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What Really Happened To JP Morgan In The Market - A Simple Example
On the day of the unexpected JPM conference call in May of 2012, during which the initial extent of the London Whale fiasco was revealed, Zero Hedge presented a full, visual breakdown of everything that, we thought, had happened at the CIO, without any corroborating evidence. In hindsight, our assumptions and conclusions were 100% correct. But for anyone still confused and curious how less than a year ago the most powerful bank in the world put itself at the mercy of a few hedge funds, here is the simple one page summary.
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still confused, but I did get past the captcha.
And now Kyle Bass is about to blow up JPig for good.
Question is, why were they doing it in the first place? God too busy?
"God too busy?"
i did a spit take
Beautiful...great call Ahmeexnal....that is unless they buy back Bass' $50m investment for fucking billions! Muuaaahhhahhhahhha!!
I thought is was $500 mil not $50
Hey eatthebankers.
If you where to do that you would get me.....
Bankster-in-my- feces.
Messed up when i made my username so ended up Bansters,
I sometimes find it useful to turn to the English version.
http://www.forbes.com/sites/petercohan/2012/05/12/how-jpmorgan-lost-17-5...
Zero Hedge make McMolotov brain hurt.
Don't feel bad. I'm an arb, but it doesn't help much. Try this.
The Morgue got caught in a short squeeze, but their continued selling of "insurance" depressed the price, increasing the potential squeeze, and gave other traders a signal and an incentive to pile in. That's kinda, sorta, roughly what happened.
In the old days, they had risk managers in the arbitrage (trading/hedging) units who knew what the fuck they were doing.
When you follow models, and always grab for a shiny short term nickel, this is what happens.
excellent analogy.
What does a $9 billion dollar brick look like, banzolo?
In other news, Detroit is pledging an uprising once the state appoints an emergency manager over the city.
That's when they roll out the RoboCops.
with multiple mini killer drones attached to their helmets ready to be deployed.
FEMA will protect the homeland by rounding up all white al-qaeda's
dobule plus good
There's white people in Detroit? Who are they? Lost tourists?
They're fair game.
Alot of white Yupies downtown I hear.
Ahmeenal...you're on a roll today!
Well that should be fun. I'm guessing they're not going to riot for the alternative of bankruptcy, so...
Obamadrones?
Fellow Executives of Omni Consumer Products,
It gives me great pleasure to intorduce you to the future of Law Enforcement, ED 209
http://youtu.be/A9l9wxGFl4k
If there's any reading involved, I expect the uprising to be short-lived.
I understand. Thanks for posting.
Business as usual.
Bet with your head. Not over it. Or Jamie should lose his.
I agree with that. And I can sum up the problem far more accurately as well. "it happened in London." as AIG so it is with JP. "come here if you want to blow up your Very Large Financial Institution." on the good side it would appear The Team wasn't paid 100 million this time. "And in even better news the taxpayer wasn't ordered to shell out over 100 billion..." in the middle of a war no less. And in even better better news there doesn't appear to be a frivolous lawsuit aimed at extorting even more billions "from hapless you and me." without a doubt "this one came from the top"...to which I say "welcome to our so called recovery." the irony of course is that New York is sitting on trillions in energy wealth "in the State the Rockefellers built." just for export you say? Wow...no surprise there either. Wow...look at that dollar collapse. Right next to the collapse of the equity market...and the treasury complex.
I'm sure when Whale-Man presented his plan to JPM management, it was also in the form of a single page summary -- age-old advice to follow when executives are the target audience. However, in his case, it was simply a drawing of a killer whale with a proud, enormous erection, which he was using to surf, fins behind his back, over 30 foot waves.
Lets play where's Waldo on CNBC. Can anybody find news about the Senate findings?
The only news is here on ZH.
Thank you TD & Co.
I had to call my Senator's office to find out the hearing will be shown here at beginning 9:30 a.m. tomorrow a.m. EST:
http://www.hsgac.senate.gov/subcommittees/investigations/hearings/chase-...
It's the Senate Homeland Security Subcommittee......... WTF you say????
AgendaThe Permanent Subcommittee on Investigations has scheduled a hearing, “JPMorgan Chase Whale Trades: A Case History of Derivatives Risks and Abuses,” on Friday, March 15, 2013, at 9:30 a.m., in Room G-50 of the Dirksen Senate Office Building.
The Subcommittee will examine matters relating to credit derivative trades made by the JPMorgan Chase Chief Investment Office. The Subcommittee expects to issue a Subcommittee staff report in conjunction with the hearing summarizing its investigative findings and recommendations. Witnesses will include representatives from JPMorgan Chase and the Office of the Comptroller of the Currency. A witness list will be available Wednesday, March 13, 2013.
Witnesses PANEL 1-
INA DREW
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ASHLEY BACON
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PETER WEILAND
PANEL 2Former Chief Investment Officer JPMorgan Chase Bank NA New York, NY
Acting Chief Risk Officer JPMorgan Chase Bank NA New York, NY
Former Head of Market Risk - Chief Investment Office JPMorgan Chase Bank NA New York, NY
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MICHAEL J. CAVANAGH
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DOUGLAS L. BRAUNSTEIN
PANEL 3Co-Chief Executive Officer - Corporate & Investment Bank JPMorgan Chase Bank NA New York, NY
Current Vice Chairman JPMorgan Chase Bank NA New York, NY
Comptroller of the Currency U. S. Department of the Treasury Washington, DC
Examiner-in-Charge - OCC National Bank Examiners - JPMorgan Chase Office of Comptroller of the Currency Washington, DC
Deputy Comptroller for Risk Analysis - Risk Analysis Department Office of the Comptroller of the Currency Washington, DC
Panel 3: Feckless Douchebags
I always think it's ridiculous how Congress calls a hearing when a company losses money. Stupid postering by politicians who don't have the slightest clue what is going on. Please let them fail!!!
When companies lose money they stop paying taxes and politicians are very concerned and they look for ways to find criminality in the process. When the companies do most things right and make a lot of money they are called greedy and exploiters that need to be punished with excess profits taxes. Capitalism works fine, democracy, not so much.
There, fixed it for you.
Maybe the emergency manager of Detroit can do double-duty and fill in for Jamie.
Where are those HFT liquidity providers when you need them? Oh that's right, we're the liquidity providers. SHIT!
Again "just the increase in natural gas is worth in excess of a TRILLION dollars for what is in storage." still not enough liquidity for you? I do find it interesting that we've never had an inventory build in this so called recovery...hmm. That's not what the EIA is showing.
I consider myself pretty informed but this is still just about Greek to me. So taking that into consideration and that I'd like to be able to explain this to much less informed people than myself, would someone care to dumb this down even further for me?
JPM is big thief. US Govt is big thief also. US Govt also big cop. Together they steal everything from everybody. If big thief get caught, big cop does nothing because they are big thief also.
NY Times on the case:
The Things Bankers Say, the London Whale Edition
http://dealbook.nytimes.com/2013/03/14/the-things-bankers-say-the-london-whale-edition/
and i still ask myself everyday how the fuck jamie dimon is not in prison. what the fuck must these bankers do to go to jail?
easy. defraud the jesuit order
easy. fail to fund the politicians
I just want to thank Tyler for having the honesty, candure, and intellectual skills enough to explain "derivatives" in a simple chart!
[[Derivatives]] are just a bunch of cross collateralized { PAPER }. > Just like we already knew! +1 Tyler
JPM tried to run a con and got conned. Seems like another day at work to me.
looks like a standard tax avoidance structure to me! fuck main street!
I consider myself pretty informed, but this is like Greek to me even still. I'd like to be able to explain this and what has happened to people who know much less than I do. If anyone would care to explain this in the most dumbed down way, it would be much appreciated. Thanks.
Fuckers got marked to market, exposing the their losses and risk. What is the real market value of the 100s of trillions in derviatives? What is the value of derivative if the counter party fails? Does one failure daisychain the whole thing to hell? What is the market if the few who can trade that size are kaput? This is the true root of the TBTF issue.
The important info is in the middle column. It shows:
First line: JPM initial protection sold, no manipulation - therefore no skew (sold at "par")
Second line: JPM starts leaning on the market and sell more protection, some manipulation - therefore -10 bps skew (sold at profit, booked more profits under mark to market)
Third line: JPM is feeling their wheaties and leans hard on the market, lots of manipulation - therefore -20 bps skew (sold at higher profit, even more booked profits)
Fourth line: JPM tries harder yet, but there is no one left to sell to, peak manipulation - still -20 bps skew (no trades performed, but all trades are marked to market at this fake profit)
Fifth line: JPM gets taken to the cleaners by the hedge funds as they exit the position, market over compensates as hedge funds lean on JPM - therefore IG9 trades at +20 bps skew (JPM loses anywhere from 20 to 40 bps, because of the swing in skew, as they buy back the protection that they sold)
As long as JPM is involved in manipulating silver and gold, they will never be allowed to fail.
Tyler rocks, man!
Tyler rocks, man!