO leadersjip tossed, and regulatory spotlights now firmly on the London whale, where do half of the future earnings come from at JPMC?

 

Tue, 05/15/2012 - 12:24 | Link to Comment Joebloinvestor
Joebloinvestor's picture

The calls for more regulation are a FUCKING JOKE.

The regulators were sitting right there with MFG and what fucking good did that do?

JPM lost no customer money and sure as shit didn't steal it.

If Dimon hadn't said a thing, the SEC wouldn't know a thing.

Not a lover of big banks either, but I see this as deflection for MFG, not a reason for more regulation.

Tue, 05/15/2012 - 13:10 | Link to Comment SWCroaker
SWCroaker's picture

With respect, regulation by Government Agency is a joke, regulation via allowed collapse and failure works just fine, but is no longer a concern for the privileged.

What JPM "claims" happened is obviously a load of steaming.  If insiders suspect the actual loss is in the triple digit billions and that proves true, then paying attention to any claims by JPM is trust misplaced.

The SEC is apparently still on watch against the sins of the 80s; they wouldn't recognize a CDS or HFT scam in action if *they* were the victims, and almost *all* CDS trading ultimately involves one shyster sticking it to another dupe with acces to money that often isn't rightly theirs to risk.

The bottom line is that big banks betting Trillions in CDS activity is *not* a victimless fun-boys-just-making-some-honest-money activity.  When faces turn red and losses come due, there is way too often some government/banking mother entity stepping forward to paper over the train-wreck with freshly minted fiat, which ultimately sticks it to every saver and taxpayer.  Contract laws have been twisted to keep wrecks from occurring (see the Greek non-default default).  When the game rules get re-written mid turn to benefit some influential players, then we all lose.

 

You're welcome to shut down the regulators, as long as you also ban bailouts and allow idiocy its proper due...

Tue, 05/15/2012 - 12:20 | Link to Comment NorthenSoul
NorthenSoul's picture

That $14 trillion in exposure exists because the financial world cannot earn sufficient returns on all of those little green pieces of paper printed by the Fed by investing solely in the real economy.  That is why the real takeaway from the JPM disclosures is not that it was an aberration, but that this is the core business of Wall Street today.

 

No shit? Well, here's some news for ya Chris: Wall Street business model will have to drastically change...or else! Believe it or not, Wall Street is NOT indispensable to any society's Way of Life. There are quite a few other ways to allocate capital in a rational fashion. Your problem is that you just can't see it, since banking's the only shit you know.

Tue, 05/15/2012 - 12:26 | Link to Comment sgt_doom
sgt_doom's picture

Excellent points.

Volcker?  Isn't he just another Rockefeller stooge?

Speaking of Rockefeller stooges, there was a stooge from Rockefeller stooge Peter G. Peteerson's Peterson Institute on that corporate propaganda NPR show, the Diane Should Be Rehmed show, claiming that World War II was the reason for an improved American economy.

This Swede/Kraut, Kirkegardy, went unquestioned on his supposition that it was international killing which aided the economy?

Hmmmm...I believe it was the dramatic infusion of federal stimulus --- using WWII as the stated impetus, which did the trick.

Note the use of the phrase, "dramatic infusion of federal stimulus."

Stranger nobody would have called out the Rockefeller stooge Peter G. Peterson's Peterson Institute stooge?

Tue, 05/15/2012 - 12:03 | Link to Comment LMAOLORI
LMAOLORI's picture

Why Can't Obama Bring Wall Street to Justice?

http://www.thedailybeast.com/newsweek/2012/05/06/why-can-t-obama-bring-wall-street-to-justice.html

JPMorgan Employees Join Goldman Sachs Among Top Obama Donors http://www.bloomberg.com/news/2012-03-20/jpmorgan-employees-join-goldman-sachs-among-top-obama-donors.html

Tue, 05/15/2012 - 12:29 | Link to Comment sgt_doom
sgt_doom's picture

Because there's still plenty of Ameritards who criminally refuse to acknowledge that Obama, just as Clinton, has a 100% neocon administration (i.e., 100% neocon administrations at least from Reagan-Bush-Clinton-Bush-Obama:  the Neocon Continuum).

Time for real change:

IS THERE A DOCTOR IN THE HOUSE? ? ? ?

Vote Dr. Jill Stein for 2012.

Tue, 05/15/2012 - 11:50 | Link to Comment myshadow
myshadow's picture

'the hit resembles a rounding error, not a stomach punch.'

 

This crack statement puts you in the same boat as those  armenian twin sharks on 'Fast Money'.

It isn't 'JUST' 2 billion...it could be 5 and counting....This thing is potentially very messy, a lot messier that we are exposed to at the moment, that is why dimon has jumped so hard to get in front of it.

Tue, 05/15/2012 - 11:02 | Link to Comment Widowmaker
Widowmaker's picture

Regulation - no.

Truth - yes.

Whalen loves his fraud and eggs.  Nothing destroys credibility like trying to justify bad behavior by pointing to worse.

JPM rot in hell, Whalen get a fucking clue.

Tue, 05/15/2012 - 10:51 | Link to Comment citta vritti
citta vritti's picture

So, traditional banking has been made unprofitable by the hand that feeds the banks. (Or is it just that whenver there are profits in an industry competition enters and profits disappear?) Time for paradigm change then - make traditional banking a non-profit business serving the needs of depositors and traditional commerical and real estate borrowers. Managers will be well but not obscenely rewarded. Cut the derivatives and other bank investing profit centers loose to be the hedge funds they really are, operating with leverage more openly obtained from the non-profit traditional banks or whatever other sources they can find, and let their losses be privatized, no longer socialized. Dollars to doughnuts accountability will increase and leverage will decrease.  

Tue, 05/15/2012 - 10:47 | Link to Comment WTF2
WTF2's picture

Break up the banks.  Better for shareholders the economy and the world.  About 100 people in the entire planet benefit from TBTF.  Jamie is on the wrong side of history.  Let him run a hedge fund if he can?

Tue, 05/15/2012 - 11:42 | Link to Comment Zero Govt
Zero Govt's picture

the Banks broke themselves in 2008

it was Govt that bailed them out because the WS Primary Dealers issued the DC spending junkies debt

if you want to return banking to good health you have to break up the primary dealer of all rot in society, Govt itself

Tue, 05/15/2012 - 10:44 | Link to Comment Benign
Benign's picture

Seek professional help, RC.  You're all wrapped up in knots.  They're getting to you.

 

cheers,

benign

Tue, 05/15/2012 - 12:02 | Link to Comment sgt_doom
sgt_doom's picture

Mr. Whalen, although most erudite in financial history (one of the few who early on understood that securitization took place in the 1920s, leading up to the Great Crash, as well as today) can be quite confusing, although I appreciate his quoting Nocera and Krugman together -- nice touch.

But as Whalen once mentioned, the only reason Goldman Sachs and JPMorgan still exists, is due to the bailout funds going to AIG.

'Nuff said.....

Tue, 05/15/2012 - 18:01 | Link to Comment Rainman
Rainman's picture

A former AIG director sits on the risk management committee of JPM, despite an outside appeal for her removal....a coincidence ?

 http://www.reuters.com/article/2012/05/15/us-jpmorgan-warning-idUSBRE84E1G120120515

Tue, 05/15/2012 - 17:08 | Link to Comment blunderdog
blunderdog's picture

It's kinda sad to see a guy like Whalen getting nothing but shit from the gallery around here.  Folks don't know anything about what he really thinks.

Gotta pay attention to him, though.  He's a strong analyst.

The fact that he probably wants to break up the big banks isn't really relevant to understanding what he's saying.  Some folks just see enemies EVERYWHERE.  I'm really hoping the hate-drones don't get his commentary dropped from this site.

Tue, 05/15/2012 - 10:45 | Link to Comment Bluntly Put
Bluntly Put's picture

"The fact is that the vast expansion of the US money supply over the past three decades makes such financial alchemy necessary for the TBTF banks to generate even nominal profits."

See, this is so simple that even I understand it. Just like we seemingly grew during the housing bubble which was driven by cheap credit provided by the Keynesian keepers of the monetary insane asylum. We are a consumer eCONomy, not only have we consumed what took us 200 years to accumulate we have also consumed what we would have accumulated for 100's of years from now.

The piper will be paid, when you have no money to pay the payment is destitution and poverty. Unfortunately the current group of sociopaths in power will most likely not be held to account, while the bulk of us will pay their price in abject poverty.

Tue, 05/15/2012 - 10:36 | Link to Comment barroter
barroter's picture

Apologetics favoring the financial industry...I'm NOT persuaded.

Tue, 05/15/2012 - 11:08 | Link to Comment GCT
GCT's picture

Some of you still do not get it.  The Dems and Repubs are already bought out, and are one and the same.  Once you realise this you will be better off.

The politicians love to see thir free pundits bickering all the time. 

Tue, 05/15/2012 - 10:20 | Link to Comment myshadow
myshadow's picture

The Repubs will make it an excuse for the further takeover of Congress by the banking industry.

Tue, 05/15/2012 - 10:08 | Link to Comment Snakeeyes
Snakeeyes's picture

I agree with Chris. My concern is that Obama and Dems will use this as an excuse for a greater takeover of the banking industry.

http://confoundedinterest.wordpress.com/2012/05/13/regulation-jpmorgan-chase-and-the-parable-of-the-titanic-and-eastland/

Tue, 05/15/2012 - 10:17 | Link to Comment TrulyStupid
TrulyStupid's picture

The Repubs will make it an excuse for the further takeover of Congress by the banking industry.

How about the sheeple taking over control  of both.

Tue, 05/15/2012 - 10:59 | Link to Comment Seer
Seer's picture

+1000

Tue, 05/15/2012 - 09:58 | Link to Comment Rasna
Rasna's picture

Chris,

First, go  and read Jim Rickards, op ed piece on the Morg, http://www.usnews.com/opinion/blogs/economic-intelligence/2012/05/14/why....

Second, "Unfortunately what JP Morgan was doing is precisely how the bank makes more than half of its annual profit.  The creation, trading and arbitrage of risk exposures is a big business for JPM and one that the bank has done well – albeit from the position of market monopoly in OTC derivatives."  WTF???!!!

This is how we find ourselves at the bottom of this shit hole that we call "The Financial System"

Banks are a "public utility" at the end of the day... They should lend money, not all of the crap that's going on now.  The Fed is the dealer and the banking system is the crack whore.

Tue, 05/15/2012 - 10:23 | Link to Comment silver4me
silver4me's picture

I like the link in the above comment. JPM does nothing good for the world. What it does is steal from pensions, so they can buy fancy cars and houses with their bonuses

Tue, 05/15/2012 - 11:38 | Link to Comment Zero Govt
Zero Govt's picture

JP Morgan and Goldman Sucks are financial wrecking crews... just look at the disasters (wreckage) behind them in US housing and the derivatives that blew up the financial system in 2008

and they're doing it in farming and commodities, Govt debt, anything that can be hypothacated into a large sucking mechanism 

Tue, 05/15/2012 - 09:48 | Link to Comment Downtoolong
Downtoolong's picture

I tend to agree with the philosophy of this post. The other dimension to emphasize is that of size. The scale of these TBTF banks is what gives them advantage to manipulate markets in their favor. Paradoxically, it’s also the reason they fail big when their positions become too big to be managed in the markets they are manipulating. As they grow bigger and faster than the scale of the markets they trade in this eventually defeats their entire business model. They inevitably end up positioning and trading themselves to death.

Tue, 05/15/2012 - 11:05 | Link to Comment Seer
Seer's picture

That's why I keep trying to get across this very simple equation:

BIG = FAIL!

At some point people have to start to get it that capitalism ends up helping to crush itself by capital concentration.  This point plus the premise of perpetual growth on a finite planet, are the two things that tell me that the notion that "true capitalism will save us" is but wishful thinking: no, I have no desire for any of the popular alternatives, nor am I pushing anything else; I'm just being a realist.

Tue, 05/15/2012 - 10:14 | Link to Comment lynnybee
lynnybee's picture

what's all the fuss ?     what's all the fuss, you ask ?    i'll tell you what all the fuss is about.    we're going into a currency & financial system extinction event someday & the good people of this country, the real people who saved a lifetime in u.s. dollars are going to be wiped out !   that's what all the god damn fuss is about.     & we can thank the u.s. government & wall st. & fractional reserve banking system & JPMORGAN & the other banks who earn interest on money created out of thin air for this event.   that's what all the god damn fuss is about .     don't ask me again ; i'm so god damn mad i could spit & am stacking as best i can no matter what the god damn manipulated price of silver & gold is ....... & i'm just a god damn housewife who shouldn't even really know all this stuff .     god help us when the general public finds out what i know.    

Tue, 05/15/2012 - 13:49 | Link to Comment RichardP
RichardP's picture

we're going into a currency & financial system extinction event someday ...

Unless you can substitute a fixed time period for your word someday, your rant is irrelevant.  All things are going to happen ... someday.  So what.  We can't be afraid to live our lives now just because all things will happen someday.  We still have to live today, tomorrow and next week.  We will morph, in increments.  Not start over.  One foot in front of the other.

Tue, 05/15/2012 - 12:11 | Link to Comment WillyGroper
WillyGroper's picture

I'm mad too Edie!

Tue, 05/15/2012 - 09:37 | Link to Comment WTF2
WTF2's picture

Firings indicate more to come Whalen.  Give me a break!

 

Tue, 05/15/2012 - 11:26 | Link to Comment Zero Govt
Zero Govt's picture

Whalen is a wet blanket for the gambling junkies like Dimon who enrich themselves by fabricating paper games that are completely worthless but as Whelan admits, is based on use of their branch depositors money

.and now we all know banks may come in and take prescedent over depositors at banks that go down playing these gambling junkie games

Maybe Whelan will wise up when his savings are stolen by worthless junkies like Dimon

Tue, 05/15/2012 - 09:20 | Link to Comment disabledvet
disabledvet's picture

Again...it ISN'T a big deal if you're the Federal Government. Ask Jamie Dimon why it's a big deal if you think it's not! He's the one changing his story. The JOURNALIST side of "the media" is just doing their job: "writing it down in a notebook" as it were. The PRESIDENT on the other hand "has a job to do." as is stated very well here "if there is a problem with the CHASE Bank" then "many other banks have problems as well" since "Morgan is the GOLD STANDARD" so to speak.

Tue, 05/15/2012 - 09:00 | Link to Comment LawsofPhysics
LawsofPhysics's picture

JPM, an owner of the Federal Reserve has a long history and  knows full well what is coming. This is all part of the repositioning that will occur before the next war and "revaluation".  I am not suprised that they are going to be the first to "recognize" some of their real losses.  JPM has only one mantra - "Gold is money, everything else is credit."  If the Euro debacle accelerates we could only be a few years away from the revaluation of PMs.  The pendulum is indeed swinging once again.  Same as it ever was, hedge accordingly (ironic I know).

Tue, 05/15/2012 - 09:23 | Link to Comment disabledvet
disabledvet's picture

Is it Morgan Chase or Chase Morgan?

Tue, 05/15/2012 - 12:19 | Link to Comment falak pema
falak pema's picture

its Morgan chased from organ. And that is unpardonable for her  as Morgan can't live without organ, as she loves to organ grind, intense market gyrations so concocted in thin slices of minced devices that it is hashed and mashed to its very derivative, butchered offals. When you turn potent, fecund mind into pork rind you are in a bind; how to find "in" from "out" when faced with a circular roundabout; maze of perpetual amazement as the rind grows faster than the mind to find uncontrollable, hallucinogen inspired solutions so unkind, that they blow your porn-organed mind to huge proportions. Wait for the organ to bubble into orgiastic pop; huge mega world wide flop. Then you can ask Morgan to make you breakfast of ham and eggs like good ole mom did!

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