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The Second Act Of The JPM CIO Fiasco Has Arrived - Mismarking Hundreds Of Billions In Credit Default Swaps

Tyler Durden's picture




 

As anyone who has ever traded CDS (or any other OTC, non-exchange traded product) knows, when you have a short risk position, unless compliance tells you to and they rarely do as they have no idea what CDS is most of the time, you always mark the EOD price at the offer, and vice versa, on long risk positions, you always use the bid. That way the P&L always looks better. And for portfolios in which the DV01 is in the hundreds of thousands of dollars (or much, much more if your name was Bruno Iksil), marking at either side of an illiquid market can result in tens if not hundreds of millions of unrealistic profits booked in advance, simply to make one's book look better, mostly for year end bonus purposes. Apparently JPM's soon to be fired Bruno Iksil was no stranger to this: as Bloomberg reports, JPM's CIO unit "was valuing some of its trades at  prices that differed from those of its investment bank, according to people familiar with the matter. The discrepancy between prices used by the chief investment office and JPMorgan’s credit-swaps dealer, the biggest in the U.S., may have obscured by hundreds of millions of dollars the magnitude of the loss before it was disclosed May 10, said one of the people, who asked not to be identified because they aren’t authorized to discuss the matter. "I’ve never run into anything like that,” said Sanford C. Bernstein & Co.’s Brad Hintz in New York. “That’s why you have a centralized accounting group that’s comparing marks” between different parts of the bank “to make sure you don’t have any outliers,” said the former chief financial officer of Lehman Brothers Holdings Inc."

At this point, Zero Hedge assumes that Iksil was merely abusing the little loophole used by every CDS trader since time immemorial, which however on a TRSed position of $100 billion in notional, which based on our calculations has a DV01 of $200 million, means that the bid/ask spread itself is worth $500 million in profit (and not so much loss).

However, if what Bloomberg is implying is that Iksil was effectively overriding "real" marks, and using imaginary (or "forced") bids and asks, then that brings into question the validity of CDS marks reported by MarkIt, the same MarkIt partially owned by Goldman and... that's right, JP Morgan (more on MarkIt in a moment).

But first, back to Bloomberg:

Jennifer Zuccarelli, a spokeswoman for New York-based JPMorgan, declined to comment on whether the CIO and investment bank were using different prices.

 

“All components of the synthetic credit portfolio in the chief investment office were mark-to-market,” she said.

 

The trades in question, made by a CIO group that included Bruno Iksil, nicknamed the London Whale because his positions grew so large, were on so-called tranches of credit-swap indexes, the people said.

 

Tranches allow investors to wager on varying degrees of risk among a pool of companies. Credit swaps pay the buyer face value if a borrower fails to meet its obligations, less the value of the defaulted debt.

 

Because JPMorgan had amassed such large positions, even a small change in how the prices were marked may have generated a big difference in the value of the trades, one of the people said.

While very little is known at this point, the realization that JPM did in fact abuse mark-to-market of a Level 1 security means that if Iksil's book was marked fairly, to mid-market alone, let alone to the real exit level opposite where it is most profitable (i.e., long risk as in the case of Bruno Iksil's IG9 holdings -> mark at offer, and vice versa), the losses would be materially greater, potentially up to hundreds of millions in the remarking process itself? And any further uncertainty about JPM's accrued losses, which we now know had to be covered up by tens of billions in asset sales from its portfolio (but, but JPM certainly did not need the cash) will merely add to the toxic spiral that is the pounding of JPM stock, coupled with further widening in IG9-10, which leads to even more JPM stock losses, which further blows out IG9-10 and so on.

One thing we do know is that in a recent case of a UBS prop trader, caught mismarking his CDS book, there was some serious litigation involved, and major accusation of illegalilty. Once again, from Bloomberg:

Ramon Braga, a trader on the bank’s corporate-credit desk in London, was fired for collusion in the alteration of “marked-to-market” values of credit default swaps by Denis Minayev, UBS staff said at an employment tribunal yesterday. Minayev, a proprietary trader, “re-marked” Braga’s trading book on 66 occasions, even though he shouldn’t have had the authority to do so, UBS investigator Richard Kennedy said.

 

If you shift one of those markers, it can give a completely false picture,” employment Judge Graeme Hodgson said at the hearing.

 

Braga, who is suing for unfair dismissal, was an inexperienced trader who was “thrown in at the deep end,” his lawyer, Amy Sander, said at the hearing. He wasn’t aware of many of the changes Minayev made, she said, and thought his actions were permitted by managers. Braga was also accused by UBS of “procuring a false broker quote,” she said.

 

UBS is already dealing with the fallout from what the bank said were unauthorized trades by London-based UBS employee Kweku Adoboli, which led to a $2.3 billion loss, regulatory probes and the resignation of Chief Executive Officer Oswald Gruebel. JPMorgan Chase & Co. (JPM) CEO Jamie Dimon said yesterday his New York-based firm suffered a $2 billion loss after a trading unit’s “egregious” failure to manage risks.

 

Dominik Von Arx, a spokesman for Zurich-based UBS, said Braga “was a junior employee” in the bank’s fixed-income, currency and commodities unit.

“He was dismissed for gross misconduct in October 2011 following an investigation into alleged mismarking,” Von Arx said in an e-mailed statement. “UBS has zero tolerance for such behavior.”

During cross-examination of Braga today, UBS lawyer Bruce Carr said Braga had asked a broker friend to send him a quote that justified changes made to his valuation, after a colleague said the price was too high.

 

“You get an entirely unsolicited e-mail that happens to fit” the valuation, Carr said. “That’s quite a coincidence, isn’t it?”

 

Braga responded that his “dismissal shouldn’t be based on speculation or coincidences.”

 

The product being re-marked was a credit default swap on European industrial-company bonds, which was illiquid and difficult to value because it was rarely traded.

 

Lawyers for Braga questioned Paolo Croce, UBS’s European head of rates, at the continuation of the hearing today about the close relationship between proprietary traders such as Minayev, who trade with the bank’s money, and flow traders like Braga, who execute orders on behalf of clients.

 

“All the other flow traders followed the direction of Mr. Minayev,” Braga’s lawyer said.

 

Croce said while flow and proprietary traders exchanged information, they weren’t supposed to take instructions on pricing.

 

Minayev had told Braga, “I need this to move,” according to Croce. “He told him ‘I’m down $9 million today.’”

Here are some preliminary question to set prosecutors on their marry way?

  • How many times did JPM's CIO office "procure a false quote"?
  • How many times did Iksil tell his middle office or subordinates: "I need this to move" - and if he kept it to himself, how many times did Iksil "make it move" on his own?
  • How many times did the CIO "shift the IG-9 market and give a completely false picture?"
  • How many times did Iksil get an external "quote" that overrode the official closing day MarkIt price, or, far worse, did JPM ever tell partially-owned MarkIt what mark to use for a given product, which would be an act of unprecedented illegality.

And this is just the beginning. The reality is that with this revelation it likely means that JPM is probably lying about the fair value of thousands if not millions of other OTC-based products. Which goes to one simple thing: 

Non-existent internal controls!

Because while JPM can blame an entire prop trading office for a pair trade gone wrong, it will have a very tough time explaining how marks impacting billions in P&L could have sneaked past the middle and back office.

Which, however, is possible, at least in theory. 

This brings us to MarkIt - a company that has long been in the public eye for being the primary source of CDS marks, which would be great if not for one small glitch: it is also partially owned by the same banks which stand to benefit if MarkIt "nudges" the market in one way or another.

The following report from Mark Mitchell from 2009 does a great job of exposing some of the potential dirt that MarkIt may be involved in, and raises some critical questions that have never been answered, and which if addressed in the past could have spared JPM shareholders, and potentially US taxpayers, billions in losses:

Did The Markit Group, A Black-Box Company Partially Owned By Goldman Sachs and JP Morgan, Devastate Markets?

 

Last year, the media reported that New York Attorney General Andrew Cuomo had sent subpoenas to Markit Group as part of an investigation into possible manipulation of credit default swap prices by short sellers. This investigation, like Mr. Cuomo’s other investigations into market manipulation, have yielded no prosecutions.

 

The Department of Justice is reportedly investigating Markit Group for anti-trust violations. This investigation (which is reportedly focused on how Markit Group packages and sells its information) seems to acknowledge that Market Group has near-monopolistic control of information about credit default swap prices. However, if the press reports are correct, the DOJ has not considered the possible appeal of this monopolistic control to market manipulators.

 

Meanwhile, Henry Hu, the director of the Securities and Exchange Commission’s division of risk, has said that it has been nearly impossible for the SEC to conduct investigations into any matter concerning credit default swaps because the commission does not have access to any data on the trading of CDSs. In itself, this is a shocking admission.  It is all the more shocking when one considers that the necessary data exists and might be in the hands of The Markit Group – a black box company based in London.

 

A thorough investigation of Markit Group is urgently required.

 

Here is what we know so far:

  • Markit Group was co-founded by Rony Grushka, Lance Uggla, and Kevin Gould. Prior to founding Markit Group, Mr. Grushka’s main line of business was investing in Bulgarian property developments. He recently resigned from the board of Orchid Developments Group, an Israeli-invested company based in Sophia, Bulgaria. Messrs. Uggla and Gould formerly worked for Toronto-Dominion Bank in Canada.
  • Markit Group’s founders also include four hedge funds. However, Markit Group refuses to disclose the names of those hedge funds. In response to an inquiry, a Markit Group spokesman said it was “corporate policy” to keep the names of the hedge funds secret, but he would not say why Markit Group had such a policy. It seems worth knowing whether those hedge funds have any influence over Markit Group’s published information or indexes, and whether those hedge funds are trading on that information. It would also be worth knowing whether those hedge funds or affiliated hedge funds have engaged in short selling of public companies whose debt and stock prices were profoundly affected by the information that Markit Group published.
  • Goldman Sachs (NYSE:GS), JP Morgan Chase (NYSE:JPM) and several other investment banks also have ownership stakes in Markit Group. The investment banks received their stakes in exchange for providing trading data to Markit Group. It would be worth knowing whether these investment banks engaged in short selling ahead of Markit Group’s published indexes and price quotations.
  • Markit Group is secretive about how it creates its indexes. In early 2008, The Wall Street Journal noted that the CMBX simply “doesn’t make sense” and that Markit Group’s indexes “might be exaggerating the amount of distress” in the home and commercial mortgage markets. In 2008, the average prediction for defaults on commercial mortgages was 2%. The CMBX implied that the default rate could be four times that level.
  • When short seller David Einhorn initiated his famous public attack on Lehman Brothers, one of his central arguments was that the CMBX (the index that was likely “exaggerating the amount of distress”) proved that Lehman had overvalued the commercial mortgages on its books.
  • In March 2008, the Commercial Mortgage Securities Association sent a letter to Markit Group asking it disclose basic information about how the CMBX index is created and its daily trading volume. “The volatility in the CMBX index, caused by short sellers, distorts the true picture of the value of commercial-mortgage-backed securities,” the group said in a statement.
  • Markit Group is equally secretive about how it derives its “prices” for credit default swaps. A spokesman for the company spent close to one hour talking to Deep Capture. He did his job well and sounded like he was trying to be helpful. But he told us as little as possible.
  • However, in the course of this conversation, we did learn that Markit Group’s “prices” are not actual, traded prices. They are mere quotations. The Markit Group has what it calls “contributors” – hedge funds and broker-dealers that provide it with information. Markit Group has a grand total of 22 “contributors.” Deep Capture asked Markit Group’s spokesman for the names of these “contributors.” The spokesman said he would try to find out the names and call back later. He never called back.
  • The 22 “contributors” provide Markit Group with quotations, and these quotations become the Markit Group’s “price.” In other words, the “contributors” can quote any price for a CDS that they choose, regardless of whether anyone is actually willing to buy the CDS at that price. Markit Group looks at these quotations. Then it somehow decides which quotations make the most sense. Then it publishes information that purports to represent the actual market price of that CDS. This process is certainly unscientific. And it is ripe for abuse.
  • Consider, for example, the Markit Group “price” for CDSs insuring the debt of company X.  The Markit Group price strongly suggests that company X is going to default on its debt in the immediate future. Short sellers eagerly point to the Markit Group CDS “price” as evidence that company X is doomed. Panic ensues, and suddenly, company X really is doomed. But the fact is, nobody ever bought a company X CDS at the price quoted by Markit Group. Rather, that panic-inducing “price” was, in effect, pulled out of a hat. Who pulled it out of a hat? That is matter of immense importance. There are two possible scenarios:
  • The first possible scenario is that the 22 “contributors” report their quotations in good faith. They should be sending the actual traded price, not just a quotation, but assume they are just doing what was asked of them. From these quotations, Markit Group somehow decides what the “price” should be. It is possible that this decision is based on some secret formula (which would be worrisome); or it is possible that Markit Group executives sit around a table debating what the price should be and take a shot in the dark (which would be even more worrisome); or it is possible that Markit Group deliberately chooses the most horrifying price possible in order to assist the short sellers who are affiliated with its owners (which would be a matter for the authorities).
  • The second possible scenario is that Markit Group acts in good faith (if not scientifically), but one or more of the 22 “contributors” or their affiliates has an interest in seeing company X fail. If just one of those “contributors” sends in an astronomically high quotation, that could be enough. Markit Group factors the absurd quotation into its posted “price” and it suddenly becomes possible to convince the world that company X is about to default on its debt.  Panic ensues, the firm’s layer of debt dries up, the stock price plunges, and perhaps the “contributor” or its affiliate make a lot of money.
  • As Deep Capture understands it, CDS quotations suggested by the 22 “contributors” also help determine the movement of the CMBX and ABX indexes. The movement of these indexes did serious damage to the American economy in multiple ways. The  indexes prompted write downs at most of the major banks and mortgage companies. They were ammunition for short sellers, like David Einhorn, who claimed that companies had cooked their books by not writing down to the rock bottom prices suggested by the Markit Group indexes. They helped precipitate the decline in prices of mortgage securities, and contributed mightily to the panic that spread across the markets.  A lot of people made a lot of money as result of those indexes moving downward. So, it is rather important to know more about how those indexes are formulated, and if they can be driven by the same people who are making directional bets on their movements.

Conclusion: Ten years ago, there was no such thing as a credit default swap. Six years ago, a very small number of investors traded credit default swaps as hedges against the long-shot possibility of corporate defaults. Nobody looked to credit default swaps as reliable indicators of corporate well-being.

 

Then, suddenly, there were over $60 trillion in credit default swaps outstanding. That is, over the course of a few years, somebody had made over $60 trillion (many times the gross domestic product) in long shot bets that borrowers would default on their debt. As this derivative risk marbled through the system, the trading in credit default swaps was completely opaque. Nobody knew who bought them, who sold them, or at what price.

...

 

These “prices” were not prices in any meaningful sense of the term.  But, suddenly, these “prices” became perhaps the single most important indicator of corporate well-being. Assuming that those four hedge funds and the 22 “contributors” (or hedge funds affiliated with them) bet against public companies, it seems more than possible that short-sellers got to run the craps table, call the dice, and place bets, all at the same time.

 

So perhaps it is not surprising that a lot of long-shot rolls paid off quite nicely.

Bottom line: Jamie Dimon's "tempest in a teapot" just became a fully-formed, perfect storm which suddenly threatens his very position, and could potentially lead to billions more in losses for his firm.

 

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Wed, 05/30/2012 - 21:38 | 2477937 Yen Cross
Yen Cross's picture

 XAU will drop to $600TOZ when we announce " Voyager Infinity", found a flake of " Gold Dust " on an Asteroid!

  /SARC?

Wed, 05/30/2012 - 21:45 | 2477939 sitenine
sitenine's picture

As this derivative risk marbled through the system, the trading in credit default swaps was completely opaque. Nobody knew who bought them, who sold them, or at what price.

This bothers me more than anything else about this entirely FUBARed situation.  Total CDS/derivitives outstanding are staggering!  So there are a LOT of people out there with a BIG motive to bring countries down for personal gain, right?  Or is my tin foil hat a little too tight?

Wed, 05/30/2012 - 21:49 | 2477975 Yen Cross
Yen Cross's picture

sitenine .

                     Fed->--   Bank- Europe > ECB @< Fed.       any questions?

  


Wed, 05/30/2012 - 22:02 | 2478023 sitenine
sitenine's picture

Fed uber alles, I know, but my fear is that we don't know who's running this show anymore.  The sums of "money" involved are impossible for the human mind to fathom, even though we have the numbers right in front of us - they are just THAT big.  Look who else is scared: Rockefeller and Rothschild Merge Financial Operations in America  I don't think the adults are in charge anymore; I don't think we're in Kansas anymore; and I sure as hell don't think that the Fed is going to save us from our sins.

Wed, 05/30/2012 - 22:12 | 2478050 Yen Cross
Yen Cross's picture

sitenine

                     Who?   In your opinion, should be running the show?    NATO, IMF,WTO?

 

  

Wed, 05/30/2012 - 22:36 | 2478073 sitenine
sitenine's picture

If I wasn't a slave, and I was actually allowed to choose?  I would choose capable representatives, and those institutions you mentioned wouldn't even exist.  I'm disappointed that you had to ask Yen Cross.

It's a moot point though, because a preponderance of voters are sadly stupid and lacking in personal responsibility.

"I never wanted to be free until I knew I was in prison."

Wed, 05/30/2012 - 23:02 | 2478194 Jim in MN
Jim in MN's picture

Really, all the Founding Fathers missed was a mechanism to place proper limits on massive, dangerous corporate entities as the current form didn't exist back then.  It's a fixable problem from a constitutional/political economy point of view.  It could be done.  Why, I even wrote up a list of possible Occupy demands that would get the ball rolling (lifetime ban on TBTF entity employees in government, closing NYC offices of the regulatory agencies and the Fed, no phone or other contact, etc.).

But, the odds of a massive asteroid striking the Earth, almost destroying humanity, but then being brought miraculously to a halt by divine intervention and stopping exactly five feet from the Earth's surface, right in the space where Jamie Dimon's head had been a moment earlier, and doing no other damage, are much higher.

Wed, 05/30/2012 - 23:42 | 2478248 sitenine
sitenine's picture

Your point is a fair one.  I especially liked the astroid on Dimon's head analogy.  I'm not saying you're wrong - in fact, I think you're right; but I remain unconvinced that the situation can be turned around at all, regardless of the tactic tried.  As much as we don't want to admit it, our habit of consumption depends on these dangerous corporate entities.  TBTF is not a term given because these corporations are of any special importance unto themselves - the term was given because if they fail, then the consumption gravy train ends.  The reason we have reached a point of no return, or the event horizon as some would call it, is because the majority have become fat, lazy and comfortable, and they wish to remain so at any cost.  That's just my take FWIW.

That aside though, I'm interested in seeing your writeup. There's likely to come a time when the majority will become quite uncomfortable, and I do not pretend to know what people will do at that point.  Do you have a link, or can you paste your list here?  It would be appreciated.  Cheers Jim!

Wed, 05/30/2012 - 21:43 | 2477950 dolph9
dolph9's picture

Before all is said and done, the corrupt bankers and laywers of Amerika will be crucified on crosses of gold and silver.

It's coming.

Thu, 05/31/2012 - 08:28 | 2478764 Bob
Bob's picture

Obama [Still] At Large: Where Are The Lawyers?

http://nader.org/2012/05/30/obama-at-large-where-are-the-lawyers/

Wed, 05/30/2012 - 21:47 | 2477952 Cabreado
Cabreado's picture

I missed it -- when did we stumble upon regulators and prosecutors ready, willing, able and permitted to see this to an honest end?

Appropriate vetting of the issue would open The Box, and it will not happen.

Dimon may go, but, that changes nothing.

Wed, 05/30/2012 - 21:47 | 2477966 Whiner
Whiner's picture

It's all puffed pastry. Hungry folk will soon turn to real protien you can't eat but can by whiskey and smokes with

Wed, 05/30/2012 - 21:48 | 2477970 michaelsmith_9
michaelsmith_9's picture

Forex is typically the leading indicator of equities, especially risk-related currencies.  The AUDJPY continues to drop to lower levels swiftly and should continue to do so in the near-term.  This means that equities are set to make a plunge tomorrow.  Longer-term the AUDJPY is suggesting major weakness is ahead for equities.  http://www.marketoverflow.com/2012/05/audjpy-21/

Wed, 05/30/2012 - 22:00 | 2478010 oldman
oldman's picture

Why not sell the GBP/JPY? If the baseline on the monthly gives-----wow!

Then you could be at the head of the line having a real laugh at the world         good luck     om

Wed, 05/30/2012 - 22:08 | 2478040 Yen Cross
Yen Cross's picture

Stay flat. Both of those trades are trash. Stick to majors. Extreme risk is a (+) aud/jpy, as I hear the RBA will " NOT" be lowering rates next week , and China has some agressive monetary policy on the table!

Wed, 05/30/2012 - 22:50 | 2478160 oldman
oldman's picture

@yen

Thanks

I'm not a trader anymore, but just a looker, because I don't know what is trash and what is real---I'm not in the game. If I was trading I would want you on the other side so that I could learn the things that a trader needs to know----always loved world-class competition----maskes one a better person

My hat is off to you            om            

Wed, 05/30/2012 - 23:21 | 2478245 Yen Cross
Yen Cross's picture

  Not a trader anymore?  Ya Right!   oldman

Wed, 05/30/2012 - 21:51 | 2477972 oldman
oldman's picture

Tyler

Thanks for such a comprehensive view of this problem.

if the banks want to trade their retained capital, I think that's fine---let them sit at the club and make their private wagers at their leisure and contain them in a 'black box'. When Glass-Steagal was in effect, however, no one ever heard of such gambling; the bankers were too frightened of losing their jobs to have ever proposed such risk to their boards.

The idea that the fed and, consequently, the Treasury of the US and its taxpayers is backing this at all is madness. This is the argument for the claim of 'odious debt', and I do not understand why some attorney out there on Main Street is not working on this angle, or why a Ron Paul or some politician is not beating on his or her pots and pans over it.

There is no justification whatsoever for the citizens of the US or of-----GREECE to assume such liability.

I suppose, however, we will have to leave such serious matters in the hands of Occupy because it seems NO ONE else gives a damn.

Thanks again for piecing this together. I know that it was a lot of work, and a job well done!     om  

Thu, 05/31/2012 - 08:55 | 2478875 Bob
Bob's picture

True, Glass Steagal was better than what we've known since, but Brooksley Born was agitating about derivatives while Glass Steagal was still in force:

http://www.washingtonpost.com/wp-dyn/content/article/2009/05/25/AR200905...

This is another massive expose by the Tylers alright.  Mewonders if articles naively trumpeting sovereign spreads based upon MarkIt indexes will continue or if we'll see this troublesome element of the pricing picture consistently addressed when the subject is broached going forward. 

Wed, 05/30/2012 - 21:49 | 2477976 JustACitizen
JustACitizen's picture

We can count on the total absence of any meaningful prosecution.

This administration is a total bust. AG Holder...roflmao!

Good thing Wall St. is supporting the other team...<snicker>

But honest, just like all of the other CEO's out there - these people earn their multi-million dollar compensation packages - no really - they do...

Wed, 05/30/2012 - 21:53 | 2477990 Davalicious
Davalicious's picture

>Mr. Grushka’s  ... an Israeli-invested company based in Sophia, Bulgaria.

Tell me it isn't so. Jews up to no good again?

Wed, 05/30/2012 - 21:55 | 2477995 John_Coltrane
John_Coltrane's picture

In the old days if you thought a company had such poor cash flow it couldn't service its debt you simply sold any bonds you owned, took a loss, and moved on-or better insisted on a huge interest rate to cover the risk.  Now, with all the "clever" hedging done using CDS, losses just keep accumulating as more collerateral must be put up to cover the losses.

Two observations:

1)Limit CDS sales to those actually owning the debt instrument (bond).  Make sure the seller has the collateral to support the sale-before the sale.  Regulate like any insurance market.

2)You can never know the true price of anything, CDS, milk, gas, etc. without free transparent markets.  (Hear that central government "experts"?)

Thu, 05/31/2012 - 08:34 | 2478789 Bob
Bob's picture

So MarkIt and its shareholders shouldn't be free to conduct their business without regulation forcing "transparency"?  Cuz it looks to me like they really would prefer to keep their business private. 

It's their business.  What gives anyone else, including guv, the right to intrude?

/sarc

Wed, 05/30/2012 - 21:58 | 2478004 Amagnonx
Amagnonx's picture

This kind of reporting is incredibly rare, and doesnt exist in the captured land of MSM - thanks for continuing to dig, compile and bring this kind of information to the surface.  Awesome stuff ZH.

Thu, 05/31/2012 - 00:37 | 2478386 Legolas
Legolas's picture

What he said.  ZH is the real "No Spin Zone".

 

Wed, 05/30/2012 - 21:58 | 2478005 chump666
chump666's picture

Margin call destruction FX market style,  looking forward to various investment banks cutting trades.  This market has still got a leg down.

AUD/USD, EUR/USD and USD/JPY all below yesterdays low as margin calls go off

Asia still can't short squeeze equities, that and it's buying USD's like no tomorrow. 

Wed, 05/30/2012 - 22:16 | 2478064 Yen Cross
Yen Cross's picture

 Just started shorting (usd) chump666

      Asia still can't short squeeze equities, you're absolutely right. +1

Wed, 05/30/2012 - 22:34 | 2478123 chump666
chump666's picture

the news goes from bad to horrifying at a constant rate.  Spain is going to blow up spectacularly in a matter of days i.e political, social, bank runs, chaos.  But metals will be slaughtered if India Q1 GDP shows recession, will indicate Asia is in trouble. 

We may have a stock market crash very soon (like within days), from correction to wipe-out.   Anyone buying dips will be decimated

Wed, 05/30/2012 - 22:34 | 2478124 BeetleBailey
BeetleBailey's picture

I don't know Yen.....just offset my GBP/JPY long.....fear is driving this market, and there are few places to turn.

Non-Farm will be a hootenanny methinks.

Got any charts for the Singapore Dollar?

Wed, 05/30/2012 - 22:48 | 2478152 Yen Cross
Yen Cross's picture

Priced in! Just like that gbp/usd move! You may have missed this post  http://www.bloomberg.com/quote/GACGB10:IND

  5% in aud ten year bonds in ONE DAY!?   I'm long aud!

Wed, 05/30/2012 - 23:07 | 2478206 chump666
chump666's picture

The AUD is slightly bid, i think the flows into Aus bonds is panicky.

Ok here what could be brewing.  Major stock crash three days out, it wipes out the AUD supports and then panics the Aust bond trade i.e dumped, yields.

IMO any countries that were hanging on the India/China commodity boom...are f*cked, that being Canada and Australia.  They're markets are about to be liquidated.

To hell.

Wed, 05/30/2012 - 23:28 | 2478265 Yen Cross
Yen Cross's picture

 I'm macro yesterday.  Look @ the H-4.   And factor the " Axioms".    I'll play Australia over Canada.  I love the Canadians.

    NatGas/ Coal/ Iron / Rare Earths/    And better mining weather. I'll take Australia.  I like the Canadians as well. 

Wed, 05/30/2012 - 21:59 | 2478008 Bezukhov
Bezukhov's picture

http://www.reuters.com/article/2012/05/30/uk-hedgefunds-eurozone-bonds-i...

This could be just the tip of the iceberg...

 

 

Wed, 05/30/2012 - 22:08 | 2478037 goldencrumbs
goldencrumbs's picture

Props Tylers.  Fuck you Bernaked.

Wed, 05/30/2012 - 22:10 | 2478044 yabyum
yabyum's picture

It will be fun to see what happens with the silver market. Gotta head down to the coin guy Thursday to buy a couple of ASE's to celebrate the demise of the dog fuckers.

Wed, 05/30/2012 - 22:12 | 2478045 jonjon831983
jonjon831983's picture

Hey, anybody recall that supposed JPM whistleblower from back in March?  I read one of the earlier posts and realized, maybe the London Whale fiasco has something to do with it?

 

A ZH post said it was not clear if the whistleblower is a fraud or legit.

However, did see it posted first on another blog: "JP Morgan Whistleblower States JP Morgan Manipulates Silver & Gold Futures" http://silverdoctors.blogspot.ca/2012/03/sd-exclusive-jp-morgan-whistleblower.html

There was an Excel document with more details, but it is now gone.

Wed, 05/30/2012 - 22:15 | 2478060 franzpick
franzpick's picture

I'll say it again as I did last week: JPM's understated and growing CIO loss indicates that the camel's nose has poked into the 400T derivative tent. A potentially huge financial disaster is being soft-pedalled, ignored, covered up, and remains hiding in plain sight, but when the camel sneezes, the hot air will presage the collapse.

Wed, 05/30/2012 - 22:17 | 2478069 Jim in MN
Jim in MN's picture

Just shut the fuckers down for 90 days.  Let them rot in Hell.  See if the world ends.

Go on.  I fucking double dog dare you.  Yeah, YOU Timmay and the SEC Slutz.  I.  DARE.  YOU.

Wed, 05/30/2012 - 22:18 | 2478071 Centurion9.41
Centurion9.41's picture

Oh how I yearn to hear the whisper of "Jekyll Island...."

Wed, 05/30/2012 - 22:23 | 2478078 Yossarian
Yossarian's picture

If this index is so imperfect then shouldn't we be questioning the managers who are managing multi-billion$ portfolios based on this flawed metric?  

Other than the general ineptitude of our collective pension fund and other portfolio mgrs, what is compelling them to action based on these flawed and relatively new indexes- is there any regulatory mandate similar to those relating to the marks of the rating agencies w/respect to bonds?  

Isn't it equally- if not more- likely that the Markit indexes are underestimating rather than over-estimating the likelihood of default, especially when you consider the TBTF banks that comprise the index?   

Wed, 05/30/2012 - 22:43 | 2478144 GMadScientist
GMadScientist's picture

As a 'fluffer', are you at least well-compensated for your craft?

Wed, 05/30/2012 - 22:54 | 2478171 Yossarian
Yossarian's picture

Who exactly am I "fluffing?" The inept pension/portfolio mgrs?  The TBTF banks manipulating an index in order to mask their insolvency?  Or the hedge funds who may or may not have been manipulating the index in order to aid their short positions?  Just so I understand you...

Wed, 05/30/2012 - 23:01 | 2478192 GMadScientist
GMadScientist's picture

The precognitive abilities of MarkIt and the 'TB' who very much would 'F' if apologists would quit pretending they're untouchable long enough to let gravity to do its duty.

 

Wed, 05/30/2012 - 23:01 | 2478188 Cabreado
Cabreado's picture

I believe you misconstrue...

Wed, 05/30/2012 - 22:22 | 2478080 General Debility
General Debility's picture

Well it won't be Bill Black tidying things up. He has been 'Disinvited' by TPTB in a letter from some lily-livered, mealy-mouthed technocrat.

"Today, I received definitive word that I had been disinvited from a bipartisan briefing of members of Congress on the subject of financial derivatives. I have deleted the name of the staffer because he is not the issue. The relevant email thread is below." Willian Black May 29th article http://www.capitalismwithoutfailure.com/2012/05/bill-black-uninvited-from-testifying.html And JPM in trouble in Japan for Insider Trading. I think Jamie is going to get his face ripped off.
Thu, 05/31/2012 - 09:02 | 2478904 Bob
Bob's picture

+1 Thanks for the link!

Wed, 05/30/2012 - 22:24 | 2478088 Jim in MN
Jim in MN's picture

And by the way, I have been reading ZH pretty much every day for years now, and this is one of the biggest, most fucked up days I have ever seen here.  The Tylers are at full throttle churning it all out.  It's like Hunter S. Thompson at the '72 convention in Miami.

Thu, 05/31/2012 - 01:11 | 2478435 MisterMousePotato
MisterMousePotato's picture

That's the only book I've ever read, I think, that actually made me laugh out loud. Several times. The scene when HT was filling the tires on the El Dorado? A few others, too. Can't remember. Been 30 years.

Wed, 05/30/2012 - 22:25 | 2478100 JeffB
JeffB's picture

Kudos on doing some journalistic digging where the mainstream media, financial and otherwise, never goes. Until it's already news and can't be ignored any longer.

 

Wed, 05/30/2012 - 22:36 | 2478105 williambanzai7
williambanzai7's picture

Markit Group.....based in London. Where have we heard those words before.

I know there are many staunch advocates of CDSs here. And I can understand in a perfect world why such instruments would have some utility.

However, after reading what I just read and knowing what we already have seen, can someone please explain to me what purpose these things are serving other than parasitical finance of the highest order?

Wed, 05/30/2012 - 23:15 | 2478211 newengland
newengland's picture

william,

It's a bit like a gun - only lethal in the wrong hands, but defensive in honest hands or that's the way this device was originally used before the likes of JP Morgue and Goldman Sacks figured out how to turn it into 'assassin's contracts' (Soros); 'weapons of mass financial destruction' (Buffett).

It seems that the lily livered town sheriffs were too frightened of the robber barons to intervene, and the common townsfolk are being held to ransom as a result. Reminds me of the movie with Clint Eastwood 'High Plains Drifter'.

Re: London is the preferred epicentre for the globalist central bank cartel's outlaws, given the more lax regulation there, home of the Rothschilds and near their family units in Paris, Germany and Swizerland.

Wed, 05/30/2012 - 23:23 | 2478255 cdskiller
cdskiller's picture

My friend, I have been having this argument with Tyler and others on this site for years. The opening line of this post should read. "As anyone who has ever traded CDS before knows...they are instruments invented for the perpetration of fraud, they are used almost exclusively for the perpetration of fraud, and they should be banned with extreme prejudice. Their use is indefensible, except by criminals."

Thu, 05/31/2012 - 09:07 | 2478925 Bob
Bob's picture

Nukes don't kill people, people do. 

Seems we have no trouble seeing how irrelevant that logic is in the case of nukes.  Why do we respect the insanity, however sincere, of those who shill financial WMD's?

Wed, 05/30/2012 - 22:29 | 2478110 BeetleBailey
BeetleBailey's picture

Excellent Tyler. Super job. After I sold out a stinkbomb trade today - and - the daily confirmation confirmed that to all my clients - and - me emailing the clients to explain exactly what DID happen - and me taking 100% responsibility for it - I feel MUCH better after reading this.

Clean in fact. Honest.

Wed, 05/30/2012 - 22:41 | 2478141 GMadScientist
GMadScientist's picture

+1 for sackin' up.

Wed, 05/30/2012 - 23:00 | 2478186 Yen Cross
Yen Cross's picture

GMadScientist +1 for sackin' up.  

  You should trade mark that quote!

Wed, 05/30/2012 - 22:35 | 2478126 GMadScientist
GMadScientist's picture

I wonder how thick the walls are at the building where "MarkIt" keeps their "information asymmetry generators".

 

Thu, 05/31/2012 - 09:22 | 2478970 JeffB
JeffB's picture

Or perhaps how impermeable their firewalls are.

If we(?) can get into Iran's computers via sophisticated software like Stuxnet & Flame, I would think they should be able to browse around in MarkIt's computers pretty easily.

The Treasury has a virtual bottomless pit of money to fund the SEC or CFTC espionage operations courtesy of the Fed after all.

If they really took "Homeland Security" seriously, they'd certainly have the grounds for doing so. If they won't open their books willingly, open them for them.

 

Wed, 05/30/2012 - 22:39 | 2478132 peekcrackers
peekcrackers's picture

 

"All businesses tend to pass costs onto customers"
Jamie Dimond
Wed, 05/30/2012 - 22:56 | 2478177 GMadScientist
GMadScientist's picture

http://online.wsj.com/article/SB10001424052970203707504577010291984996510.html

"Last week, a person familiar with J.P. Morgan Chase told The Wall Street Journal that its Chase retail unit had decided to drop its test of debit-card fees. The bank had been testing $3 monthly fees for eight months in parts of Georgia and Wisconsin. Wells Fargo followed suit on Friday, announcing it was canceling its test of $3 monthly debit-card fees that had started in October."

Not always; you do at least need to insure that you still have customers.

Wed, 05/30/2012 - 22:47 | 2478148 palmereldritch
palmereldritch's picture

Mark-to-market.

Well that's definitely going to leave a mark

Wed, 05/30/2012 - 22:50 | 2478159 Spectre
Spectre's picture

Isn't it just dandy that FDIC Banks(JPM,GS et al)can trade in markets(CDS) that the corrupt bastards at the SEC can't even look into on our behalf.  And the Roosters are part owners in the supposed market maker that do control the coop.  How Fucked Up !

Thu, 05/31/2012 - 00:35 | 2478383 MayerRothschild
MayerRothschild's picture

Why would the SEC look into it?  Some are ex-SEC

JPMorgan Hires Ex-SEC Enforcement Chief McLucas in Probes

Wed, 05/30/2012 - 22:52 | 2478166 ZeroAvatar
ZeroAvatar's picture

Here's one way to describe a swan.

The Swan at Edgewater Park Ruth L. Schwartz

Isn't one of your prissy richpeoples' swans
Wouldn't be at home on some pristine pond
Chooses the whole stinking shoreline, candy wrappers, condoms
     in its tidal fringe
Prefers to curve its muscular, slightly grubby neck
     into the body of a Great Lake,
Swilling whatever it is swans swill,
Chardonnay of algae with bouquet of crud,
While Clevelanders walk by saying Look
     at that big duck!
Beauty isn't the point here; of course
     the swan is beautiful,
But not like Lorie at 16, when
Everything was possible—no
More like Lorie at 27
Smoking away her days off in her dirty kitchen,
Her kid with asthma watching TV,
The boyfriend who doesn't know yet she's gonna
Leave him, washing his car out back—and
He's a runty little guy, and drinks too much, and
It's not his kid anyway, but he loves her, he
Really does, he loves them both—
That's the kind of swan this is.

Wed, 05/30/2012 - 23:03 | 2478197 GMadScientist
GMadScientist's picture

Look at that big <rhymes with duck>!

Wed, 05/30/2012 - 23:10 | 2478219 ZeroAvatar
ZeroAvatar's picture

Truck?

Thu, 05/31/2012 - 07:32 | 2478675 GMadScientist
GMadScientist's picture

Zuck! ;)

Wed, 05/30/2012 - 22:55 | 2478173 chump666
chump666's picture

HK getting killed:

18,418 -273 -1.46%

A 1987 style crash started in HK

So, we get a point of singularity Spain/EU falling to pieces and China/HK/Indonesia/India/Japan i.e the creditors of the world collapsing in a heap.

= the end.

Wed, 05/30/2012 - 23:05 | 2478200 Yen Cross
Yen Cross's picture

chump666   

  Look @ the weekly charts . This is a slow meltdown , not a FLASH Crash.   Start averaging in.    Use {chf} as a proxy knowing a strong usd/] eur/chf peg!

   Come on chump666 ?

 


Thu, 05/31/2012 - 04:30 | 2478534 falak pema
falak pema's picture

remember what Hemingway said about banktruptcy. We don't know whats under the carpet.

Thu, 05/31/2012 - 01:03 | 2478419 HughJeffin Byrd
HughJeffin Byrd's picture

The end game is pretty fuckin scary, if we take them down...they take us down

 

http://www.veteranstoday.com/2012/05/30/breaking-exclusive-japan-attack-...

Wed, 05/30/2012 - 23:04 | 2478198 cherry picker
cherry picker's picture

How safe to you feel with your money in JPM?  Do you think the FDIC can insure their losses?

I would be there in the morning pulling out my coin if I had it there.

Wed, 05/30/2012 - 23:08 | 2478205 Yen Cross
Yen Cross's picture

 I woke up this morning , and Jamie Dimon was between my legs...<>  

   I lost 5lbs this Morning!

Wed, 05/30/2012 - 23:07 | 2478203 Dineroguru
Dineroguru's picture

Yea, but JPM has a fortress balance sheet~with $72 Trillion of derivatives.  It is like 72 Trillion turds stuck together with Jamie's head poking out like a gargoyle.

Wed, 05/30/2012 - 23:10 | 2478217 Jim in MN
Jim in MN's picture

Dung can be used as fuel, it turns out.

Wed, 05/30/2012 - 23:10 | 2478218 Yen Cross
Yen Cross's picture

  JPM<  we specialize in " PUP TENTS", and Barrel Heads!

Thu, 05/31/2012 - 00:06 | 2478342 mademesmile
mademesmile's picture

That visual will forevermore be known as 72 T to the 2.

Wed, 05/30/2012 - 23:09 | 2478213 gissaus
gissaus's picture

you always mark the EOD price at the offer, and vice versa, on long risk positions, you always use the bid. That way the P&L always looks better.

 

wouldn't this make your P&L look worse?

Wed, 05/30/2012 - 23:14 | 2478232 Yen Cross
Yen Cross's picture

 Options are another chapter. I like you're Ideas though!

Thu, 05/31/2012 - 01:10 | 2478432 bag holder
bag holder's picture

Not when you're the bidder.

Wed, 05/30/2012 - 23:11 | 2478220 marketcycles79
marketcycles79's picture

black swan patterns can be identifiy a higher degree of posiblity when the markets sets up the right way.

http://humblestudent777.blogspot.com/

 

My friend Eric Chen has succesfulled called recent mini crashes.

Wed, 05/30/2012 - 23:12 | 2478224 Extremist Tan
Extremist Tan's picture

This MarkIt post is Pulitzer worthy except the Pulitzer people don't get it.

Wed, 05/30/2012 - 23:23 | 2478250 newengland
newengland's picture

...Tan,

+1, along with the rest of today's ZH stories on a fast moving remarkable day for those with eyes to see the tide running out. Add the ZH story on the foreign law bond vs Greek law bond issue, and ZH is a champion fight club.

Wed, 05/30/2012 - 23:21 | 2478246 Dineroguru
Dineroguru's picture

JPM Fortress balance sheet with $72 Trillion in Derivatives is like a fortress  built with 72 trillion turds and a gargoyle head of Jamie Dimon stuck in the middle...It smells like crap!

Wed, 05/30/2012 - 23:23 | 2478253 kdervin
kdervin's picture

When it's really important, like fake pricing CDS, in the words of Juncker you have to lie.

 

http://blogs.wsj.com/brussels/2011/05/09/luxembourg-lies-on-secret-meeting/

Wed, 05/30/2012 - 23:26 | 2478260 slewie the pi-rat
slewie the pi-rat's picture

let me see if i understand what tyler is saying

the banksters have a partnership which aids them in price-fixing

rilly?

Wed, 05/30/2012 - 23:32 | 2478276 Yen Cross
Wed, 05/30/2012 - 23:27 | 2478263 MikeMcGspot
MikeMcGspot's picture

There is so much disconnect between the financial, physical and psychic worlds. I understand the concept of a CDS, I don’t understand its connection to the physical, or ROI, or creating value.

As the owner of a small new company, in league with other companies we manage risk every day, we don’t have a lot of wiggle room, a 20K loss would kick the crap out of us.

We have no debt, our customers are happy.

We share the risk and benefits with our employees and partners.

We have honor and integrity.

Someday the bottom feeding scum like JP will look up and realize they are just sucking up crap from the bottom of the pond, their own crap.

Meanwhile back at the ranch, we got business to do and we will.

 

P.S. Summertime is coming, we “the Negros in the forest brightly feathered" need to have a Zombie Apocalypse party.

Don’t you love the smell of gun powder ignition residue on your hands? Does it just make you want to jump for joy.

 Peace

 

Thu, 05/31/2012 - 00:23 | 2478363 BanksterSlayer
BanksterSlayer's picture

Hey, that's what Clif High of the Web Bots also said today: Summertime Is Coming.

http://halfpasthuman.com/summertime.html

 

June 27/28/29 - The data sets are clearly stating that whatever-the-events of late June are, that the pivotal point for [continuation] of [central banks and nwo and global warfare] is breached in these three/3 days. There are very small levels of [visibility] on the [breach of stability (for existence of central banks)], so it is unlikely that the [populace] will be aware of this significant shift. As the [unexpected military events] are going to dominate the consciousness, the data flow suggests that we will only be able to ascertain the shift point in analysis from the near future when the [central banks] have all failed.

 

 

Thu, 05/31/2012 - 01:17 | 2478439 Milton Waddams
Milton Waddams's picture

Have you ever considered going public?

Wed, 05/30/2012 - 23:32 | 2478281 q99x2
q99x2's picture

Great article. CNBC said in an article today that JPM wrote down the $2 billion in losses from the Iksil incident. CNBC sucks.

Wed, 05/30/2012 - 23:37 | 2478288 ZeroAvatar
ZeroAvatar's picture

Jamie's Cryin'.

Wed, 05/30/2012 - 23:39 | 2478290 tyler
tyler's picture

These guys should have consulted a professional before doing business with the morgue.  The professionals in this case being silver investors who could have told them something about the corruption and deceit these rat bastards have to use on a daily basis to stay in business. Fuck jp morgan chase.  They're the scum of the earth.

Wed, 05/30/2012 - 23:54 | 2478324 Yen Cross
Yen Cross's picture

 I'm not WB-7.

  If I were WB-7, my next maneuver, would be having fun with " BOA & Morgan Stanley"     I am invested in regional banks!

Thu, 05/31/2012 - 00:12 | 2478354 Furrycushion
Furrycushion's picture

In the Bloomberg article it says the mismarked positions were on tranches - so not covered by markit partners, which covers only CDS. 

Tranches trade relative to a fixed reference index price throughout the day.  But if the index also moves, then the tranche will have to be remarked.  This is one potential time where a tranche could end up with different marks.

Thu, 05/31/2012 - 00:29 | 2478372 Wannabee
Wannabee's picture

Novice question: wouldn't an audit firm catch this? What is PWC's scope of work?

Thu, 05/31/2012 - 06:14 | 2478611 Winston Churchill
Winston Churchill's picture

Their real money comes from advice on accounting"treatments'.

No money in auditing a companies accounts.

If you want to see Unicorn shitting skittles,you are,

everytime one of the big four accounting firms sign off on accounts.

Been there,dome that.

Thu, 05/31/2012 - 00:31 | 2478375 Crabshacker
Crabshacker's picture

Newbie...going to take from here more than I give,But let me be clear....F@*k them Bitch'eze!!! Hope I did that right. Oh.. If I could contribute a little...http://www.ebaumsworld.com/video/watch/485709/...also...Choom balabingadolobluntatolawhitehoosela..bitch'eze..we're Dooomed....

 

Thu, 05/31/2012 - 00:32 | 2478376 Crabshacker
Crabshacker's picture

Newbie...

Thu, 05/31/2012 - 00:40 | 2478393 nomorebuyins
nomorebuyins's picture

Counter party risk is soaring. JPM is domino uno!

Thu, 05/31/2012 - 00:53 | 2478409 Bullionaire
Bullionaire's picture

No wonder PMs have gotten smashed recently.

 

 

 

Thu, 05/31/2012 - 00:53 | 2478410 TNTARG
TNTARG's picture

Kaboom!

Thu, 05/31/2012 - 01:20 | 2478425 Yen Cross
Yen Cross's picture

 Complicity Squared? engaged in short selling ahead of Markit Group’s published indexes and price quotations.Markit Group is secretive about how it creates its indexes. In early 2008, The Wall Street Journal noted that the CMBX simply “doesn’t make sense” and that Markit Group’s indexes “might be exaggerating the amount of

 

                    End of Month rebalancing ..>>

Thu, 05/31/2012 - 01:48 | 2478459 jonjon831983
jonjon831983's picture

Hmm is this what people refer to as efficient "price discovery"?

Thu, 05/31/2012 - 02:12 | 2478474 oldman
oldman's picture

It's OK lads and lassies,

"I'm the daddy and I own the game, the cards, the table, and I print the money.

You certainly are welcome at the table

Sit down right here, my good friend

Can I get you a drink?

How about a nice sandwich?

T want everyone here to have a really good time

And, by the way--------------------------------------

Your credit is always good at my table"

 

How long is this going to go on, doesn't anyone ever get enough?         om

Thu, 05/31/2012 - 02:31 | 2478486 Ted Baker
Ted Baker's picture

JP MORGAN HAS TAKEN THIS CDS AND OTHER CREDIT RELATED PRODUCTS MARKET FROM 0 NOTIONAL TO TRILLION USD OF NOTIONAL AND FOR NO REASON AND CREATED OUT OF THIN AIR LIKE BANKS DO CREATE MONEY BY EXTENDING CREDIT AND INFLATING THEIR BOOKS WITH FICTICIOUS DEBIT/CREDIT ENTRIES IN THEIR ACCOUNTING BOOKS...TIME FOR AN INVESTIGATION

Thu, 05/31/2012 - 03:58 | 2478527 Cosimo de Medici
Cosimo de Medici's picture

Two points:

1)  In the days of partnerships, risk managers would get prices by telling the trader to go into the market with a piece of his position and try to move it.  That became the mark.  Since the loss was on the firm, there was greater incentive to be not just accurate, but conservative.

2)  With what Tyler wrote, imagine another major benefit:  FUNDING.  If one can control the mark, one has some influence on the amount of collateral one is required to post, or have posted to them.  One can even, theoretically, force insolvency by posting a mark that materially hurts a counterparty.  I recall in Michael Lewis' The Big Short, Michael Burry had a problem with his counterparties, who happened to be Goldman, JPM and DB.

Thu, 05/31/2012 - 04:48 | 2478533 falak pema
falak pema's picture

CDS : the ultimate dream of circular reasoning put into lethal practice on the assumption that the sun would never set on Pax Americana perpetual growth based on outsourced model, R& D and marketing savvy, and the RISK economy asset levitation pump paid by other nations. Debt unlimited in uber-alles land and growth unlimited as well due to its trumpeted unmatchable techy excellence, aka dot com bubble. And Pop went the weasel.

Now we have the debt, the huge mountain of side bets, horrendously leveraged but generating HUGE fiat mark to model margins, that the banks consider as money in the bank, in a beggar thy neighbour scam thats makes capitalism into a zero sum game, with a lethal tail spin so huge that it'll take growth rates (real ones) of 3% + for twenty years to clean up the mess. Not unlimited paper printing that adds more debt to debt, but real growth in real economy; not bubble-o-nomics.

How do we achieve that with energy now in Peak fossil configuration with an EROEI which is nose diving like an olympic swimmer doing a pike? 

Yes the CDS like its twin sister CDO is the sign of the times that the OTC opaque trades of private sector WS/City banking is the atom bomb that will bring down modern capitalism, more so than sovereign debt in fleeced Greece or charcoal charred Spanish sausage grilled to the core. Thank you very very fukking much Greenspan and Bill of Glass Steagall revoke and universal banking, no holds barred,  Oligarchy.

FED better print like hell to keep this bubbly baby from having a tourista bout that will turn into a shit storm rout.

Meanwhile burn the club med heretics who thought they could get away with borrowed money from market on the sovereign bonds bubble. Somebody has to play the christian fall guy before Rome burns! 

OT PS / Here is an interesting theory pawned by BI about Saudi's current ability to jack up its OWN production to ROUT shia Iran and Iraq; implying Peak Oil in Saudi is all BS! 

Barton Biggs Explains How Far The Saudis Will Drive Down Oil Prices To Bankrupt Iraq And Iran - Business Insider

Thu, 05/31/2012 - 06:02 | 2478603 NuYawkFrankie
NuYawkFrankie's picture

Pooo.....ST O' The DaY!

Thu, 05/31/2012 - 04:43 | 2478536 R0bux
R0bux's picture

...when you have a short risk position ... you always mark the EOD price at the bid, and vice versa, on long risk positions, you always use the offer. That way the P&L always looks better...

Thu, 05/31/2012 - 07:05 | 2478644 Tyler Durden
Tyler Durden's picture

IG 9 - 10 Year market: 163 bid -168 offer  (as those who actually trade it quote it)

Next: short risk means long CDS

So to maximize your spread from cost, you will market it at the widest, or the 168 offer.

Any other observations?

Thu, 05/31/2012 - 10:43 | 2479459 R0bux
R0bux's picture

Thanks, now I got it.

Thu, 05/31/2012 - 05:24 | 2478574 jarrollin
jarrollin's picture

You call this a fiasco;  well, say hello to my little friend off on the horizon.

Thu, 05/31/2012 - 06:35 | 2478622 Escapeclaws
Escapeclaws's picture

I'm just showing my ignorance, I'm sure. That said, looking into this kaleidoscope JPM, I can't help having the impression that this is all just propaganda. Whatever the claimed size of their losses, their gains over the years and the power they have amassed completely dwarf them. These losses are reported just to give us peons the some inkling that even the gods stumble. Whereas, the truth is that the gods stride from mountain-top to mountain-top and we are not worthy to touch the last seam on the edge of their garments.

Thu, 05/31/2012 - 07:48 | 2478690 my puppy for prez
my puppy for prez's picture

They have to set up some series of "events" that start the collapse ball rolling!  This is all scripted...things should really speed up soon.

Thu, 05/31/2012 - 06:33 | 2478625 icanhasbailout
icanhasbailout's picture

I'm not going to consider this serious until they start offering banker suits with Kevlar lining.

Thu, 05/31/2012 - 06:37 | 2478627 shutupnsing
shutupnsing's picture

oopsadaisey!

Thu, 05/31/2012 - 06:52 | 2478639 j0nx
j0nx's picture

If Obama had a bank it would look just like JPM but if Obama had a banker then it would look just like Jamie Dimon.

Thu, 05/31/2012 - 06:59 | 2478643 IMA5U
IMA5U's picture

It's easy to be a big whale trader if you can mismark your book

 

Welcome to the CDS market

Thu, 05/31/2012 - 07:09 | 2478647 MFL8240
MFL8240's picture

The Jewish Banking crime ring ready for bailout #2 on the backs of the US taxpayers and the young.  I say, fuck you to Dimon and the GS tribe!  bernanke will do as he is told by the masters of deciet and fraud.

Thu, 05/31/2012 - 07:52 | 2478696 j0nx
j0nx's picture

Without a doubt it's coming. And the sheep will sit back, piss and moan and do NOTHING about it. Not only that, but they will then reelect the same politicians afterwards. Handily. People are just.....lost.

Thu, 05/31/2012 - 09:21 | 2478980 Bob
Bob's picture

No, no!  We'll elect the other party!

http://askville.amazon.com/Red-Blue-color-represents-political-party-imp...

Everything will change. 

Vote. 

Thu, 05/31/2012 - 07:11 | 2478649 johnnymustardseed
johnnymustardseed's picture

PONZI!!!

Thu, 05/31/2012 - 07:46 | 2478689 Ricky Bobby
Ricky Bobby's picture

"Situation Normal All Fucked UP" SNAFU. 

Thu, 05/31/2012 - 07:49 | 2478693 goldinpenguin
goldinpenguin's picture

Markit is starting to remind me of MERS - innocuous on the surface but an obscure, minipulative "inside baseball" cheating scheme.

When companies claim that they don't need regulation they have effective internal controls, chinese firewalls etc. you know there is a denouement coming.

 

 

Thu, 05/31/2012 - 08:02 | 2478709 ebear
ebear's picture

And I only am escaped alone to tell thee. JOB

The Drama's Done. Why then here does any one step forth? - Because one did survive the wreck.

It so chanced, that after the Parsee's disappearance, I was he whom the Fates ordained to take the place of Ahab's bowsman, when that bowsman assumed the vacant post; the same, who, when on the last day the three men were tossed from out the rocking boat, was dropped astern. So. floating on the margin of the ensuing scene, and in full sight of it, when the half-spent suction of the sunk ship reached me, I was then, but slowly, drawn towards the closing vortex. When I reached it, it had subsided to a creamy pool. Round and round, then, and ever contracting towards the button-like black bubble at the axis of that slowly wheeling circle, like another ixion I did revolve. till gaining that vital centre, the black bubble upward burst; and now, liberated by reason of its cunning spring, and owing to its great buoyancy, rising with great force, the coffin like-buoy shot lengthwise from the sea, fell over, and floated by my side. Buoyed up by that coffin, for almost one whole day and night, I floated on a soft and dirge-like main. The unharming sharks, they glided by as if with padlocks on their mouths; the savage sea-hawks sailed with sheathed beaks. On the second day, a sail drew near, nearer, and picked me up at last. It was the devious-cruising Rachel, that in her retracing search after her missing children, only found another orphan.

 

Thu, 05/31/2012 - 08:03 | 2478712 The Wolf
The Wolf's picture

Jamie Dimon is the new Aaron Barr... of HBGary "I am going to unmask Anonymous fame"... and got electronically destroyed... most eloquently summarized by Stephen Colbert...

"To put this in hacker terms," Colbert said, "Anonymous is a hornet's nest, and Barr said, 'I'm going to stick my penis in that thing.'"

Thu, 05/31/2012 - 09:07 | 2478926 rrrr
rrrr's picture

Instead of holding JPMorgan to certain criteria of morals and ethics which apply to us, I suggest that we apply the same morals and ethics to ourselves and everyone else that JPMorgan performs under. That way our government will automatically by definition be seen to have integrity, Morgan and others will instantly be recognized as being models or ethical behavior, and we will all be free to do whatever we like. Now, about murder. I am not recommending that it be made legal, but, obviously, that would be the next step.

Thu, 05/31/2012 - 09:28 | 2479016 Bob
Bob's picture

Looks like a storm is brewing against Jamie. My guess is he'll get thrown under the bus before a Corzine Event takes out the firm. 

It would be difficult to explain ignoring another Corzine. 

And, with Dimon gone, it'll look like the problem is solved and it'll be back to the markets for the financial wizards and back to la-la land for the sheeple. 

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