Blythe Masters On The Blogosphere, Silver Manipulation, Gold-Axed Clients And Doing The "Wrong" Thing

Tyler Durden's picture


In an article that is about three years overdue, "JPMorgan's practices bring scrutiny" the FT finally takes aim at that other "vampire squid", JP Morgan, which technically is incorrect: because if Goldman is a nimble and aggressive creature, with infinite tentacles in every governmental office, and unencumbered by massive liabilities, JPMorgan is just as connected, but unlike Goldman, it is a behemoth in every other possible capacity, and with its trillion in deposits, matched by tens of billions in bad loans, is a true Bank Holding Company. As such 'Jabba the Hutt' would be a far more appropriate allegory to describe the the firm, whose reach, scope and scale lead the FT to classify it as "Three times a pallbearer, never a corpse."

As some may recall, back in October 2009, Zero Hedge did an exhaustive expose on the relationship between JPMorgan and the then version of MF Global, Lehman Brothers, whose perfectly functioning division, its North American Brokerage, ended up being scooped up by Barclays for pennies on the dollar. In the meantime, however, JPMorgan, with the backing of the Fed, proceeded to demand as much extra collateral for Lehman repo positions on hold with JP Morgan and the Tri-Party repo system, of which JPM is one of only two custodians, simply because it could, and because this is the easiest way for the bank that is even closer to the Fed than Goldman Sachs, to procure liquidity during times of broad distress. Such as when the money market is about to freeze to death. Since then, the topic of just how much JPMorgan may have ripped off the Lehman estate has escalated, and is set to be an epic showdown in the form of a lawsuit which "accuses JPMorgan of using its “life and death power as the brokerage firm’s primary clearing bank” to put a “financial gun” to its head and demand excess collateral." And here is the kicker: "It claims JPMorgan abused its access to US government officials and then “accelerated Lehman’s free fall into bankruptcy”, hoovering up collateral to protect itself to the detriment of the firm and other eventual creditors."

And therein lies the rub: because of all TBTF banks, JPMorgan is literally at the nexus of the entire $16 trillion shadow banking system, the very system that the Fed, much more than traditional liabilities, knows and uses constantly to hypothecate and rehypothecate assets, in essence creating money out of nothing, and which in conjunction with the other Tri-Party repo dealer, Bank of New York, as well as State Street, provides the US financial system with over $30 trillion in shadow credit money in the form of custodial assets - liquidity the bulk of which is not accounted for in any conventional monetary textbook or in any modern theory of money as it is such a novel development, yet which is still 100% fungible, and is by far the biggest secret of the American monetary system. It can be seen as summarized in the following graphic, first created by Citi's Matt King back in the week before Lehman failed (full report can be read here, and should be by anyone who wishes to understand just what is truly going on behind the scenes in modern finance).

Keep in mind, these are the same custody assets which, as explained previously in the case of MF Global, can be rehypothecated in serial fashion, creating a virtually infinite amount of "money" as long as everyone who is in on the fraud agrees to maintain the ponzi. Of course, if and when someone demands delivery of an underlying assets, the whole thing falls apart, which is what happened with AIG, with Lehman, and to a smaller degree, MF Global.

So what does all of this have to do with Blythe Masters?


At the end of the day, and as the Lehman lawsuit alleges, JPMorgan has intimate access to US government officials, and particularly the Federal Reserve, who will in turn take advantage of all JPM facilities, including its trading desk, to preserve the sanctity and foundations of the $30+ trillion in custodial assets and rehypothecation system, which further means that any potential implication that fiat money is impaired has to be wiped out. As it so happens, soaring prices of gold and silver are the primary if not only means left to express rising doubts in the future viability of the dollar, but in the viability of the fiat system in the first place. Which means that the Fed is, without a doubt, one of the biggest "clients" of the Fed in a symbiotic crosshold, where what the Fed wants, JPM has to execute and vice versa.

This brings us to the transcript of Blythe's interview on CNBC, in which a primary topic, ironically, was whether or not Jamie Dimon's firm manipulates the prices of precious metals, and particularly silver. What followed was the usual avalanche of platitudes that only a muppet can love:

  • "JPM's commodities business is not about betting on commodity prices but about assisting clients"... "it's about assisting clients in executing, managing, their risks and ensuring access to capital so they can make the kind of large long-term investments that are needed in the long run to expand the supply of commodities"...
  • "There's been a tremendous amount of speculation particularly in the blogosphere on this topic. I think the challenge is it represents a misunderstanding as the nature of our business. As i mentioned earlier, our business is a client-driven business where we execute on behalf of clients to achieve their financial and risk management objectives. The challenge is that commentators don't see that. So to give you a specific example, we store significant amount of commodities, for example, silver, on behalf of customers we operate vaults in New York City, Singapore and in London. And often when customers have that metal stored in our facilities, they hedge it on a forward basis through JPMorgan who in turn hedges itself in the commodity markets. If you see only the hedges and our activity in the futures market, but you aren't aware of the underlying client position that we're hedging, that would suggest inaccurately that we're running a large directional position. In fact that's not the case at all.
  • "We have offsetting positions. We have no stake in whether prices rise or decline. Rather we're running a flat or relatively flat matched book.
  • "What is commonly out there is that JPMorgan is manipulating the metals market. It's not part of our business model. it would be wrong and we don't do it."

Ah yes, because JPMorgan never engages in "wrong" activites...

And while we admire JPM's naive statement that it can triple its commodities revenues to $2.8 billion in 2011, while everyone else was losing money in the space, without taking prop bets, we just don't buy it. Just as we didn't buy Goldman's explanation that its prop desk only accounted for 12% of that firm's revenue, as Goldman told us directly (coupled with our challenge of prop trading in 2009, a pursuit taken on by Paul Volcker a few weeks later, resulting in the Volcker Rule). Needless to say, once the firm did break out its prop trading, it became quite clear just how huge of a factor prop trading truly was for Goldman. Because taken at face value, it would mean that all else equal, JPMorgan transacted at least 3 times more in flow in 2011 than in 2010. Yet, everyone knows that trading volumes in 2011 slumped relative to 2010. So no, Blythe, we appreciate your explanation, but we would appreciate the truth even more.

And yet there is one simple explanation that would make Blythe's story 100% correct: would JPMorgan consider the Fed, whose interests in keeping the price of precious metals as low as possible, and are aligned with those of JPM for the reasons listed above, its client?

Because if so, then absolutely everything falls into place, as JPMorgan is merely the overt conduit by which the Fed, and specifically the New York Fed, conducts monetary policy in the commodities space, just as Brian Sack would conduct open market operations in the bond arena, and as the FRBNY uses, on occasion, Citadel, and its HFT expertise, to execute its discretionary stock trades (yes, we know about those too).

We would welcome Blythe's comments on any and all of the topics listed above.

In the meantime, for those who missed it, here's Blythe.

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Thu, 04/05/2012 - 17:27 | 2320559 Citxmech
Citxmech's picture

Does sociopathy have a genetic componant?

Thu, 04/05/2012 - 17:31 | 2320573 Diplodicus Rex
Diplodicus Rex's picture

Reminds me of Two Weeks  There's something not right about her lower jaw.

Thu, 04/05/2012 - 19:18 | 2320776 BlackholeDivestment
BlackholeDivestment's picture, Nope, growing up?

Team Benny and the Suicide Vampire Squid of the Great Wal Mart of China and the 911 NWO Jets

                                             do not offer time,%202001%20Tornadoes.htm 

                          for that kind of child growth. Lol. 

                   The occult prophetic picture has been painted and the alter flame has been lit*fNcs18ZL2fzvTZrMxwyN5G3mc83Kbj-gInnZJfVKVrBsi2QFztw7o0vV1T7h4/s1.jpg 

...for Rosemary's Baby U.N.Security Council Chairmanship confirmed by Pre-emptively awarding the Antichrist 

prophetic Peace Prize  

for the nuclear nonProLIFEration response to the Iran Event(s) that shall open the seal to the prophetic false peace with Israel and the United Nations via Iran  Israel and the Middle East Muslim nations conflict shocking the market that has been set up by the big brother Masonic G Man 


Blythe Masters of Muppets prophetic Greenspan of the Larry it's time for Summers season. Lol.

Thu, 04/05/2012 - 20:04 | 2320876 Cathartes Aura
Cathartes Aura's picture

your post(s) could also be applied to some of the violent suggestive imaginations posted in thread. . .

If they happen to open their hearts to humanity and understand the global damage she is doing, they may choose another path.

one has to wonder if many of these guys have any females in their lives - mothers, sisters, nieces, daughters, etc. - and what their perceptions of these relatives might be. . .

Thu, 04/05/2012 - 20:20 | 2320905 Jendrzejczyk
Jendrzejczyk's picture

Cathartes Aura = testosterone Kryptonite. Blustery _icks shrivel at your every post.

Thu, 04/05/2012 - 21:44 | 2321093 Cathartes Aura
Cathartes Aura's picture


we all have testosterone flowing, just in varying amounts depending on body chemistry, and perhaps "environmental" affects still being argued over. . . doesn't mean one need be ruled by their hormones, certainly not if you're past your teens at least.

less about hormones, more about anger over feeling powerless, plus the desire to punish people - male AND female - sexually.

scrolling past most of these posts, I couldn't help but remember poster Janus' avatar. . .

Fri, 04/06/2012 - 00:42 | 2321329 BlackholeDivestment
BlackholeDivestment's picture

...awe relax Aura, play some more Agenda 21 Black Jack, you'll be fine. Nobody's looking at your Fannie. Lol.

Fri, 04/06/2012 - 02:38 | 2321417 Cathartes Aura
Cathartes Aura's picture

heh, like everyone else here, just entertaining myself watching the show - if I was even remotely bothered, I'd stop reading.

but it can be fascinating to see how lame people can be, and just what the threads throw up. . . literally.  quite the education relative to just what amrkn minds are pre-occupied with.

I'm sure you'll understand if I pass on whatever you've linked. . . have fun!

Fri, 04/06/2012 - 04:25 | 2321488 BlackholeDivestment
BlackholeDivestment's picture, that is understandable, people pass on by things ''foreign'' to them, they really don't want to know about, all the time, like; why in the wide world of sport did a Russian like Nicholas Roerich inspire the Vice President and the President to put the seal in your hand or the affect thereof? Lol. ...but since you do not care to know, lol, I'm sure you will find some good programming, lol, ...on your Country's TV channel, lol, to be ''pre-occupied'' with. Those familiar spirits, oooh, very scary, but don't be bothered enough to comment on them, that's entertainment. Lol. ''Lame'', but ''...have fun!'' sniping myself. Lol, good one.

Thu, 04/05/2012 - 23:51 | 2321281 mkkby
mkkby's picture

No, children of sociopaths often grow up to stick a knife in their parents back.  Let's hope I'm right.

Thu, 04/05/2012 - 15:49 | 2320250 Bicycle Repairman
Bicycle Repairman's picture

Really disingenuous stuff there, Blythe.  But let's face it.  The last decade is now gone.  PMs and commodities are now attracting serious money, much of it smart money.  So vermin like JPM and GS have set up shop in the sector, expecting to control the market and shake people down.  THAT is their business model.

Real regulation would prevent yet another market being destroyed, but we do not have that.  The regulators have been captured.

The real tragedy is that commodities like food and oil affect everyone deeply.  But the "squid", "Jabba" and their ilk must get their cut.  So fuck you, everybody.

Thu, 04/05/2012 - 18:45 | 2320738 The Disappointed
The Disappointed's picture

Vote up! just for your name.

Thu, 04/05/2012 - 15:49 | 2320255 Pinto Currency
Pinto Currency's picture

delete double post

Thu, 04/05/2012 - 18:37 | 2320719 RafterManFMJ
RafterManFMJ's picture

Not a bad job overall, but I can still tell she was born a man.

Sun, 05/13/2012 - 16:52 | 2421967 Loukanika the r...
Loukanika the riot dog's picture

Oh No. Dont let WB7 see this. I predict another peppermint rhino pic I could well do without

Thu, 04/05/2012 - 15:21 | 2320173 Calmyourself
Calmyourself's picture

No, you'll be fine just choose granite or limestone..

Thu, 04/05/2012 - 15:31 | 2320190 strannick
strannick's picture

No, you should not have looked directly into her eyes. When you stare into the abyss, the abyss stares into you.

"JPM's commodities business is not about betting on commodity prices but about assisting clients".

What an interesting thing to say. I guess she really couldnt say anything else, except the truth, and the truth would set her free of her job as Commodities head of JPM.

Fri, 04/06/2012 - 10:07 | 2321954 fockewulf190
fockewulf190's picture

I'm surprised that people don't instantly turn to stone once eye contact is made with the Blythdusa.

Thu, 04/05/2012 - 16:19 | 2320353 SHEEPFUKKER

Hmmmm... great business model at the Fed.....errrrrrrrrrr JP Morgue.  Buy all the Treasuries and sell all the PM's.  Please let me know how that turns out.  

Thu, 04/05/2012 - 17:43 | 2320609 bonin006
bonin006's picture

I think you only turn to stone by looking at the actual physical creature, images are safe.

Thu, 04/05/2012 - 15:10 | 2320132 Badabing
Badabing's picture

and all this is OK?

Thu, 04/05/2012 - 15:17 | 2320152 Stanwick
Stanwick's picture

Buy cash 

Thu, 04/05/2012 - 15:57 | 2320285 vato poco
vato poco's picture

Naw, seeing as how it's *her*, let's do us an update on the classic "Death of Crassus" thing: a jeroboam of molten silver down the gullet. Let her watch it being melted - tell her nothing to worry about, it's merely a neutral position.

Thu, 04/05/2012 - 18:35 | 2320710 Silver Bug
Silver Bug's picture

The evil one speaks! Beware!

Thu, 04/05/2012 - 23:55 | 2321287 CompassionateFascist
CompassionateFascist's picture

Silver wire round her ankles, with Blythe hanging upside down. I can give the lie to everything she said via direct personal experience. In August 2010 I moved from munis/money mkt into "silver". My JPM-connected broker put it all into SLV...stupid me, at the time I didn't even know what a "derivative" was. When I found that out (along with much else) from ZH and other sites, I let it ride for awhile...then in April of 2011 moved from paper into bullion. But to do so, broker-man insisted I sign a piece of paper clearing him w his boss JD, attesting that I made this move "against his advice". JPM is THAT desperate too keep people away from physical and in paper. And we all know why.

Thu, 04/05/2012 - 16:16 | 2320346 jus_lite_reading
jus_lite_reading's picture



Thu, 04/05/2012 - 18:50 | 2320751 Robot Traders Mom
Robot Traders Mom's picture

I'm not going to lie. I'd pound that stupid bitch.

Thu, 04/05/2012 - 20:36 | 2320945 TheFourthStooge-ing
TheFourthStooge-ing's picture

Claw, ball peen, framing, or sledge?


Thu, 04/05/2012 - 15:05 | 2320103 The They
The They's picture

she melts if you pour colloidal silver on her

Thu, 04/05/2012 - 15:45 | 2320245 moondog
moondog's picture

A silver crown...much like the one Viserys wore on Game Of Thrones..

Thu, 04/05/2012 - 15:05 | 2320117 citta vritti
citta vritti's picture

try 30 of 'em

Thu, 04/05/2012 - 15:09 | 2320130 SeverinSlade
SeverinSlade's picture

That's the equivalent of showing a cross to a vampire.

I'm sure Blythe has never actually seen an ounce of physical silver...Seeing as how their "vaults" are likely empty.

Thu, 04/05/2012 - 15:20 | 2320166 Pladizow
Pladizow's picture

Why do vampires hate crosses?

They're allergic to bullshit!

Thu, 04/05/2012 - 15:49 | 2320256 strannick
strannick's picture

No, because they are the living dead

Thu, 04/05/2012 - 15:11 | 2320137 slaughterer
slaughterer's picture

Uh oh, I do not like BM on CNBC at all: this can only mean JPM is going to take down silver to $26 again. 

Thu, 04/05/2012 - 15:21 | 2320168 Beam Me Up Scotty
Beam Me Up Scotty's picture

Boooya!!!  I hope so!!  I love sales!!

Thu, 04/05/2012 - 15:23 | 2320178 Gohn Galt
Gohn Galt's picture

Hope so.  Its like when she is about to bust out laughing, she hides it with a smirk.  I think she almost lopst it for a second.

Thu, 04/05/2012 - 15:36 | 2320218 gadflew
gadflew's picture

Agreed.  She shows up after pit close the day before a holiday with this?  When you see Blythe, Soros, a Rothschild, etc. come out in the daylight you know something is brewing with the vampires

Thu, 04/05/2012 - 15:55 | 2320275 Pinto Currency
Pinto Currency's picture


And Brian Sack quits.

I wonder how long until he commits suicide with two gunshots to the back of the head.

Fri, 04/06/2012 - 22:00 | 2323925 MeelionDollerBogus
MeelionDollerBogus's picture

On-target for the trend is silver = $26 with gold = $1465.77

2012 04 06 gold vs silver performance multiplier | Flickr - goldpricemodel

2012 feb 06 gold price model 277 wk roc | Flickr, Goldpricemodel - I'd expect no later than 2nd week May and possibly window opening only 3rd week April (2012)

Thu, 04/05/2012 - 15:19 | 2320161 Thisson
Thisson's picture

This article is pretty foolish.  As much as I hate to admit it, Masters' statement makes sense.  If they're sitting long the physical (in the vault), they need an offsetting short position in the paper market.  It also doesn't make sense to say that JPM isn't running a matched book in Silver when we already accept that they run matched books in all their other markets.  The silver manipulation claims here are bullshit, in my opinion. 

Thu, 04/05/2012 - 15:22 | 2320179 Beam Me Up Scotty
Beam Me Up Scotty's picture

How did they make $2.8 Billion then?  On commisions?

Thu, 04/05/2012 - 15:26 | 2320189 hedgeless_horseman
hedgeless_horseman's picture



...they need an offsetting short position in the paper market.

Really?  Why, exactly? 

Thu, 04/05/2012 - 16:11 | 2320323 CH1
CH1's picture

Because... well... because... SHUT UP! You are crazy!

Conspiracy theorist! Government hater! Bible thumper! Ron Paul lover!

Racist, sexist, bigot, homophobe... Terrorist!!

Thu, 04/05/2012 - 16:26 | 2320376 nope-1004
nope-1004's picture

You forgot "silver bug".  LOL.

Thu, 04/05/2012 - 16:48 | 2320439 JW n FL
JW n FL's picture




... well... because... SHUT UP! You are crazy!

Conspiracy theorist! Government hater! Bible thumper! Ron Paul lover!

Racist, sexist, bigot, homophobe... Terrorist!!


I know you are but what am I?

Thu, 04/05/2012 - 16:48 | 2320438 Thisson
Thisson's picture

Really?  Why, exactly? 

For risk management, the same as every other market maker.

Thu, 04/05/2012 - 17:48 | 2320581 hedgeless_horseman
hedgeless_horseman's picture



Thus one of the many conflicts of interest inherent in banks that are also market makers. But really, market makers have no requirement to be flat, and banks do have a requirement to have reserves.


Fri, 04/06/2012 - 00:18 | 2321313 CompassionateFascist
CompassionateFascist's picture

JPM worries little about "risk". There is no "risk" when you are the government. At least until the shooting starts.

Thu, 04/05/2012 - 19:19 | 2320798 TeMpTeK
TeMpTeK's picture

The 2.8 Billion dollar question...................

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