Amusing: DealBreaker Says Whale Trade No Big Deal

clokey's picture




 

 I used to like DealBreaker, I really did. Alas that was in my younger years before I made a (very) small name for myself and before I took the red pill offered to me by Tyler Durden. Now I realize that sarcastically apologizing for the nefarious character of the financial world is pretty much the same as just plain-old apologizing for it... except funnier. Case in point, here is an excerpt from an article published on DealBreaker a few days ago entitled "Regulators Close Aquarium Door Behind Escaped Whale":

For one trader, losing six billion dollars, give or take, really is in the far left tail of Worst Things You Can Do, and so the whale himself was fired in infamy, though an infamy mixed with a certain envy. For his direct manager and that manager’s manager, it is probably even worse, since failing to prevent your direct report’s $6 billion loss lacks the “wow-that-takes-balls” element of actually going out there and losing six billion dollars like a whale. So they were fired too. For the bank … meh. For the Second Bank of North-Central Indiana, I’m sure losing six billion dollars would be the sort of existential disaster that would require firing the CEO, tearing down the building, and salting the earth on which it stood, but there’s a reason this didn’t happen at the Second Bank of North-Central Indiana. It happened at JPMorgan. For which it wasn’t all that much of a disaster... What about for JPMorgan’s regulators? I go with, like, our financial system is still here, not really any the worse for wear...
Remember the whale’s problem was like one part bad directional bet, three parts everyone finding out about it and picking him off.

I see. So if you're the biggest financial institution in the country you are free to turn your $423 billion deposit-to-loan gap into a giant, off-shore, tax payer-sponsored hedge fund, because in the end, you've got the money (not to mention the political connections) to cover it. I'm not sure if depositors would agree, but thanks to people like DealBreaker's Matt Levine, they will never know the difference because they read shit like the above-cited passages which are written in a kind of "I'm being sarcastic about it so I must be on your side" type of way, and think, "Oh, the 'alternative' financial press is saying its no big deal, so I guess everything's ok." It's not. JPMorgan took your deposits and placed derivative bets so large that they displaced the market for one of the most liquid CDS indices on the planet -- that is no small feat. For more info on this, feel free to review my articles on the subject, links to which can be found in the sidebar of my blog under the not-so-inconspicuous title "JP Morgan and The London Whale."

Of course Matt Levine is right, "our financial system is still here, not really any worse for wear." Then again, one could say the same thing about the financial crisis right? I mean, the S&P 500 is back to 2007 levels so we are all "no worse for wear" after 2008. If you believe that, I've got some Canadian third-party asset-backed commercial paper I'd like to sell you (that's an obscure reference, but readers should Google it). 
In the end, if Levine's "Second-Bank Of North Central Indiana" agrees not to make $150 billion notional in curve trades on an off-the-run CDS index with my deposits, I'll be glad to store my money in their vault instead of JPMorgan's any day. 

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Sun, 01/20/2013 - 16:30 | 3171069 azzhatter
azzhatter's picture

Dimon is the golden boy. All the little male writers on Wall Street like Levine, Sorkin et al wanna suck his cock. All the little females want his cock between their legs. Pretty much a big Jamie sock puppet festival

Sun, 01/20/2013 - 16:03 | 3171023 GMadScientist
GMadScientist's picture

Worst ad placement ever.

You missed the point of comparing the TBTF and the LETF and how having more of the latter would lead to less of the former, dillhole.

Sun, 01/20/2013 - 15:47 | 3170982 blindman
blindman's picture

9/11: Follow the Money find the criminals
http://www.youtube.com/watch?v=X1t5anm6Uyo
.
Chop! Chop! ....
http://maxkeiser.com/2013/01/20/chop-chop/
.

Sun, 01/20/2013 - 15:10 | 3170880 Catullus
Catullus's picture

The source of the funds is seperate and distinct from how and why you lost it.  In the end, it was a hit to bank capital, which was a hit to JPM shareholders, not deposit-holders. 

Yes, gambling with other people's money is bad regardless if you win or lose.  But when you gamble with 400 some odd billion, losing 6 of it is in fact not a big deal.

Sun, 01/20/2013 - 17:20 | 3171143 ebworthen
ebworthen's picture

I'm going to Vegas, do you have $100,000 to lend me so I can play craps, poker, and spin the roulette wheel? 

It will also come in handy for whores, caviar, and Bollinger.

I'll only lose $10K or so, which I'll get back from the FED who will add to the debt, thus increasing your taxes and the generational obligations of any of your progeny.

Sooner or later because of this, your $100,000K will be worth $5.00.

So, if you see nothing wrong with this, please send me my $100,000.

Thanks!

Sun, 01/20/2013 - 17:15 | 3170837 ebworthen
ebworthen's picture

The true cost is the tearing down of the foundation and the salting of the earth - of the soul of the society.

Ultimately, the cost will be a lot of dead people.  Society is now desperate to blame shootings on inanimate objects; and society will be just as eager to blame riots and war on various actors or words or small deeds.

The truth is that immoral and unethical behavior remove the reasons for being civilized.

The lying, cheating, and skullduggery in the heart of Wall Street and Washington are a corrosive acid; eroding the spirits of industry, thrift, honesty, charity, and goodwill.

 

Sun, 01/20/2013 - 14:24 | 3170725 q99x2
q99x2's picture

Today is January 20th the day to prayer for the United States of America to be returned from bankster occupation to rule by the U.S. Constitution.

(I think it means something like and God heard the prayers of his children and came down and he smote them)

May this be a good day for a little smoting.

Sun, 01/20/2013 - 14:34 | 3170769 FinalCollapse
FinalCollapse's picture

He was elected by the people for the people. America, fuck yeah! JPM  rulez!

Sun, 01/20/2013 - 14:10 | 3170700 NoDebt
NoDebt's picture

Break 'em up.  Where's Gordon Gekko when you need him?

Sun, 01/20/2013 - 14:07 | 3170694 FinalCollapse
FinalCollapse's picture

Moar deposits, bitchez!!!!

Sun, 01/20/2013 - 13:59 | 3170678 Never One Roach
Never One Roach's picture

"There's never only one roach."

Sun, 01/20/2013 - 13:38 | 3170643 ToNYC
ToNYC's picture

Too Big To be True.

Trying to prove Martingale when you have a printing press FED at your back playing stability Joker cards is not rocket science, it's schoolyard bully behavior ... but then there is PM forward contracts that never deliver, etc. Too Big To be True.

Representation of systemic damage is ipso facto proof that orderly and scheduled breakup is the missing plan that also proves the crime in progress. This is the "proprement fait" of Balzac's observation we currently endure.

 

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