Art Cashin Previews Jamie Dimon's Senatorial "Minuet"

Tyler Durden's picture

It appears that more and more people are finally waking up to the sheer farce that calling a kleptofascist crony capitalist system with socialist overtones because "deficits don't matter", a democracy, has become.

From UBS Financial Services

Congress, JPMorgan And The Financials - Today, Jamie Dimon will be called to Capitol Hill, purportedly to answer questions on a hedge trade that might have gone sour to the tune of $2 billion, or more. Hearings of this type tend to be a typically American political minuet. Each of the elected officials will be offered a set time (e.g. 10 minutes) in which to ask questions. After checking to be sure that the cameras are rolling, each will use up probably seven of those minutes making a statement (just to set up the question we are sure). Some cynics think a primary goal is sometimes to set your name in a headline for the next day. Please, please these are elected representatives of the people.

Folks in the financials hope the questioning sticks to the announced topic. Traders fear that some of the folks may use the opportunity to pillory Wall Street and the financials.

JPM has a large notional exposure to derivatives. The firm claims that it only looks large but that most of it is “paired off”. (Think - half buyers and half sellers). Further, they claim these are heavily very low risk interest rate derivatives.

But bloggers and some political types use the sheer dollar volume of the notional values. They note that the notional value of derivatives pointed out in the 10K report is a whopping $71 trillion. Then they giddily point out that $71 trillion is larger than the GDP of the entire United States - in fact about five times larger. Then they deliver the punch line, noting that $71 trillion is larger than the GDP for the entire globe. That’s usually followed by table pounding about how reckless and dangerous Wall Street is. Let’s hope they stick to the hedge trade as advertised.

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Janice's picture

Simply put, this is an opportunity for congress to extort more money from JPM. And JPM to extort more money from taxpayers.

idea_hamster's picture

most of it is “paired off”

net notional != gross notional

When you are the leper with the most fingers, you can't depend on your counterparties to keep their side of any deal that you have not required variation margin on over the entire life of the contract.

"Paired off" is bull-shit-ski when you don't have an exchange and you don't enforce mark-to-market losses as they mount.

fuu's picture

Who does the pairing? JPM's CIO? Smoking craters abound.

Thomas's picture

So the claim is that you can net their $71 trillion--$35.5 trillion on one side and $35.5 trillion on the other. Tell us how that works out for ya in a financial crisis. 

SWRichmond's picture

Yes, and let's not forget it was those harmless-as-a-cute-puppy Interest Rate Swaps that wiped out more than $400 Million of Harvard's endowment.

Clowns on Acid's picture

Yeh...Hravard just should have bought's all so simple.

dow2000's picture

Yeah quick question tough?  what happens if that hedge is off by 1bp (0.01%)?  Yeah big losses...and not a whole lot of margin for error!

azzhatter's picture

Dimon surveying his next campaign contributions

LoneStarHog's picture

Republic and not a democracy...Fascist and not Socialist

James_Cole's picture

That's my pet peeve, tying socialism to all this nonsense. Socialism has gotten a terrible reputation in the western world because of all the propaganda tying it to state capitalism aka Mussolini's corpratism. 

"The original conception of socialism was an economic system whereby production was organised in a way to directly produce goods and services for their use-value; the direct allocation of resources according to satisfy economic demands without financial calculation and the mobilisation of the economy based on physical units as opposed to the economic laws of capitalism (see: Law of value), often entailing the end of capitalistic economic categories such as rent, interest, profit and money."

I think most of the people on this site are actually closet socialists without even being aware of what that is. 

yabyum's picture

Jamie:Why are we even here? I own your collective asses.

junkyardjack's picture

Congressman: Jamie, I forgot my notes at the office.  Do you remember what question 3 was?....

Jim in MN's picture

Off topic, well sort of:  Two new mindblowers from TEPCO/Fukushima:


TEPCO studied huge tsunamis in in-house training

Tokyo Electric Power Company says it failed to make use of an in-house study that estimated the extent of damage by huge tsunamis on nuclear reactors.

A group of TEPCO employees conducted a study in 2006 to determine what would happen at the plant's No.5 reactor if it was hit by waves higher than 5.7 meters, the maximum height assumed by the company.

The group estimated that if the waves exceeded 13.5 meters, all power would be lost and it would be impossible to inject water into the reactor.

The study also said it would cost about 25 million dollars to implement measures to prevent such an occurrence.

TEPCO says the study session was conducted as training for junior employees, and that the company did not really expect such a large tsunami.

It says it brought up the issue of tsunami damage at the training because a government panel was discussing the effects of large waves on nuclear reactors following the massive Indian Ocean tsunami in 2004.

TEPCO made another estimate in 2008 to determine the effects of a 10-meter-high tsunami on nuclear reactors.

But on both occasions, the company failed to make use of the studies' results and did not take any measures against possible disasters.

Jun. 13, 2012 - Updated 06:11 UTC (15:11 JST)

TEPCO again fails to find leaks at Fukushima plant

The operator of the Fukushima Daiichi nuclear power plant says a new method has failed to locate radioactive water leaking from one of the reactors. Identifying the leaks is a key step towards decommissioning the plant.

Tokyo Electric Power Company said workers used an infrared camera on Tuesday to search for the leaks in the suppression chamber at the No.2 reactor.

It was hoped that the infrared images would reveal the leakage spots by showing the temperature difference between the water and the air.

But the images failed to show a big gap in temperatures.

TEPCO says it will devise other ways to find the locations.

The utility has been injecting water into the reactor to cool melted fuel rods to prepare for their removal.
But some of the radioactive water is leaking from unidentified places.

Jun. 12, 2012 - Updated 22:20 UTC (07:20 JST)


Cursive's picture


That’s usually followed by table pounding about how reckless and dangerous Wall Street is. Let’s hope they stick to the hedge trade as advertised.

Art, if it ain't just a hedge trade (otherwise why the big loss), then the entire derivitives industry should be under scrutiny.  You can look worry about the faulty brakes all you want, but if you see this over and over in the same model car, maybe you want to look at the brake manufacturer.

blindfaith's picture

The reason cars have breaks is so the car can go faster...think about that a moment.  ( bad breaks, you drive slow or not at all).

This is how everything financial thinks...we have breaks.  Sure you do, unless someone forgot to install them properly and test them for safety.

This is like all the monkeys with typewritters, but no one is checking the sentence structure or spelling.

JeffB's picture

"we have breaks"

Freudian slip?


Jesse's picture

Yes, they might say things like excessive risk taking by greedy and reckless banks threaten the world's financial system.

How reckless is that sort of speculation!  How dare they!


Don't worry Art, they won't do anything. 

unununium's picture

Let's hope they stick to the hedge trade?

Why on Earth would we hope for that?

If we're going to hope, let's hope that Dimon slips up and exposes massive market manipulation. Or let's hope that he breaks down and confesses to being part of a vast kleptocratic supra governmental machine. Let's hope that he names names and explains.

Have we forgotten what hope means?

Mercury's picture

This whole sorry spectacle is made worse by the MSM cheerleading for and speculating about what new flavors of government micromanagement may come out the other end. TBTF-4EVA may as well be constitutional amendment. 

Not only will the policy of TBTF never be revoked, individual TBTF firms will never be allowed to disassemble themselves into several, smaller firms and TBTF will metastasize to other sectors. This is the kind of thing Bill Gross had in mind when he said "Shake hands with the government" back in January of 2009.

What a farce. If Congress had to go through the ringer every time they pissed away $2bil we'd need 147 C-SPAN channels just to keep up.

RiverRoad's picture

Derivitives were a large factor in the Crash of "87 too, but few people knew what they were at the time.  The Street kept the concept under wraps as long as they could, but this Mess was just a matter of time.

jjsilver's picture

Excuse me, "socialist overtones" isn't that a bit generous?

It is outrageous that private banks and the FED can create our money and collect interest on it. If we must pay interest on monies created and loaned, let it be the United States of America that receives it, not some private interest.

The private banks that create money out of thin air and enslave the common man to a life of debt. If we are to be indebted let it be to our country and not the bankers.

Congressman McFadden on the Federal Reserve Corporation Remarks in Congress, 1934 AN ASTOUNDING EXPOSURE 

                               Look familiar?

               10 PLANKS stated in the Communist Manifesto

1. Abolition of private property and the application of all rents of land to public purposes.
Americans do these with actions such as the 14th Amendment of the U.S. Constitution (1868), and various zoning, school & property taxes. Also the Bureau of Land Management (Zoning laws are the first step to government property ownership)

2. A heavy progressive or graduated income tax.
Americans know this as misapplication of the 16th Amendment of the U.S. Constitution, 1913, The Social Security Act of 1936.; Joint House Resolution 192 of 1933; and various State "income" taxes. We call it "paying your fair share".

3. Abolition of all rights of inheritance.
Americans call it Federal & State estate Tax (1916); or reformed Probate Laws, and limited inheritance via arbitrary inheritance tax statutes.

4. Confiscation of the property of all emigrants and rebels.
Americans call it government seizures, tax liens, Public "law" 99-570 (1986); Executive order 11490, sections 1205, 2002 which gives private land to the Department of Urban Development; the imprisonment of "terrorists" and those who speak out or write against the "government" (1997 Crime/Terrorist Bill); or the IRS confiscation of property without due process. Asset forfeiture laws are used by DEA, IRS, ATF etc...).

5. Centralization of credit in the hands of the state, by means of a national bank with State capital and an exclusive monopoly.
Americans call it the Federal Reserve which is a privately-owned credit/debt system allowed by the Federal Reserve act of 1913. All local banks are members of the Fed system, and are regulated by the Federal Deposit Insurance Corporation (FDIC) another privately-owned corporation. The Federal Reserve Banks issue Fiat Paper Money and practice economically destructive fractional reserve banking.

6. Centralization of the means of communications and transportation in the hands of the State.
Americans call it the Federal Communications Commission (FCC) and Department of Transportation (DOT) mandated through the ICC act of 1887, the Commissions Act of 1934, The Interstate Commerce Commission established in 1938, The Federal Aviation Administration, Federal Communications Commission, and Executive orders 11490, 10999, as well as State mandated driver's licenses and Department of Transportation regulations.

7. Extension of factories and instruments of production owned by the state, the bringing into cultivation of waste lands, and the improvement of the soil generally in accordance with a common plan.
Americans call it corporate capacity, The Desert Entry Act and The Department of Agriculture… Thus read "controlled or subsidized" rather than "owned"… This is easily seen in these as well as the Department of Commerce and Labor, Department of Interior, the Environmental Protection Agency, Bureau of Land Management, Bureau of Reclamation, Bureau of Mines, National Park Service, and the IRS control of business through corporate regulations.

8. Equal liability of all to labor. Establishment of industrial armies, especially for agriculture.
Americans call it Minimum Wage and slave labor like dealing with our Most Favored Nation trade partner; i.e. Communist China. We see it in practice via the Social Security Administration and The Department of Labor. The National debt and inflation caused by the communal bank has caused the need for a two "income" family. Woman in the workplace since the 1920's, the 19th amendment of the U.S. Constitution, the Civil Rights Act of 1964, assorted Socialist Unions, affirmative action, the Federal Public Works Program and of course Executive order 11000.

9. Combination of agriculture with manufacturing industries, gradual abolition of the distinction between town and country, by a more equitable distribution of population over the country.
Americans call it the Planning Reorganization act of 1949 , zoning (Title 17 1910-1990) and Super Corporate Farms, as well as Executive orders 11647, 11731 (ten regions) and Public "law" 89-136. These provide for forced relocations and forced sterilization programs, like in China.

10. Free education for all children in public schools. Abolition of children's factory labor in its present form. Combination of education with industrial production.
Americans are being taxed to support what we call 'public' schools, but are actually "government force-tax-funded schools " Even private schools are government regulated. The purpose is to train the young to work for the communal debt system. We also call it the Department of Education, the NEA and Outcome Based "Education" . These are used so that all children can be indoctrinated and inculcated with the government propaganda, like "majority rules", and "pay your fair share". WHERE are the words "fair share" in the Constitution, Bill of Rights or the Internal Revenue Code (Title 26)?? NO WHERE is "fair share" even suggested !! The philosophical concept of "fair share" comes from the Communist maxim, "From each according to their ability, to each according to their need! This concept is pure socialism. ... America was made the greatest society by its private initiative WORK ETHIC ... Teaching ourselves and others how to "fish" to be self sufficient and produce plenty of EXTRA commodities to if so desired could be shared with others who might be "needy"... Americans have always voluntarily been the MOST generous and charitable society on the planet.

Do changing words, change the end result? ... By using different words, is it all of a sudden OK to ignore or violate the provisions or intent of the Constitution of the united States of America?????

The people (politicians) who believe in the SOCIALISTIC and COMMUNISTIC concepts, especially those who pass more and more laws implementing these slavery ideas, are traitors to their oath of office and to the Constitution of the united States of America... KNOW YOUR ENEMY ...Remove the enemy from within and from among us.

None are more hopelessly enslaved, as those who falsely believe they are free....

Mercury's picture

It is outrageous that private banks and the FED can create our money and collect interest on it. If we must pay interest on monies created and loaned, let it be the United States of America that receives it, not some private interest.

Yes, let's give the government a monopoly on the business of pricing risk. 

Which constitution are you reading?

LetThemEatRand's picture

Come on, really?  The minimum wage is the same as everyone having the equal income?  Having a minimum age for working in a factory is evil?  The FCC is the same as having all communications centralized in the state?  The same goes for every other point.  Not even close.  Get a fucking grip. 

eclectic syncretist's picture

Not trying to play Ben Franklin to your Thomas Jefferson here by correcting your first sentence, but it should more properly read "It is outrageous that private banks and the FED can create our DEBT and collect interest on it'.  The difference is not semantical, at least IMHO.

totally agree on the rise of socialism end of free trade parts too.

Centurion9.41's picture

Now, I'm not disagreeing with everything you rant upon.  But, at the very BEGINNING of your rant you write: "If we must pay interest on monies created and loaned, let it be the United States of America that receives it, not some private interest."

Here's the thing, the Fed does pay the US gov.  Obviously not all of the money they make, the rest is retained, as the assertion goes, to fund the infrastructure etc. to support the banking system.

So, that you state something which is not only so fundamentally ignorant, so very very easily verifiable, and so clearly stated in so many educational pieces on the Federal Reserve System, one can ONLY conclude you are either EXTREMELY ignorant, OR have deep political motivations to LIE.

Folks like you, Generation "Xs", "99%ers" & anarchistic who hate the system all seem to have one thing clearly in common.  You are all EXTREMELY poorly educated and must have come from an educational system where whatever BS was thrown down on the paper was given a gold star and your pansy @ss ego stroked with words like "you're so wonderful", "you can do anything you put your mind to", "every opinion matters" and other PC drivel.

All that said, I'm decidedly a Libertarian who believes in the "at the time written" & "strict constructionalist" interpretations of the Constitution.  Read Judge Borks' "The Tempting of America".   So I am very much with you on the dangers faced. 

But please, if you hope to make a difference in the world, dont insult the world with such blatantly ignorant statements.  Doing so will result in only morons sitting around you saying "yea!" to your emotional rants.

Lastly, and probably most importantly, your implications re the 10 planks and the current liberal/progressive idols, though being very true on many levels, is offensive to most because of the Constitution, the right to vote, and.... the 2nd Amendment.

I suggest if you dont already strongly support the 2nd Amendment, that you begin so immediately.  Because most American people are far more Communist/Progressive in mind and spirit than American.  And Jefferson's pruning of the Tree of Liberty is again drawing near.

Good luck


adr's picture

Rabble, rabble, rabble rabble.

Rabble rabble, rabble, rabble.


Rabble, Rabble.

Maniacal laugh, maniacal laugh, maniacal laugh.

Rabble! rabble rabble.

Maniacal laugh, maniacal laugh.

Yep that covers the extent of the hearing.

junkyardjack's picture

Exactly.  Senators are so stupid. They don't realize that most of the $71 trillion is perfectly hedged just like JPM's was so notional doesn't matter and not to mention that even though its 5x the world's GDP it's mostly backed by collateral so there's not much risk in it at all

/sarc off

lolmao500's picture

Please, please these are elected representatives of the people.

Please please, they don't care about that, they care about who payed their third house... not who voted for them.

spanish inquisition's picture

No need to worry about who votes and how with Diebold voting machines "Let us handle the count for you! Stalin approved!"

You know, comrades," says Stalin, "that I think in regard to this: I consider it completely unimportant who in the party will vote, or how; but what is extraordinarily important is this — who will count the votes, and how. (my bolding and ital)

batterycharged's picture

"with socialist overtones"

LMAO, 1 star.

Lumberjack's picture

A little regarding misuse of public office and crony capatilism with possible RICO ramifications.


Here is a video of candidate's debating for Maine Senator Olympia Snowe's Seat. Included on the roster is wind scam artist and former Maine Governor Angus King (Former Democrat now Independent, who formed the Independent party in Maine when independent legally meant unenrolled), who used his office as Governor to enrich himself in this scam. 

Go to 14 minutes in the video for candidates responses to a wind energy (subsidies) question that was posed.


edmondantes's picture

Democracy is the worship of jackals by jackasses - Mencken

Clint Liquor's picture

There are only two guaranteed ways to become a multi-millionaire:

1.) Win the lottery.

2.) Be elected to Congress.

pmm009's picture

looking at the financials for JPM, MS & GS, The balance sheets seem to be well diversified.   JPM & GS are printing money and with interest rates dropping so fast against large fixed income portfolios they should continue to do so unless something blows up in Europe and their other asset class holdings get taken down in another 2008 all correlations are 1 environment.   They should be hedging to withstand such catastrophe, not to make marginal Q to Q profits.  I don't think they will supply anyone enough info. to know where on the scale the actually stand, but it brings up another issue.  Nearly 45% of GS revenue is directly expensed as comp in the last Q and JPM's is over 30% ( they have alot more revenue and alot more net interest revenue not requiring the same head count ratio ).  The questions that need to be asked are around corporate governance and pay.  These companies need to pay out less and hold larger capital buffers.  The tax payer should have demanded a larger, more commercial, pound of flesh when they were standing at the abyss in 2008.  Internal rates of return of 18% at best don't cut it.   These banks should be paying at least a 30-50% IRR and this would help create a 50-100 Billion fund that could have been set aside (like the politicians in Wash could actually keep their hands of it!!!)  There are too many people making more than 10 million per year at these banks who should be making less than 5.  There are not that many 7 footers on this planet, but there are plenty of people with the intellectual capacity and education/experience to do what Ina & the Whale have done.  We are literally talking about a few hundred people being able to gamble at the risk of the standard of living for a few billion.  There are people that will say, "the structures are not in place in NY or Wash" so dinging the banks will simply kill the golden goose and hamstring a hugh offensive weapon for the American system.  This maybe true, but we are now in the situation where we could easily take another step back, such as 2008,  and it is not all clear what is left of the middle class will accept another 20-50% loss in net worth either through direct asset price drop or via inflation for that matter.  The bottom line is that we need to fix this before it does damage to the country that is nor repairable.

sansnobel's picture

Did anybody see this this morning on CNBC:

Banking analyst- CLSA Mike Mayo

He is suggesting that banks have deposits in excess of loans as a rule?? What rule? I thought Banks did not have any deposits? They take money in.... lend it out and collect the spread....They don't have a balance sheet, when depositers need their money the bank has to borrow from another bank to make deposits whole or repo some of their shit for tempo liquidity so depositers don't get suspicious....what fuckin planet is this guy from? I wonder if he would care to comment on what causes BANK RUNS!!!!!!!!

Centurion9.41's picture

Seriously, pieces like this bring out the morons en-mass.

Banks have reserve requirements, but they are too low.

Regardless, it's the FIAT basis to the Fractional Banking System that is the issue, NOT the concept of fractional reserves.

Returning to a Gold Standard based Fractional Banking System is the only fix.

Of course society will have to also live with the effects of not being able to vote in politicians to give them things like unemployment benefits for 2 years, or food stamps, or many of the other things that the current debt based fiat currency system does through Keynesian manipulations.

sansnobel's picture

So what exactly are the reserve requirements for banks to hold? Some people say 10%, some of you "geniuses" say less than that, more like 3% I've heard some say. So what is a good number? What number would have worked so that the Banks had enough Capital so that The FDIC would not have had to step in and stop the Bank Runs in 2008? Our regulators or self proclaimed wise ones seem to have this all under control...move along people nothing to see here. Better yet an even better question is what is the definition of "Deposit"? Does the word take on a different connotation when it applies to banking? Have we all agreed to put our money into a bank account and have 90% of it put at risk? Show me the legal agreement! I would love to see it!!!! Or is this just another part of that "Social Contract" we all supposedly entered into when we were born? Slaves to the Banker, is more accurate I think. Born into Neo-Feudalism. And by the way Bank Runs happend under the Fractional Gold standard as well, Gold does nothing to stop Fractional lending from doing the damage it does. All Gold does is limit the "BASE" money supply nothing more. In today's world the Base money supply is expanded by keystroke at the Marriner Eccles building. Gold Schmold ......

Ace Ventura's picture

Here you go:

The picture is actually worse than you suspected. What could possibly go wrong with 0% reserve requirements?

LOLZ. In a maniacal "WTF is this really happening?" sort of way.

Thisson's picture

No, a gold standard only works if there are limits on fractional reserve banking, otherwise you once again have a situation where there is no limit on the creation of credit (and thus inflation).


Satan's picture

Trillions are so last year. Quadrillions bitchez!

Stackers's picture

If net pairing worked AIG would be trading at $1400 today ...... instead of $30.

Centurion9.41's picture

If you stated the truth, you wouldnt be written off as a moron by those who understand the difference between "net pairing" and reserve requirements.

It's the latter that caused AIG to fail, not "net pairing". 

None of the counter parties were required to have sufficient reserves to meet their obligations of the pairs they entered into.

That was the problem.

Not "net pairing".

stickyfingers's picture

Tune in at 'tea time'.

earleflorida's picture

we begin: ____ as the unwonting defendent stands in noncompliance with maladjusted magic,... this lapidary charlatan 'dimon of sorts', with such elegance only damian would object. mandrake,  the jurist, queries the joey-court`jury - jestering, aphoristically vetting with impeccable servitude. hence, a lowly shout comes forth,... tis not you we want, mandrake bellows,... but that of octon's whereabouts in the forensic global market of malfeasance!  the dimon tenses up as his veneer mystique quivers - without hesitant he stands short, yet towering as a napoleonic clone, and unambiguously refuses to give up the octon.

the reveal: ____ knowing so well, 'it' would send the cobra to finish him by just pulling on a string? the mandrake must now rest his snake-bitten laurels upon the bench to deliberate this defiant defendant's fate, knowing to well that the illusive and opaque cobra has already poisoned the jury with wants to each twelve in which they could not dwell.      to be cont.       :-))

loveyajimbo's picture

Wonder if they will ask for complete disclosure on "Dogturd" Dimon's silver short position... massive and unbacked...  Maybe Gensler will... ah shit, he is asleep again!

lugn's picture

what page(s) of the 10-K is the $71 trln from?

Grand Supercycle's picture

Rally Warning Continues...

SPX bullish daily chart & USDX bearish daily chart strengthen.

Significant equity / EURUSD upside & USDX retracement ahead.