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Did JPM's CIO Intentionally Start The Margin Call Avalanche That Crushed Lehman?

Tyler Durden's picture


It is conventional wisdom that in the days leading to Lehman's bankruptcy filing on the night of September 15, 2008, sheer panic and utter confusion ruled ever back- and middle-office, over concerns that a counterparty, any counterparty, but especially Lehman, would end up being "not money good", and the result was that trigger-happy margin clerks had the potential to make or break a company, by demanding just enough variation margin that would send the notice recipient promptly into bankruptcy. It is also conventional wisdom, that it was precisely several such margin calls mostly out of JPMorgan that precipitated the Chapter 7 filing by Lehman brothers, as the firm was finally unable to mask the fact that it was terminally overlevered, and even more terminally illiquid. It is certainly conventional wisdom, that Lehman was certainly massively overlevered, holding billions of overmarked CMBS on its balance sheet, and was doing everything in its power to hold on to precious liquidity, taking every opportunity to window dress its balance sheet as far better than it truly was (Repo 105 at the end of every quarter promptly comes to mind), over fears of avoiding precisely such a margin call onslaught, where the first margin call would cascade into many, likely lethal, margin calls.

Which is why, over four years after the filing of Lehman's bankruptcy and the fight for who was responsible for what in the Lehman Chapter 7 saga still waging, most actively between the Lehman creditor estate and tri-party repo stalwart JP Morgan, we were not surprised to learn that the Lehman estate had attempted to force yet another sworn testimony from a (former) employee of JP Morgan, in hopes of catching the firm as engaging in a malicious act of defrauding Lehman of precious liquidity in its final hours, or said in layman's terms, forcing it to liquidate.

What did catch our attention was that Lehman named the infamous JPM Chief Investment Office, and specifically its very infamous trader Bruno Iksil, accountable along with others for the London Whale fiasco, as the person responsible for an initial margin call to the tune of $273.3 million, made the same day "that JPMorgan made its first of two demands that week each for $5 billion of extra cash collateral that it had no right to obtain and that drained Lehman of $8.6 billion" (as per the Lehman filing). One could make the argument that this initial margin call was the straw that broke the camel's back, as in the avalanche of money requests, every dollar flowing out of Lehman may have been the one that pushed it under.

If, of course, the Lehman estate claim was credible.

At this point, virtually everyone in the media said "no way" and moved on: this has to be just another desperate attempt by the Lehman unsecureds to force a settlement from JPM, and a few more cent recovery on the bonds. After all, how on earth can someone hold now former JPM employee Bruno Iksil accountable for what he did nearly 5 years ago (however still within the statute of limitations). We, too, almost ignored the story as just too incredible to be true.


And then we decided to do some digging.

What we found was stunning, and frankly shocking, because it appears that the Lehman estate was absolutely correct.

In other words, a chronological forensic analysis of the events surrounding the margin call in question confirm, beyond a shadow of a doubt that the margin call issued by JP Morgan's CIO unit was absolutely unwarranted.

But it gets worse - because the mistake that led to the issuance of what may have been the defining margin call that was the beginning of the end of Lehman, was so ridiculously naive, and idiotic, that we have a hard time believing it was made in good faith, even if it JPMorgan tries to put the blame on some 19 year old NYU intern as being responsible. In fact, we have an easier time believing that the margin call was purposeful, malicious and made with full intent to destroy Lehman, which in turn would mean that, despite the repeated mockery of even the sophisticated media, Lehman may well have been the mark of a JPM-spearheaded campaign to force the bank to shutter as margin call after margin call led it to lose all liquidity.

So what exactly happened? Here are the events as seen by the Lehman side:

On September 9, 2008, the same day that JPMorgan made its initial demand for $5 billion of additional collateral and extracted new one-sided legal agreements from Lehman, JPMorgan also insisted that Lehman post $273.3 million before close of business as derivatives variation margin. The $273.3 million derivative margin demand was primarily attributable to three disputed trades which Mr. Iksil managed or discussed with Lehman. Lehman was certain that JPMorgan's marks were erroneous and that in fact Lehman owed no additional margin. All three CDS referenced a well known and liquid index for which readily-available third party valuations corroborated Lehman’s marks, not JPMorgan’s, which were off by $273.3 million. Nevertheless, Lehman bowed to pressure from JPMorgan executives, including Investment Bank Chief Risk Officer John Hogan, to accept JPMorgan's marks and immediately post the requisite collateral. Accordingly Lehman sent the $273.3 million demanded.  That JPMorgan was able to force Lehman’s compliance is particularly telling considering JPMorgan’s marks were so clearly wrong.


The trades primary responsible for the $273.3 million derivatives margin dispute were 3 CDS index tranche trades booked through JPMorgan’s CIO, two of which were managed by Mr. Iksil. Lehman had repeatedly asked Mr. Iksil to correct the mark on the third large disputed trade throughout August and early September without success. Contemporaneous emails attached here reflect how JPMorgan’s mismarks grew into a multi-month ordeal due to the inaction and unresponsiveness of JPMorgan, and of Mr. Iksil in particular. 


On September 10, 2008, Lehman’s relationship, operations, and trading personnel mobilized to resolve the mismarks of Mr. Iksil’s trades and secure the return of the nearly 300 million dollars in excess collateral they had been pressured to post to JPMorgan the day before.


Late in the morning on September 10, Lehman reached out once again to Mr. Iksil to request that he correct his marks. This time, Mr. Iksil immediately referred Lehman to a JPMorgan colleague who conceded within minutes that Lehman's marks were correct and an error on JPMorgan's side had caused the problem. Less than an hour later JPMorgan agreed in full to Lehman's September 10 collateral call, which included JPMorgan returning the entire $273.3 million Lehman had delivered to JPMorgan the day before.


That JPMorgan would run roughshod over Lehman’s objections and insist on getting collateral immediately based on marks that were so quickly seen to be erroneous provide a window into JPMorgan’s mindset and operating procedures the week prior to LBHI’s bankruptcy: Get cash now, ask questions later. JPMorgan has taken the position in this litigation that JPMorgan was solicitous of Lehman’s welfare and demanded collateral only after carefully calculating the amount required. Yet, JPMorgan failed to correct its marks despite weeks of requests to do so and allowed a valuation dispute to fester for nearly a month. And on September 9, 2008, although even the most minimal diligence would have revealed JPMorgan was in the wrong, JPMorgan demanded that Lehman accept JPMorgan’s marks and post $273.3 million in disputed collateral overnight. That demand came on the very same day that JPMorgan made its first of two demands that week each for $5 billion of extra cash collateral that it had no right to obtain and that drained Lehman of $8.6 billion.

What, specifically, were the CDX trades in question? They were all three different CDX HY8 5 year 0-10 tranche index trades, which Lehman had bought from Bruno Iksil. Here they are, from one of the exhibit emails, also showing the massive MTM diveregence between the JPM and Lehman marks.

Although perhaps the best way to show this is from this table which summarizes the email from Lehman's CDX trader (24 year old) Zahid Hassan who shows the drastic change in MTM between Lehman and JPM on the CDX tranches:

Basically, what any credit trader can figure out happened here after looking at the table above for more than 5 seconds, and looking at the variation in Leh vs JPM marks, is that whereas Lehman was marking its HY8 exposure correctly, and in line with where MarkIt and other pricing databases would have it, what JPM did was take the upfront priced index and price at 1 par minus price! In other words, where Lehman had it priced at 83.05%, what JPM wanted to do was express a price of 1-19.42%, or 81.58; instead the JPM front, middle and back office chain of command made a mistake so rookie it is impossible it was an error, and it appears to have been maliciously intended to force a liquidity event. Because what drove this massive margin call on this very liquid (at the time) index is because JPM had it suddenly repriced in MTM from 83 to 19 when what JPM really wanted was to reprice it from 83 to 81!

In other words, literally overnight, instead of pricing Lehman's paid upfront collateral at Price, JPM decided, for whatever reason, to revalue  it at 1-Price!

The result, had JPM correctly calculated the MTM, would have been a variation margin call of just $6 million: some $257 million less than what JPM demanded from the cash-strapped company!

While we do not know if the $257 million extra in cash that Lehman would have retained on its books would have avoided the subsequent $10 billion in JPM margin calls, or if it would have avoided the firm's bankruptcy as the final outcome, we know we are, and Lehman, are right in alleging that it was JPM's fault in completely screwing up the calculation that led to the massive margin call. Here is the Bloomberg Chat transcript (Lehman Exhibit M) between Lehman (again very, very young CDX trader) Zahid Hassan, and Bruno Iksil first, and then Iksil's supervisor in London, Luis Buraya:

The chat above took place at 11:40 am on Wednesday, September 10: two days before the weekend which was Lehman's last.  What we learn from the transcript is threefold: first Lehman was incorrectly margined to the tune of $263 million. JPMorgan admits as much; second, by the time JPM admitted it was wrong, the margin request had already been satisfied, and margin clerks in other divisions were scrambling to come up with other comparably fictitious variation margin demands, such as those which saw JPM demanding extracting nearly $10 billion in liquidity from Lehman in the next 48 hours which culminated with Lehman's Chapter 7. FInally, the "guy" responsible was not "collateral" but CIO, meaning the division that was supposed to hedge, but did anything but when it blew up after attempting to corner the HY9 market last year, had other less noble uses too: to destroy the competition by commencing an avalanche of unjustified margin calls!

Lehman's filing summarizes it as much in the following:

The $273.3 million collateral dispute is highly relevant to this litigation over JPMorgan’s improper cash collateral demands that same week, which deprived Lehman of desperately needed liquidity and precipitated Lehman’s exigent bankruptcy filing. First, the backdrop to the dispute illustrates that there was a well developed market-standard practice for the calculation and exchange of collateral in support of derivatives transactions, which is specified in the ISDA Master Agreement and Credit Support Annex (“CSA”) executed between the parties and involves daily exchange of collateral based on the current net mark-to-market value of the positions. The daily collateral calls under the CSAs which were made and met throughout the week, and the procedures by which the $273.3 million dispute was ultimately resolved, indicate that during the week of September 8 – 12 JPMorgan adhered to the CSA framework for the collateralization of counterparty derivatives exposure to Lehman. Even the $273.3 demand, an example as unreasonable as they come, was tied to the marks (albeit incorrect) on particular trades and posted and returned via the CSA framework. JPMorgan’s demand for $5 billion on September 9, which JPMorgan claims it made in significant part to collateralize its purported derivatives exposure to Lehman, was entirely outside the ISDA/CSA framework and represented a dramatic departure from commercial practice for collateralization of derivatives exposure. Second, the episode shows that during the week of September 8 – 12 JPMorgan was willing to override standard commercial procedure by insisting that any collateral disputes be immediately resolved in its favor. Third, it illustrates Lehman’s complete vulnerability to JPMorgan’s bullying behavior. Just as with the $8.6 billion, Lehman lacked any choice other than to capitulate to demands it knew were baseless, in light of JPMorgan’s power to deal Lehman a death blow by ceasing to trade or clear. Finally, it shows that JPMorgan’s exposure calculation methods were highly suspect – a point with obvious relevance to this litigation over two demands for collateral in round $5 billion increments, unaccompanied by any calculation or documentation of exposure.

To conclude: a variation margin call, which we now know beyond a reasonable doubt, was erroneous and had no basis in reality, launched by JPM's CIO is what started the cash outflow from Lehman, and was followed by two other comparable $5 billion margin calls, which may well have had the same totally erroneous justification to them. But Lehman had no choice: even then saying no to the uber-behemoth and tri-party repo guardian JPM was tantamount to suicide anyway.

Any by the close of trading on Friday everyone else on Wall Street was doing what JPM did: demanding hundreds of millions and billions in margin from Lehman, at which point seeking the culprit for what 48 short hours later would be the biggest bankruptcy in history, was a moot point.

By then the game was over, and JPM's CIO had won, courtesy of a ruse so pathetic it was either outright idiotic, or conceived with the most despicable of destructive intentions. And then we remember that it is the same uber-sophisticated CIO unit that for years was misreporting its VaR because of a simple excel transposition error which nobody had bothered to check!

So we wonder: should we attribute to malice and Jamie Dimon's bloodthirst what sheer, brutal JPMorganite incompetence can explain far more simply? But then we also wonder: is it also purely a coincidence that JPM's largest gold vault in the world is located inches away from the gold vault of the New York Fed...

And everything is once again crystal clear.


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Sun, 03/03/2013 - 19:51 | 3296201 vmromk
vmromk's picture

Nothing a good noose couldn't fix.

Sun, 03/03/2013 - 19:56 | 3296214 Caged Monkey
Caged Monkey's picture

"Nothing a good noose couldn't fix."

That's what David Carradine said.

Sun, 03/03/2013 - 20:04 | 3296231 GMadScientist
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There's another one just like em waiting to come up.

Sun, 03/03/2013 - 21:47 | 3296480 IridiumRebel
IridiumRebel's picture

Yep, always someone waiting in the wings to assume command....

Sun, 03/03/2013 - 22:29 | 3296611 Dingleberry
Dingleberry's picture

The blogs have been talking about the Lehman hit by JPM for years. This is nothing new and should not be the least bit surprising to the bitchez at ZH. We all knew. 

Just use Cassius's line: "cui bono"?

The answer is blatantly obvious. 

Now the REAL question is.......will any bankster go to jail?

(insert crickets chirping here)

Mon, 03/04/2013 - 09:44 | 3297431 Town Crier
Town Crier's picture

From "No Country For Old Men":

"He's got some hard bark on 'im."

Sun, 03/03/2013 - 19:56 | 3296205 Racer
Racer's picture

Probably had some sort of private Goa'uld feud

But not surprising at all.. the eleeches think they are gods.. look at Trump and the way he treated the people of Scotland about the golf course he wanted to build

Sun, 03/03/2013 - 20:29 | 3296304 swissaustrian
swissaustrian's picture

To me it almost looks like ZH wants to start a feud with JPM. All these JPM articles have been popping up here lately. Keep 'em coming. Maybe some msm presstitute picks something up and we're getting something going...

What about some insight on the CFTC silver investigation, Tylers?

Sun, 03/03/2013 - 21:18 | 3296402 Pinto Currency
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Maybe JPM is at the center of the economic issues facing the world.

Sun, 03/03/2013 - 22:26 | 3296602 SemperFord
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I thought it was and learn.

Sun, 03/03/2013 - 23:36 | 3296783 Pinto Currency
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There's room at the center for more than one entity.  It's a big world out there.

Mon, 03/04/2013 - 04:57 | 3297152 Ghordius
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they have different specialities. JPM's SharkBoy is way bloodthirstier than his peers, and he has our Lady of Pain

the squid is better at political work peddling her financial weapons in the various provinces of the empire

at the end, whoever controls 80% of all dozens trillions derivatives of the world sees where the cookie could crumble - and that's five megabanks

Mon, 03/04/2013 - 08:46 | 3297322 NotApplicable
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Sun, 03/03/2013 - 22:39 | 3296638 dick cheneys ghost
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''I knew it was Barzini all along"

Sun, 03/03/2013 - 23:00 | 3296689 disabledvet
disabledvet's picture

"there are no WMD's in Iraq. But we did find a few on Wall Street...

Mon, 03/04/2013 - 01:05 | 3296950 francis_sawyer
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Evil Episcopalians!

Sun, 03/03/2013 - 23:14 | 3296727 holdbuysell
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To poke at JPM is to poke at the NY Fed is to poke at the Fed is to poke at the US Government.

Gotta start somewhere with the facts and build from there.

Kudos, ZH.

Mon, 03/04/2013 - 07:54 | 3297274 Cloud9.5
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Doesn't JP run the SNAP program? We will sell our aircraft carriers to China before we let old JP go down.

Sun, 03/03/2013 - 20:02 | 3296213 sunaJ
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I always thought that this whole thing was started by a grudge expressed as a business action against Penis Wrinkle, er, Dick Fuld.   He was despised by many in the circle jerk of power that was (and is): apparently his name suited his personality and he would not play by the circle jerks' rules.  Should we be surprised to find that it was a personal move that has started this prolonged demise?

Sun, 03/03/2013 - 20:02 | 3296228 knukles
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And who might we ask was the biggest competitive threat to Goldilocks and the Morgue in the fixed income bidniz?

Why, Lehman Brothers.


Sun, 03/03/2013 - 19:58 | 3296219 GMadScientist
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The problem with the affectation of wealth is that any chink in the armor comes with a deep implication of insolvency.

Lehman caved because of appearances, despite the Morgue being as wrong as Iksil's dumbass trade.

Sun, 03/03/2013 - 20:01 | 3296226 Seize Mars
Seize Mars's picture

Wow. This is incredible. I suppose high leverage exposes you to...vicissitudes...such as being predated upon.

Sun, 03/03/2013 - 20:04 | 3296234 GMadScientist
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It's "Mean Girls" with pinstripes.

Sun, 03/03/2013 - 21:47 | 3296478 orez65
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Lehman bent over.

It was just a matter of time until someone stuck it in.

Our financial system is just one giant fraud being played by criminals.

Mon, 03/04/2013 - 04:25 | 3297136 CompassionateFascist
CompassionateFascist's picture

u can say that again. But it's still +1/-1

Mon, 03/04/2013 - 07:39 | 3297256 What is The Hedge
What is The Hedge's picture

Why do you think they use the phrase, "Exposed to risk?"

Sun, 03/03/2013 - 21:47 | 3296479 orez65
orez65's picture

Lehman bent over.

It was just a matter of time until someone stuck it in.

Our financial system is just one giant fraud being played by criminals.

Sun, 03/03/2013 - 21:49 | 3296489 FreedomGuy
FreedomGuy's picture

My thoughts,as well. It also seems a bit of a conflict of interest when one has to trade with and through a potential predator and competitor.

Mon, 03/04/2013 - 05:23 | 3297164 bigyimmy007
bigyimmy007's picture

Yeah from the chatlog it almost looks civil.

"Oh can you correct your error please?"

"Sure, I'll get right on that."

Then 2 days later "...Not! GOTCHA BITCH!"

Sun, 03/03/2013 - 20:02 | 3296227 Pine Creek
Pine Creek's picture

It would not be the first time. JPM (and DB) issued egregious margin calls on a certain PE sponsored public fund during Feb and Mar 2008.




Sun, 03/03/2013 - 20:04 | 3296233 Dewey Cheatum Howe
Dewey Cheatum Howe's picture

The only question is there any criminality here that the SEC and DOJ can't ignore so when they do they can be shown up yet again as being nothing more than mob enforcers disguised as regulators and law officials?

Sun, 03/03/2013 - 20:07 | 3296239 IridiumRebel
IridiumRebel's picture

He'd fuck a cat to make a buck.

Sun, 03/03/2013 - 20:14 | 3296256 eatthebanksters
eatthebanksters's picture

He did...

Sun, 03/03/2013 - 20:11 | 3296242 VonManstein
VonManstein's picture

its a plan bitchezzz --- >> implode economy, bankrupt everything and buy it cheap.. that includes government. Finance and build up China, de industrialise US and increase value of Chinese investment --- >> pump USD and Stock Markets to remove every last bit of "value" prior to full implosion. Then wheel zee gold out and back a new currency with it.. Purchase the whole word and transfer asset holdings from zee gold to global property and infrastructure and the means of production.

Get all the slaves wearing ID cards and paying taxes.

Global Domination by design! Could it happen any other way?

Great reporting by ZH

Oh and could it be the remains of Lehman and all the others JPM has screwed over that are ingaged in taking Silver up and out?


Sun, 03/03/2013 - 20:23 | 3296287 Acet
Acet's picture

It certainly explains why the Morgue reactivated in 2011 the PM vault that's connected to the NY Fed's vault and also (earlier) got a nice little PM vault in London connected via the Waterloo and City tube line to the BoE vault.

It's becoming very clear that the endgame is to gain posssession of all those tons of barbarous relic that the sucker governments entrusted to the care of the British and the American central banks. Quite possibly when it all comes to light that the Gold ain't there anymore, revolutions will be triggered in many of those countries - just more opportunities for rape by the likes of the Morgue.

Sun, 03/03/2013 - 21:30 | 3296442 GOSPLAN HERO
GOSPLAN HERO's picture

... disarm the peasants.

Sun, 03/03/2013 - 21:58 | 3296520 Tursas
Tursas's picture

We have pitchforks!

Sun, 03/03/2013 - 20:09 | 3296244 ekm
ekm's picture

I love zerohedge, I love it.

Most of my conjectures based on hours and hours of research are being proven by ZH.

As I've been saying, Lehman was let go in order to crap the market, since with Bear Stearns market did not crap. Lehman was the sacrificial lamb.


Now we are exactly like in 2008. Primary Dealers own everything and there's nothing left to trade. Somebody has to die thus unloading the stocks into the market, thus crapping the market.


And this time I think 2 or 3 non US based primary dealers will be voted out, LITERALLY.

I think it's the turn of Deutsche Securities an RBS Securities to crap out. That's why I say, QE is over, nothing left to buy. Time for few funerals.


Again, thank you Zerohedge, thx a lot.

Sun, 03/03/2013 - 20:14 | 3296250 VonManstein
VonManstein's picture


apart from the no more QE part.. i think that comes after they inflated their pockets a bit more and backed wth Gold, then they will allow major deflation and asset "value" destruction.. they will then buy everything. Straight forward really.

Sun, 03/03/2013 - 20:22 | 3296270 ekm
ekm's picture


Money is printed by buying something. Gov + Fed  +Primary dealers own everything, bought everything.

HFT companies are dying due to lack of stocks to steal from. Brokerages and hedge funds are closing down due to lack of securities to trade.


Even Seth Klarman complained that the Gov has left little for him to buy and sell.

It's over. The beauty of open ended QE is that it can stop at any time. QE is over, it's done.

Sun, 03/03/2013 - 20:34 | 3296308 VonManstein
VonManstein's picture

Indeed, "open ended" does not suggest a date of completion. However, it has a while to run yet before they pull the plug. Its about financing Gov nothing else.

Can you just help me understand your point a little better please. I agree with the premis that "open ended" can stop at any time but im not sure what you are exactly saying...

Sun, 03/03/2013 - 21:09 | 3296341 ekm
ekm's picture



I've been saying for a long time already that QE has got nothing to do with gov funding, but it aims at providing primary dealers with cash to pay for continuing losses for SWAPS.


No different compared to run up to 2008. The Fed did QE up to 2008 also. Have you noticed it's only SMALL primary dealers who go down, Bear Sterns, Lehman, MFG. The goal is to protect JPM, GS and probably C, but JPM and GS are UNTOUCHABLE, JPM more that GS I'd say.

That's why somebody as clueless as Dimon is running that place. The man is totally clueless, professional wise. He doesn't even understand derivatives as Janet Tavakoli discovered. He's a puppet.


However, it gets to a point, same as in 2008, the EXCESSIVE CASH in the market bought up all stocks and commodities, hence the economy contracted and there was nothing left over for wall street to trade with.

Hence, somewhere there was a WEAKEST LINK VOTE OUT, literally. BS was voted out, then Lehman, then MFG later. MFG is like Bear Stearns, didn't do much to crap the market.

A tripple Lehman is in the works, I'd say.

Sun, 03/03/2013 - 21:12 | 3296391 VonManstein
VonManstein's picture

Interesting points nicely made. I will continue to listen.

  Though still, suggesting QE has nothing to do with financing Gov seems a little stretched to me. It has to be the primary reason because without it the US government would go bankrupt overnight, and all the Banks would follow as the debt would consume all.

I think there are obvious benefactors of QE and JPM GS and all the rest of it and i agree they will blow some finance house or something for reasons you state but...

I am scratching my head now

Sun, 03/03/2013 - 21:34 | 3296407 ekm
ekm's picture



The US gov does NOT need $85b/month buying MBSs worth few cents/dollar.


Primary Dealers are the ones needing that money.

They need at least 85b/month to do CDS payouts. Remember AIG?


And there is only one indication and only one: CRUDE OIL PRICE.

Sun, 03/03/2013 - 21:36 | 3296455 VonManstein
VonManstein's picture

Agreed MBS is for that purpose only.

Elaborate re crude oil

Sun, 03/03/2013 - 21:46 | 3296467 ekm
ekm's picture

Check this:


Crude oil is the energy for the real economy. I do not check stock market futures or exchange rates, I only check crude oil price, as I'm doing right now.

Economy is in severe contraction due to crude oil shortage from the real economy. Same as in the run up of 2008, storages onshore and offshore are exploding.

And again, same as in 2008, a lot of money printed went to crude oil, hence real economy is in contraction, forget about BLS data.


They are obligated to stop QE due to artificial shortage of energy. That is the absolute most important indicator to gauge QE continuity.

Sun, 03/03/2013 - 21:49 | 3296493 VonManstein
VonManstein's picture

not understanding this "crude oil shortage from real economy" doesn’t the storage of crude suggest less demand and thus lower prices?

or are you saying that as the Crude is not being used due to weak economic activity its being speculated with, bid up, rather than consumed?

We have over supply.  Agreed.

we have higher prices. We can see that.

What is the dynamic here?

Sun, 03/03/2013 - 22:02 | 3296518 ekm
ekm's picture

Typical, typical, typical mistake due to media and those idiotic teaching from Keynes, a man who lost his money trading stocks and had to be bailed out by his uncle.




People will consume as much oil as given to them. The issue is not lack of demand. The issue is lack of supply oF crude oil into the CONSUMPTION market.


There's nothing more IDIOTIC than Keyne's AGGREGATE DEMAND.


They say there's no aggregate demand. I say bullshit. There truth is that there is no aggregate supply. If Daimler overproduces Mercedeses and sells them at $100/month wouldn't everybody buy one?


Have you noticed laptops and PC prices? There's an oversupply.


Sun, 03/03/2013 - 22:04 | 3296540 VonManstein
VonManstein's picture

No i get you, kind of. Im almost understanding. Obviosuly no demand would be stupid, price is the problem. Agreed.

Ok, but what is the dynamic that is elevating oil prices in this environemt?

where is all the supply at? why is it being stored and not sold? this is where im losing you.

explain this "no aggregate supply" situation to me. Supply is cut? clear this up for me and i will go away a wiser man, so it seems.

Sun, 03/03/2013 - 22:16 | 3296568 ekm
ekm's picture

Perfect. Money flowchart:

- Fed - Primary Dealer - Winning CDS counterparty


Q: What does one do with huge amounts of excessive money? One can't put hundreds of billions in a savings account at the local bank.

A: (same as in the run up of 2008) Buy and store commodities like gold, silver, crude oil, copper, iron ore you name it, REAL STUFF, NOT ELECTRONs IN AETHER.


However, none of the above commodities has an immediate effect except for CRUDE OIL. Primary Dealers, particularly JPm and GS as well as big CDS winning counterparties have been buying crude oil and storing it. What else to do with all that money?

Nothing different from 2008 run up.


That's why WTI is in Contango, due to huge ONSHORE storage capabilities in USA and Brent is in Backwardation due to lack of huge ONSHORE storage spaces in Europe. Iran issue adds to it, but it is not the main factor.


Sun, 03/03/2013 - 22:18 | 3296579 VonManstein
VonManstein's picture

All makes sense. Very well explained thanks.

Ok, so next then we get teh event.. then what? why did oil prices implode? they dumped it on the market in exchange for cash to pay off debts?

Sun, 03/03/2013 - 22:25 | 3296597 ekm
ekm's picture

No. George Bush made a gift to Obama. He gave the executive order to dump it since the real economy crapped literally.

Crude oil was not allowed to be traded on margin for few months until it dropped to $35.


I think Obama is simply forced to do the same thing now, very soon. Iran has complicated things, IMO, but the saw has gotten to the bone now. No more tolerance for the real economy. He has to give the same order, if not already signed. Legally, only the president can release the SPR oil.


The sudden collapse triggered all kinds of derivatives which accelerated the collapse.

Again, these are my conclusions based on countless hours of reading and cross checking statements from officials who always have slips of tongue. To my surprise, proof on paper is being presented for what I've been saying as conjecture, like this one.

Sun, 03/03/2013 - 22:34 | 3296623 VonManstein
VonManstein's picture

Ok thatll do for tonigt then. Thoroughly enjoyed that thank you for taking the time.

I will be on the look out for your comments in the future

All the best

Sun, 03/03/2013 - 22:35 | 3296628 ekm
ekm's picture

Thx a lot

Mon, 03/04/2013 - 04:19 | 3297132 Jack Sheet
Jack Sheet's picture



Seconded-  I appreciate the insights. First plausible explanation I have seen for the 2008-9 oil price dump. Keep up the good work


Sun, 03/03/2013 - 22:25 | 3296598 AssFire
AssFire's picture

They are obligated to stop QE due to artificial shortage of energy.

Can you explain this? Are you saying after the storage is complete and CDS are unwound that is when QE ends?

Sun, 03/03/2013 - 22:30 | 3296612 ekm
ekm's picture

What I'm saying is that they will stop QE, stock market and crude oil and commodities prices collapse, the sacrificial lambs will be slaughtered on the altar of JPM and GS and when S&P goes down to 400 or crude oil at $15 TEMPORARILY, QE will start again.


Ultimately, a central bank does only one thing: Quantitative Easing. Since birth, the Fed did quantitative easing.

Sun, 03/03/2013 - 22:40 | 3296642 AssFire
AssFire's picture

Well done ekm!

Sun, 03/03/2013 - 22:44 | 3296654 ekm
ekm's picture

thx a lot


thx for the sharp questions

Sun, 03/03/2013 - 22:45 | 3296656 VonManstein
VonManstein's picture

My cycle work suggests major market peak/trough in Q1 next year.

other "events" in 3 rd week of May and 2 week of August this year. I am looking for a short entry in ES but i think it will have a stab higher from here. 1555 i was thinking.

ekm. its been a pleasure!

Sun, 03/03/2013 - 22:50 | 3296668 ekm
ekm's picture

Your poignant questions stirred my brain.

Thx a lot


I am 100% cash. Trade at your own risk. You'll need a lot of luck.

Mon, 03/04/2013 - 02:07 | 3297028 RebelDevil
RebelDevil's picture

If QE for bonds stop, the gov. defaults. Simple as that.
Not sure which will happen though.
We do know this for a fact. - Treasuries/Bonds for the G7 are in a bubble.

Sun, 03/03/2013 - 22:34 | 3296624 Cathartes Aura
Cathartes Aura's picture

thanks, both of you, that was a brilliant exchange, worth every page-refresh.

the thick'nd plot grows ever more transparent, great minds on the case.

well deserved cheers for the posts today Tyler(s).

Sun, 03/03/2013 - 23:13 | 3296723 willwork4food
willwork4food's picture


Fun to joke around here... but equally fun reading  and engaging dialog and points from others I never thought of.

Mon, 03/04/2013 - 03:45 | 3297106 Rogue Trooper
Rogue Trooper's picture

Ditto +1.  So good I copied the whole exchange.... wonderful :)

Sun, 03/03/2013 - 22:14 | 3296470 AssFire
AssFire's picture

I'm gonna get some popcorn...

This is fascinating- ekm is nailing it.

Von Manstein asking great questions...munch, munch


Sun, 03/03/2013 - 23:27 | 3296762 andrewp111
andrewp111's picture

The Fed is buying $40B MBS and $45B Treasuries each month.

Sun, 03/03/2013 - 23:33 | 3296777 ekm
ekm's picture

thx for the correction

Mon, 03/04/2013 - 00:26 | 3296896 hangemhigh
hangemhigh's picture

@ VM   3296391

"Though still, suggesting QE has nothing to do with financing Gov seems a little stretched to me. It has to be the primary reason because without it the US government would go bankrupt overnight, and all the Banks would follow as the debt would consume all."

The miising link you seek is the role of the dollar as the reserve currency and the part that the primary dealers (PD's) play in perpetuating that illusion.  for the PD's, profitability depends on their first mover advatage in frontrunning the printing process. when the $ begins to fail, the 3 card monti hustles no longer meet the bonus pay-out requirements, famine sets in and the strong are forced to eat the weak.  it's a sophisticated version of a lord of the flies kind of 'long pig' cannabalism.

Sun, 03/03/2013 - 23:24 | 3296753 andrewp111
andrewp111's picture

A Trippel Lehman would be a very dangerous thing to pull right now. The Fed is nearly out of bullets, QE is just about maxxed out as there isn't much agency and treasury debt left for the Fed to buy, and the GOP House would be certain to reject any calls by this President for another bank bailout. A Triple Lehman without a bailout could cause a worldwide cascade of bank failures that nothing could stop. It could even take out JPM, BOA, and C. Even if it was done right before the midterm election to flip the House, it is still dangerous. There is 2 months between the election and the new Congress taking power.

Someone needs to start selling a beer called a Lehman Trippel, with pictures of firey doom on the label.

Sun, 03/03/2013 - 23:37 | 3296784 ekm
ekm's picture

MAXED OUT is a far better way of putting it, for sure.

Once S&P goes to 400, GOP will cave easy peasy. Congressmen will see their own retirement funds going down the drain.


JPM and GS will never fail, never since they are one with US Gov. They are basically like canadian banks, government owned but under private management. That's why Dimon is professionally clueless.


Lehman Trippel beer is quite humorous.

Mon, 03/04/2013 - 02:14 | 3297034 RebelDevil
RebelDevil's picture

"QE is just about maxxed out as there isn't much agency and treasury debt left for the Fed to buy"

lol what the hell is that all about!? The Dept. of Treasury issues, the FED buys. That is the inflationary scenario.
If the Fed stops buying, then it's a deflationary scenario, and the chain reaction of defaults occur. 

Mon, 03/04/2013 - 04:55 | 3297149 CompassionateFascist
CompassionateFascist's picture

beat me to it, RebelDevil, and you are right. There's an avg issue of 100 billion/month of new Treasury debt, and there's >$4 trillion of bad paper still at the mortgage agencies. Fed/Banksters will pull the plug when no more sucker money can be pulled into the stock market.

Sun, 03/03/2013 - 20:15 | 3296257 AgShaman
AgShaman's picture

Banking families have always been's in their nature and deep seeded love for "competition"

Sun, 03/03/2013 - 20:21 | 3296284 ekm
ekm's picture

Ah, human nature!

Sun, 03/03/2013 - 21:53 | 3296505 orez65
orez65's picture

QE is not over because Congress will never stop deficit spending.

Therefore there will always be worthless Treasuries for sale that only the Fed will buy.

Sun, 03/03/2013 - 23:14 | 3296728 andrewp111
andrewp111's picture

QE is not over, but it is maxxed out, and its effectiveness is constantly diminishing. Remember, Japan did QE for 2 decades, and got less bang for its yen as time went on.

Sun, 03/03/2013 - 23:35 | 3296778 Radical Marijuana
Radical Marijuana's picture

Yes, and today it looks like Greece "is the sacrificial lamb."

Sun, 03/03/2013 - 23:38 | 3296795 ekm
ekm's picture

that lamb is alreayd roasted and spiced. It tasted pretty well for those who ate it.

Mon, 03/04/2013 - 04:32 | 3297141 Ghordius
Ghordius's picture

that lamb's government was busy buing derivatives and accounting scams from the megabanks, though - a drug addict being served by pushers

Sun, 03/03/2013 - 20:12 | 3296249 Dr. No
Dr. No's picture

If the tax payer didn't have to cover the loss, I really wouldn't give a shit what wall street did to each other.

Sun, 03/03/2013 - 22:04 | 3296541 orez65
orez65's picture

That's why the Fed exists, so that we'll be the collateral for the loss.

And those fuckers put Andrew Jackson's picture on the $20 FEDERAL RESERVE NOTE!!

A fucking insult.

He is the one that shut down the equivalent of the Federal Reserve, the Second Bank of the United States, in 1836.

Mon, 03/04/2013 - 05:45 | 3297181 bigyimmy007
bigyimmy007's picture

Jackson is without a doubt turning in his grave.

Sun, 03/03/2013 - 20:13 | 3296251 gridlocked
gridlocked's picture

I found it odd that the biggest banks in the world were unable to give Barclays a bridge loan to buy Lehman but on Monday the day Lehman went under JP Morgan Chase loaned Lehman $138 billion. That was a Federal Reserve backed loan.  I think Chase paid themselves then had the Fed pay them back for paying themselves.

Sun, 03/03/2013 - 21:43 | 3296471 Xibalba
Xibalba's picture

was that Geithner at the head of NYFRB then? 

Sun, 03/03/2013 - 20:14 | 3296253 eatthebanksters
eatthebanksters's picture

Kill them all...

Sun, 03/03/2013 - 20:15 | 3296260 Albertarocks
Albertarocks's picture

Dimon alone is reason enough to re-open Alcatraz.  Once he's in there, no more residents.   Make it happen. 

Sun, 03/03/2013 - 20:25 | 3296297 Acet
Acet's picture

Dimon alone is reason enough to adapt Mr Guillot's invention to the modern times.

Here, I corrected it for you.

Sun, 03/03/2013 - 20:36 | 3296317 Albertarocks
Albertarocks's picture

You're a gentle soul.  Don't you want him to suffer for the rest of his life like I do?

Sun, 03/03/2013 - 20:39 | 3296324 Acet
Acet's picture

How about we reach a compromise and just have a rusty blade so that it take a couple of tries before the deed is done?

Sun, 03/03/2013 - 21:18 | 3296403 Albertarocks
Albertarocks's picture

We both agree of course that this must all be after a fair trial as per the law.  In a real court, not one purchased by the cabal.  Then I'd vote for this punishment.  Let the punishment fit the crime as they say:

Mon, 03/04/2013 - 05:25 | 3297165 Acet
Acet's picture

As long as the jury is made up of real people - the man and women on the street - rather than his "peers" in the finance industry.

I'm pretty sure we can find people who died early or even commited suicide as result of loosing all their savings from the crash.

It's about time these assholes get on trial for Murder.

(For the kind of people that cause deaths and ruin countless lives throught economic manipulation I'll even waive my long held denial of capital punishment)


Sun, 03/03/2013 - 21:30 | 3296439 Roandavid
Roandavid's picture

Or ........

Guillotine for his testicles.

Alcatraz for the rest of him.

Sun, 03/03/2013 - 23:22 | 3296738 willwork4food
willwork4food's picture

I'm liking the way you think.


As long as the blade is rusty (bad economy) , and it takes a few tries (can't afford qualified workers), then get it done, after a few coffee breaks.

Sun, 03/03/2013 - 20:15 | 3296262 kill switch
kill switch's picture

Did JPM's CIO Intentionally And Maliciously Start The Margin Call Avalanche That Crushed Lehman?



Sun, 03/03/2013 - 20:32 | 3296310 AllWorkedUp
AllWorkedUp's picture

No kidding. Does a bear shit in the woods?

Sun, 03/03/2013 - 23:48 | 3296815 Teamtc321
Teamtc321's picture

Only if the bear has Mr. Rabbit to snatch up and wipe away the Krugman berries, I mean dingle berries. 



Sun, 03/03/2013 - 20:18 | 3296271 atomic180
atomic180's picture

We'"ll maybe we should start with BEAR STEARNS first his finger prints are all over that take down...

Sun, 03/03/2013 - 20:19 | 3296276 dick cheneys ghost
dick cheneys ghost's picture

David v Goliath


Fight Club..............gotta love it

Sun, 03/03/2013 - 20:22 | 3296286 Gamma735
Gamma735's picture

Meh. Greed and corruption.  Who knew?!?

Sun, 03/03/2013 - 20:26 | 3296298 William.M.Tweed
William.M.Tweed's picture

So this is another reason why Jamie Dimon is richer than you


The appearance of the law must be upheld, Especially when it's being broken


Sun, 03/03/2013 - 20:28 | 3296302 chunkylover42
chunkylover42's picture

Of course they did.

Next question.

Sun, 03/03/2013 - 20:33 | 3296311 Joebloinvestor
Joebloinvestor's picture

They eat their young too.

Sun, 03/03/2013 - 20:46 | 3296337 Crimedog
Crimedog's picture

Nice work ZH.  But in the end, Lehman was toast either way.  JPM, like most everyone else, knew they were toast and was probably just trying to get as much collateral as possible as quick as possible, justified or not.  Can't really say I blame them.  Waiting until Chapter 7 and the subsequent shit show to commence would pose major risks to any outstanding notional amounts that they were due prior to the event.

Sun, 03/03/2013 - 20:50 | 3296343 Mine Is Bigger
Mine Is Bigger's picture

YES.  And that's why he is richer than us.

Sun, 03/03/2013 - 21:03 | 3296375 Seasmoke
Seasmoke's picture

Jamie Dimon is richer than Dick Fuld.

Mon, 03/04/2013 - 01:34 | 3296986 newengland
newengland's picture the moment.

Sun, 03/03/2013 - 21:07 | 3296383 SillySalesmanQu...
SillySalesmanQuestion's picture

Congrats Tylers & ZH!  This is why you have millions of devoted readers every day reading your posts. MSN would never investigate this, let alone report it...P)

Why can't the SEC or DOJ find any of this info? Because they are bought and paid for ...( too much porn watching will make you go blind) just like everything the Morgue touches or deals with.

Lots of dots have been connected with these three posts about J.P. & Jamie....Keep going Tyler!

Sun, 03/03/2013 - 21:10 | 3296387 Crash Overide
Crash Overide's picture

Burn it all down...


Sun, 03/03/2013 - 21:14 | 3296394 ebworthen
ebworthen's picture

Why am I not surprised?

When do we make a margin call on the heads of Dimon and Blythe?

Sun, 03/03/2013 - 21:16 | 3296400 OpenThePodBayDoorHAL
OpenThePodBayDoorHAL's picture

Seems to me the entire profession of "investigative journalism" is just going to go away. For starters, no one cares. Secondly, the people who are paid to care are looking the other way, bought out by the criminals. And thirdly, the guys who are supposed to prosecute the cases that do make their way through this reverse Bingo process are paid not to enforce the law. So why bother in the first place?

Let's all just go back to wearing animal skins and carrying clubs.

Sun, 03/03/2013 - 21:18 | 3296409 Whoa Dammit
Whoa Dammit's picture

Dick Fuld should have refused to hand over the margins or clear through the Morgue and should have screamed to the press that due to JPM's incompetence, his bank would no longer clear there. As a longshot, this could have turned the tables and crushed JPM--Not likely I know, but at least then Lehman would have gone down fighting.

Mon, 03/04/2013 - 00:42 | 3296924 trebuchet
trebuchet's picture

unless they thought/were led to believe unlce fed would take care of them...


Sun, 03/03/2013 - 21:21 | 3296410 IridiumRebel
IridiumRebel's picture

Scrub a dub I thought comments were not scrubbed from ZH.....

Sun, 03/03/2013 - 21:21 | 3296412 chump666
chump666's picture

Audit the NY Fed.

Oliver Stone, if he grew balls again, could have made Wall Street 2 a classic.  Lehman was taken out by it's competitors with the Fed's blessing. 

The main player in all this is the NY Fed, which is essentially Wall Street.  The EUR stabilization (NY Fed best trade) is primarily to keep equity markets bid, note last attempt at correction was crushed when th NY Fed laid down a billionUSD to the ECB before the start of the last correction (just Google it).


Sun, 03/03/2013 - 21:50 | 3296500 Tursas
Tursas's picture

It is better to move on with force, do what is right and nationalize FED!

Mon, 03/04/2013 - 05:05 | 3297155 CompassionateFascist
CompassionateFascist's picture

ah, no...the Fed (Rothschild Int'l Bank) took over the gubmint long ago....The Rothschild Int'l Bank needs to be taken apart brick by brick and the bricks dropped in the deepest part of the ocean

Sun, 03/03/2013 - 21:22 | 3296420 Benjamin Glutton
Benjamin Glutton's picture
Did JPM's CIO Intentionally And Maliciously Start The Margin Call Avalanche That Crushed Lehman?


You may be slow if you like but let there be no doubt the same people slayed MFGlobal....

Sun, 03/03/2013 - 21:26 | 3296434 Missiondweller
Missiondweller's picture

Great reporting ZH and you beat WSJ to the story.

Sun, 03/03/2013 - 21:30 | 3296440 world_debt_slave
world_debt_slave's picture

A long assed collapse of the house of cards, but it will.

Sun, 03/03/2013 - 21:37 | 3296459 WTFUD
WTFUD's picture

Banking families. . . .competition. No way jose! Competition is a level playing field not cowboys and injuns! Good insight & great comments.
O'bummer & Jamie the New Acceptible Fuckfaces of Ye Olde Establishment ( here here ).

Sun, 03/03/2013 - 21:47 | 3296482 Marcuz Aurelius
Marcuz Aurelius's picture

Great read, somtimes you have to attribute malice ... to people/institutions. Wonder what is going to happen between may-september this year. Am curious whats cooking at the Morgue and who took iskils place to perform another execution or two.

Sun, 03/03/2013 - 21:49 | 3296487 buzzsaw99
buzzsaw99's picture

So Lehman lubed up and JPM stuck it to them. Boo hoo, anyone who does business with gs or jpm deserves the screwing. Anyone who does business on margin doubly so.

Sun, 03/03/2013 - 21:50 | 3296491 newengland
newengland's picture

JD is a banksta gangsta.

Trust your eyes, ears and instincts.

Jail 'em. Don't bail 'em.

Sun, 03/03/2013 - 22:11 | 3296561 WTFUD
WTFUD's picture

Bang 'em then Hang 'em you mean. Wouldn't wish to lock up our ordinary law abiding criminals with these sorts.

Mon, 03/04/2013 - 00:27 | 3296868 newengland
newengland's picture

Jail 'em. Don't bail 'em ;-) Same is true of Goldman Sacks Board et al.

Do not pay for failures.

Sun, 03/03/2013 - 21:51 | 3296498 Downtoolong
Downtoolong's picture

Too much money in the hands of too few people with too much power who in the end don't give a shit about anyone but themselves.

Sun, 03/03/2013 - 21:52 | 3296504 TheLastMan
TheLastMan's picture

S. Freud wrote  -  "There are no accidents".

Sun, 03/03/2013 - 22:02 | 3296536 dick cheneys ghost
dick cheneys ghost's picture

Right.......Does anyboby really believe that Mark Felt was 'deepthroat'?

Sun, 03/03/2013 - 23:37 | 3296791 willwork4food
willwork4food's picture

I thought it was Marilyn Monroe..

Sun, 03/03/2013 - 21:56 | 3296516 Pseudo Anonym
Pseudo Anonym's picture

what's kinda weird is that with all this dirt in digital format,  there are no whistleblowers that would just upload internal document anonymously and let everybody take a stab at it

Sun, 03/03/2013 - 21:59 | 3296521 q99x2
q99x2's picture

I new it. The financial collapse was a conspiracy by the banksters to overthrow the world and use the DHS hollow points to Freakin kill us. Somebody arrest Dimon. Get him before he gets away.

Sun, 03/03/2013 - 21:59 | 3296524 WTFUD
WTFUD's picture

Lest i forget! Regarding scooping up the leftover gold; Remember the Paper Derives are of 100/500 times the multiple. Any muppet that remains holding paper like germany must be too frightened to request physical delivery. To conclude JPM & Ass are dead meat But have Fairy Godfather in O'bummer maintaining the Giant Ponzi Charade. We Couldn't Handle the Twooth! Dats all folks i taut i taw a puthycat. Izz an injusteece it is!

Mon, 03/04/2013 - 05:13 | 3297161 CompassionateFascist
CompassionateFascist's picture

muppet here. Not sure about "fear", but I was not stupid enough to "request phys delivery" of my silver bars (supposedly) in NY JPM vault; just getting out of SLV was like pulling the broker's teeth. Converted to cash, and bought silver eagles. Lost quite a few ounces in the exchange, but definitely worth it. 

Sun, 03/03/2013 - 22:04 | 3296542 El_Puerco
El_Puerco's picture

Take a break and watch this...Relax something is coming...


Hagan un reposo y esperen,que ya algo, estar por venir...



Sun, 03/03/2013 - 22:23 | 3296594 IridiumRebel
IridiumRebel's picture

By the pricking of my thumbs, something wicked this way comes....

Mon, 03/04/2013 - 02:19 | 3297040 monad
monad's picture

By the thumbing of your prick, what's coming will be hot and thick...

Sun, 03/03/2013 - 22:07 | 3296549 gonetogalt
gonetogalt's picture

sorry to be so off-thread, but just watched two good stories on CCTV (Red China's CNN/BBC), 1st was on some 20+ Mexican municipalities who now have civilian militias keeping order and protecting against drug gang violence. Armed with old rifles and machetes. 2nd was a pretty long piece on gun ownership/culture filmed in Alaska, very favorable to all 2nd amendment principles and a good interview with the Anchorage Police Chief, overall very favorable.

So in what world do we get our best news/commentary from Al Jazeera, RT and CCTV? 

The Japs didn't consider invading because of the 'rifle behind every blade of grass', this doesn't seem to concern the Chinks... think they have something else in mind?

Sun, 03/03/2013 - 22:41 | 3296643 chump666
chump666's picture

Well, South America will do what China/Japan are doing now.  Pick an enemy to distract their crappy situations with the own people.  Mexico will do the same.  South America is a mess, inflation, out of control drug war in Mexico (narco gangs are now into illegal coal mining), fueled by Colombians/Guatemalans jumping the Mexican boarder. Argentina will get frisky with the UK again etc etc etc

Keynesian economics should be outlawed.

Sun, 03/03/2013 - 23:42 | 3296800 willwork4food
willwork4food's picture

Argentina will get frisky with the UK again?  Even the hag in charge won't do something that stupid.

Mon, 03/04/2013 - 01:43 | 3297001 chump666
chump666's picture

You gonna love this quote, long behold from Abe, as of recently re: Falkland Islands

In a speech to Japan’s Parliament, however, Mr. Abe used a comparison to the 1982 Falkland Islands war to cast China as the provocateur. He cited the memoir of the British prime minister at the time, Margaret Thatcher, who said her decision to go to war was an effort to defend the principle that rule of law should prevail over the use of force.

“I want to appeal to international society that in modern times, efforts to change the status quo by the use of force will justify nothing,” said Mr. Abe, referring to the standoff with China.

Strange days huh?

Argentina looking for that enemy again:

We live in a cosmic wash cycle.

Sun, 03/03/2013 - 23:10 | 3296714 MiltonFriedmans...
MiltonFriedmansNightmare's picture

Gonetogalt, are you making reference to the Alex Jones piece referring to this very topic? Search Alex jones interview Obama does not want you to see.

Sun, 03/03/2013 - 22:09 | 3296556 IamtheREALmario
IamtheREALmario's picture

Why Lehman? It is very simple. No one could stand "the gorilla". He had broken the code.

Mon, 03/04/2013 - 02:38 | 3297054 Sandmann
Sandmann's picture

LTCM trades cleared by Lehman and Bear 1998

Sun, 03/03/2013 - 22:27 | 3296605 chump666
chump666's picture

The sucker punch for Wall Street next time will be Asia blowing up and South America blowing up =  Inflation, USD black-markets, property crashes and war and chaos is all on for 2013.  Right now the shanghai is down close to it's 2% neg.  EUR support bounce at 1.30, DXY is steady, futures supported by HFTs. 

Sun, 03/03/2013 - 22:31 | 3296607 EclecticParrot
EclecticParrot's picture

The conspiracy regarding the conspiracy is itself a conspiracy, but in this case a highly complex one in eleven dimensions, many folded within themselves so as to be undetectable.  The fact that Bruno Iksil's head resembles a Calabi-Yau manifold is certainly no coincidence (  

Or, given this multi-verse we live in, is the likeness simply an expression of infinity?

Sun, 03/03/2013 - 22:36 | 3296615 Pike Bishop
Pike Bishop's picture

It's not the $257MM, it's the breakage in the mark. Everybody starts to itch because JPM can push the mark and Lehman has to swallow it. You can't be that weak and survive.

And who the fuck are you going to send to do this? The Models read this crack and all lights go red on Lehman.

There's only 3 ways to win... be smart, cheat, or be first. JPM picked #3 and weren't going to let it trace to the backrooms or CIO. By the next $8.6B, everybody knows what's next, even if they just have their models look at their own book on Friday night.

Be first and make it happen, rather than swim in the heating pot with the rest of the frogs, until it's too late.

There are no fucking accidents, just people trying to make them look that way.

This needs to be pushed on harder.

The yield may only be vapor, but who gives a shit. Nothing else is going to be done before the statutes run out.

Sun, 03/03/2013 - 22:37 | 3296632 newengland
newengland's picture

Bull$shit. JD and the Morgue are the world's biggest welfare queens, courtesy of the U.S. taxpayer, and the puppets in D.C.

Your sort pays for them. I don't. Enjoy the show.

Sun, 03/03/2013 - 22:46 | 3296661 holdbuysell
holdbuysell's picture

A few questions:

Was JPM preempting something that was about to bring JPM down?

Did JPM not understand gross = net when a counterparty in a linked chain fails?

There's a bigger picture here, which ZH alludes to at the end of the article. The linking of the events is what needs thinking through.

Do NOT follow this link or you will be banned from the site!