And Now For Something Special: "The J.P.Morgan Guide To Credit Derivatives" By Blythe Masters

Tyler Durden's picture


Lelaina: Can you define "irony"?
Troy Dyer: It's when the actual meaning is the complete opposite from the literal meaning.


                                             - Reality Bites

From circa 1999.


h/t Prophet

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Fri, 05/11/2012 - 07:52 | 2416637 GeneMarchbanks
GeneMarchbanks's picture

So anyway, is anyone going to even mention anything about a rating cut or should we just assume that apathy has completely taken over?

Fri, 05/11/2012 - 07:58 | 2416645 ndotken
ndotken's picture

Fuck You Jamie ... that karma's a bitch ... huh dude?

Fri, 05/11/2012 - 08:02 | 2416651 GetZeeGold
GetZeeGold's picture all this.....I forgot about Blythe. Always watch the other hand.


Fri, 05/11/2012 - 09:07 | 2416873 Badabing
Badabing's picture

When I first heard the JPM misfortune it made me smile and then it hit me JPM is TBTF ergo we the tax payer will pay, first it made me Moody and then Blue because it will be paid by our children’s children’s children.

Is this just smoke and mirrors and does this 2.3 billion get funneled to the Greek’s at our expense?  

Fri, 05/11/2012 - 09:23 | 2416934 gmrpeabody
gmrpeabody's picture

Yes..., I suppose Ben will need to start buying securities, and take those JPM positions public. But it will not be a bailout. <sarc>

Fri, 05/11/2012 - 09:38 | 2416977 francis_sawyer
francis_sawyer's picture

Hey Blythe ~ The University of Colorado is on the phone wondering if the $5 million for the commodities trading center is still a good offer...

Fri, 05/11/2012 - 11:37 | 2417549 Silver Bully
Silver Bully's picture

' all this.....I forgot about Blythe.'

Are you kidding? The FIRST thing I thought of when I heard the news yesterday was 'What is Blythe gonna do to silver TODAY?'

Who knows, she could end up with a promotion or get fired by next week. You never know what Dimon doesn't know.

Fri, 05/11/2012 - 07:58 | 2416647 TooBearish
TooBearish's picture

JPM will be re-affirmed by mainstream rating agencies S&P and Moody's to think this is anything but a one time event is rediculous...JPM is soverign

Fri, 05/11/2012 - 08:01 | 2416656 GetZeeGold
GetZeeGold's picture



Cramer concurs......


Fri, 05/11/2012 - 08:12 | 2416668 disabledvet
disabledvet's picture

Not true...

Fri, 05/11/2012 - 08:02 | 2416659 Theta_Burn
Theta_Burn's picture

You speak sedition boy, easy with that.

The silence is deafening though.

Will this spark the cannibalism we've been waiting for?

Fri, 05/11/2012 - 08:13 | 2416672 disabledvet
disabledvet's picture

"fine young cannibals" indeed.

Fri, 05/11/2012 - 07:54 | 2416641 DavidC
DavidC's picture

You're so naughty!


Fri, 05/11/2012 - 07:54 | 2416642 Wakanda
Wakanda's picture


1999 seems like a dream world to me now.

Fri, 05/11/2012 - 08:14 | 2416676 disabledvet
disabledvet's picture

"some are mathematicians. Some are carpenter's wives...

Fri, 05/11/2012 - 08:23 | 2416701 Wakanda
Wakanda's picture

"Headin' for another joint..."

Fri, 05/11/2012 - 07:54 | 2416643 Burr's 2nd Shot
Burr&#039;s 2nd Shot's picture

Like reading the project specs on the Doomsday device.

Fri, 05/11/2012 - 07:55 | 2416644 ZeroPower
ZeroPower's picture

To be fair, this, as well as the Credit Derivative Handbook (by Morgan Stanley) are seminal pieces for anyone in this line of work.

Fri, 05/11/2012 - 08:07 | 2416662 LULZBank
LULZBank's picture

Now they need to write a simpler version of this: "Credit Derivatives for Dummies"

Fri, 05/11/2012 - 08:09 | 2416666 Vince Clortho
Vince Clortho's picture

We know from Greece that a cds is a mythical beast.  

Why include cds in the handbook and exclude Unicorns?

Fri, 05/11/2012 - 08:14 | 2416680 disabledvet
disabledvet's picture

Because they'd have to include Hades in that mythical world as well.

Fri, 05/11/2012 - 08:11 | 2416671 koaj
koaj's picture

where is max kaiser? been very silent since last night


wonder if now is a good time to start up the "Buy silver, crash JP MOrgan" campaign again

Fri, 05/11/2012 - 08:12 | 2416673 Meatballs
Meatballs's picture

'Aided and Abetted' in the first line- a term common to criminal conduct. Now that's irony...

Fri, 05/11/2012 - 08:14 | 2416678 Catullus
Catullus's picture

"In bypassing barriers between different classes, maturities, rating categories, debt seniority levels and so on, credit derivatives are creating enormous opportunities to exploit and profit from associated discontinuities in the pricing of credit risk."

And it's great because it works until it doesn't.

Fri, 05/11/2012 - 11:38 | 2417554 Bananamerican
Bananamerican's picture

most confidence schemes do.....even ones as full of obfuscating jargon as this....

Fri, 05/11/2012 - 21:39 | 2419139 InvalidID
InvalidID's picture


 The Offcial New Jersey translation of that reads: Yo, lemme hold a (billion) dollah(s).

Fri, 05/11/2012 - 08:16 | 2416686 LULZBank
LULZBank's picture

Hedging a risk never makes the risk go away, it only moves it from one party to another. Someone, somewhere will have to take the loss, if there is a loss.

ANYBODY who believed the Credit Derivatives or anything would take the risk away from an economy or a sector as whole, was a Fockin' Lunatic!

All through my degree in Finance and Economics, I was not able to excel or score higher grades (despite being a Genius) was becuase all the propaganda shit aka "financial education" would not make sense to me.

But NOW it does, and I am all LULZ!!!

Fri, 05/11/2012 - 08:23 | 2416687 Al Capowned
Al Capowned's picture

Warren G Wall street Regulators:

We dont regulate any stealing of this money and we damn corrupt too, But you can't be any geek off the street,Gotta be in the wall street club If you know what I mean, earn your keep, Regulators! do fuck all! Mount up!

It was a clear black night a clear white moon...............


60 trillion in derviates and silver manipualtion getting old ..... Jamie Dimon and Blythe Masters are about to make some markets turn cold.......

Fri, 05/11/2012 - 08:20 | 2416689 Robot Traders Mom
Robot Traders Mom's picture

Lelaina: Can you define "irony"?
Troy Dyer: It's when the actual meaning is the complete opposite from the literal meaning.

I spent 87 minutes of my life waiting for Troy and Leilana to get together. The unintentional comedy was well worth it.

Fri, 05/11/2012 - 08:20 | 2416696 distopiandreamboy
distopiandreamboy's picture

I wonder if Blythe's email is still the same. Let's find out...

Fri, 05/11/2012 - 08:24 | 2416704 BandGap
BandGap's picture

Doesn't JPM "own" a shitload of solver contracts? Just wondering.

Fri, 05/11/2012 - 08:27 | 2416722 Nader_Nazemi
Nader_Nazemi's picture

This is just a paper loss, right ? 

But what is the actual loss ? 

I apologize for sounding a little ignorant. 

Fri, 05/11/2012 - 08:54 | 2416829 Sudden Debt
Sudden Debt's picture

actual loss? who cares! Nothing taxpayers money can't solve!

Fri, 05/11/2012 - 08:29 | 2416724 the not so migh...
the not so mighty maximiza's picture

To quote JP morgan Chase own TV commericals "This is what recoveries are made of"

Fri, 05/11/2012 - 08:29 | 2416726 JohnKozac
JohnKozac's picture

" balance sheets instruments offering more flexibility..."

Dictionaries need to update the new definition of "flexibility"

Fri, 05/11/2012 - 08:51 | 2416818 Sudden Debt
Sudden Debt's picture

Look under "Thai Hookers"

Fri, 05/11/2012 - 08:48 | 2416804 Sudden Debt
Sudden Debt's picture

I feel so confident all will fall back on it's feet by itself!!

Money's for nothing and everything's for free!

Fri, 05/11/2012 - 09:07 | 2416874 GMadScientist
GMadScientist's picture

Nice crack pipe, but you're gonna need a torch and some rocks for full effect.


Fri, 05/11/2012 - 09:03 | 2416860 ArrestBobRubin
ArrestBobRubin's picture
JP Morgan Failure Shows the Incompetency of the Fed As Regulator And a Corrupted Government

The spin machine is revving up, and the spokesmodels are gesticulating wildly, in an effort to direct and deflect this failure of governance at JPM.

See how manfully Jamie Dimon has come clean on this. And look how well the Fed's capital standards are protecting us from a failure at JPM because of this unfortunate but 'manageable' trading mistake. This will be a buying opportunity!

A craven Congress, dominated by a hard core of one-percenter bully boys, an Obama Administration intimately tied to Wall St. cronies, and the Federal Reserve, which is a private institution of financial establishment insiders making a weak attempt at self-regulation cloaked in secrecy, have failed the public once again.

Simon Johnson points out what many may miss in all this. The side effects of the continuing campaign by the banks' lobbyists to weaken reform have given us a hint of the next financial crisis.

The credibility trap has captured our leadership. They cannot change course without admitting their failures, and to admit their failures is to weaken or even lose their power. And so its steady as she goes, onto the rocks. Better a general than a personal failure, because there is opportunity in a crisis as long as you still have a seat in the game.

The cheating, stealing, and lying will continue until the system finally collapses, or until the people finally wake up, take responsibility for their government, and demand meaningful reform.

Fri, 05/11/2012 - 09:04 | 2416864 Alexmai
Alexmai's picture

If you really look into JPM's $2billion loss, there is honest intent on the part of Jamie Dimon and JPM.

Fri, 05/11/2012 - 09:12 | 2416900 GMadScientist
GMadScientist's picture

I assure you there's very little honest about cooking one's reserve levels with STUPID hedging strategy.


Fri, 05/11/2012 - 09:20 | 2416926 Golden monkey
Golden monkey's picture

Stanley "big cock" Crouch, chief investment officer of Aegis Capital Corp., talks about JPMorgan Chase & Co.'s $2 billion trading loss and it's potential impact on global investment firms.


Fri, 05/11/2012 - 10:31 | 2417265 slackrabbit
slackrabbit's picture

Sorry but this is a hedge of a hedge (and that is the smallest number of links that we know of).

It makes mathematical sense, but Mother Nature doesn’t see it that way because no risk has actually been moved.

All that has happened is that complexity has increased. If they could have taken the loss in the first place, then they wouldn't have need the second hedge .......but then no one likes to lose money.

The problem is the psychological con of adding on another hedge, rather than take the losses.

If you can't take a big loss, don't make a big bet! 

The maths looks nice though....until it doesn't.

</sarc (I am sure bonuses were not involved) />


Fri, 05/11/2012 - 09:18 | 2416922 tradewithdave
tradewithdave's picture

Speaking of special... how about a trojan horse that looks like whale on the Thames?




Fri, 05/11/2012 - 10:02 | 2417075 Morphine Drip
Morphine Drip's picture

.... but online gambling is illegal in the US.


Fri, 05/11/2012 - 11:14 | 2417463 falak pema
falak pema's picture

when the gaussian curve gets distorted and fat tails become themselves the problem and not the haven of CDS bunga binges; as imagined by Blythe. If you live on the assumption of a perpetual economic machine and go on a virtual side bet spree on that basis, not realising that this very spiral is now vital part of the real economy you have become the very spark that lights the powder keg, as the tail is now feeding the mouth of the real economy.

You are in 2007... and if you continue to pretend and extent you are in 2012. And...well, the harder the fall!


Fri, 05/11/2012 - 12:18 | 2417675 earleflorida
earleflorida's picture

The irony of 'Synthetic' today, is quite the natural origination of lucidity - would 'not' you concur Doctor Who-Shalom? Oh yes, indeed  Jamie [soon to be a dimon in the rough?] ,but, it is my masters whom have no use for Darwinian Science!

Fri, 05/11/2012 - 14:06 | 2418075 heavymetaleconomist
heavymetaleconomist's picture

They made us read this in school because they thought it was cutting edge. The regulators didn't understand VaR so JP had to teach it to them. Try backing into the reported VaR on their financial statements. It's like trying to figure out China's actual GDP.

Fri, 05/11/2012 - 17:13 | 2418708 jayman21
jayman21's picture

Is that her phone number?  Warming up the war dialer.

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