Why What Jamie Dimon Doesn’t Know Is Plain Scary

Tyler Durden's picture


Bloomberg's Jonathan Weil rips the lies emanating from Jamie's mouth, a new one.

What Jamie Dimon Doesn’t Know Is Plain Scary

Could Jamie Dimon really be as clueless as he sounded on the phone yesterday?

Last month, after Bloomberg News broke the story that JPMorgan Chase & Co. (JPM)’s chief investment office had, in essence, become a ticking time bomb, Dimon, the bank’s chief executive officer, called the press coverage “a complete tempest in a teapot.” That explanation no longer works.

Yesterday, Dimon changed tacks. Losses on the investment office’s “synthetic credit portfolio” had reached $2 billion so far this quarter, though he refused to give any meaningful details on how that had happened. Presumably, these are derivatives of some sort, but even that basic fact was too much for the bank to specify.

What Dimon lacked in information, he more than made up for in assigning blame -- to himself and JPMorgan employees. “There are many errors, sloppiness and bad judgment,” he said, as JPMorgan’s stock sank in after-hours trading. “These were egregious mistakes. They were self-inflicted.” He called himself and his colleagues “stupid.”

But there is more to it than that. Either Dimon misled the public about the gravity of the festering trades during his company’s first-quarter earnings call last month. Or he didn’t know what was happening inside the bowels of his own company. History tells us the latter is the norm for Wall Street bosses, though it’s hard to say which is worse.

New Rule

Don’t bother asking JPMorgan how it accumulated all these losses. That information is proprietary, as if the taxpayers who bailed out the bank in 2008 don’t have any business knowing. Here’s an idea for a new rule: If a too-big-to-fail bank can’t disclose what its trading desk is doing for fear of blowing itself up, then the bank shouldn’t be allowed to do it.

It’s not often that a huge company calls an emergency teleconference on short notice to discuss an intra-quarter trading loss that’s equivalent to only 1 percent of shareholder equity. So when a Deutsche Bank AG stock analyst named Matt O’Connor asked Dimon why the company had disclosed it at all, the answer was bound to be revealing.

“It could get worse, and it’s going to go on for a little bit unfortunately,” Dimon replied. The meaning was clear. Worse could mean disastrous.

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Fri, 05/11/2012 - 10:41 | 2417314 HarryM
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JPM Fallout will hit Monday - today market being heavily supported to avoid panic

Fri, 05/11/2012 - 10:49 | 2417361 walküre
walküre's picture

Last two days we faded into close when "selling into strength" gained momentum. I'd be surprised to see anything different today.

The cabal has a whole weekend to rummage through Bruno's desk and get to the bottom of his trading Iksils.

The opposite of "I am skilled" or I-Skill is I-Ksils.


Fri, 05/11/2012 - 10:55 | 2417386 Fukushima Sam
Fukushima Sam's picture

I've never known of a CEO of a company larger than about 300 people who knew what was really going on in the bowels of his/her own company.

Fri, 05/11/2012 - 11:18 | 2417476 NotApplicable
NotApplicable's picture

CIO is more like the heart though. The shit emanates on the investor "services" side.

Fri, 05/11/2012 - 11:35 | 2417540 boogerbently
boogerbently's picture

The amount of $$$ they are paying themselves in salary/benefits/bonuses, you'd think they know EVERYTHING....or at least be RESPONSIBLE for everything.

What do you want to bet (later) he gets a FAT bonus for this years performance!

Fri, 05/11/2012 - 11:36 | 2417544 MsCreant
MsCreant's picture

His real speech:

I live in a culture where winning at any cost is the norm. You do too. My colleagues and I have finally pushed the boundaries of theft and subterfuge to the point that some of us need to start pretending to come clean about it. So pretend we will.

Our crimes are far worse than just theft. The whole story of the financial system itself is falling apart. When you finally know and understand what we have been doing all along, you will want to tear out our bowels, loop them around your bumpers, and drag us through the streets as we scream in agony. You will be right to do so. But acknowledge this, you too wanted something for nothing; your greed and selfishness made our crimes possible. 

What needs to be torn apart and rendered asunder is our culture itself, our value system. We are not our bank accounts, our houses, our jewelry, our clothes, or our cars. We eat, drink, and dope too much to anesthetize the pain of living lives that lack meaning and joy. We merely preyed upon your weaknesses in order to feed our own.  

Fri, 05/11/2012 - 12:12 | 2417659 The Big Ching-aso
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I don't know what Jamie knows, but I do know he has his head up his bowels.

Fri, 05/11/2012 - 12:29 | 2417727 macktheknife
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MsCreant,  us ZeroHedgers have been watching this greed, as a band of loosely-knit  and too well-educated distant observers.  Your nicely written comment above is beginning to evolve to violence - although you speak the violence tangentially thru Dimon's own voice.   A few years ago, you wouldn't have even mentioned violence at all.   I see that as a change in you - and how many other ZHers? 

You speak of an almost Biblical need for our culture to be torn apart, and out of the ashes rises values and actions that have been learned thru violence and desperation -  the Cambodians on after walking out of YEAR ZERO.

What I want to see is a hundred thousand men - and myself as one - all carbon copies of Robert De Niro in  The DeerHunter, meeting up with their hundred thousand GI Janes, just back from Libya and Sudan - and these troops driving East, Slouching Towards Washington to be born. 

In a matter of time, this will look like the first days when the Khmer Rouge soldier boys straggled into Phnom Pen, and Duc was documenting the crimes, and the innocents and the guilty were bleeding out on the cement floors of the former middle school.   

Now, you can go to Cambodia, and watch them make beautiful exquisite silk sheets - watch the whole process of the silk worms producing, the weaving, and watch the cloth being died in the bloodiest red die in buckets.

Humans - I woud say it is almost predetermined in some undiscovered quantum of our DNA - we need orgies of violence every so often, to keep us healthy and fit.    Our liberal modern education, and comfort shun these purges as being Barbaric (like Gold)- but they serve a purpose.    Embrace the violence as health- as a cultures childbirth, and close your eyes, and recall the Russian Roulette Scene in The DeerHunter: we are getting closer to that, and way away from Mr Smith Goes To Washington.

Fri, 05/11/2012 - 12:43 | 2417775 francis_sawyer
francis_sawyer's picture

show dem 'pearly whites'

Fri, 05/11/2012 - 13:26 | 2417942 Bindar Dundat
Bindar Dundat's picture

If only they had listened better in Sunday School...

Fri, 05/11/2012 - 14:07 | 2418082 robertocarlos
robertocarlos's picture

Taking everyone's wealth away will be violence enough.

Fri, 05/11/2012 - 22:26 | 2419237 StychoKiller
StychoKiller's picture

Even for the age of kali yuga, ALL things MUST PASS!

Fri, 05/11/2012 - 10:49 | 2417364 DeadFred
DeadFred's picture

It's depressing to see the market soar on how confident we were when the algos drove the DOW to new highs. Cheer us up Tyler and post some good worst case scenarios. Just how bad can it get for them once the sharks smell the blood in the water?

Fri, 05/11/2012 - 10:52 | 2417369 HarryM
HarryM's picture

On the surface it's just a few billion - shoe shine money , so no panic yet.

Fri, 05/11/2012 - 10:53 | 2417379 Hugh_Jorgan
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Something big must be afoot for them to reveal anything at all. The questions is, what else remains unexposed?

Fri, 05/11/2012 - 12:56 | 2417839 Catch-22
Catch-22's picture

...more today after the close and a solution (read; spin) by Sunday open...

Fri, 05/11/2012 - 14:27 | 2418119 Tim White
Tim White's picture

Blythe's naked bod needs to be exposed...the rest will fall on the taxpayers, like always!

Fri, 05/11/2012 - 22:27 | 2419248 StychoKiller
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Again I must ask:  Was it $2Billion in FRNs, or Tonnes of Au?

Fri, 05/11/2012 - 11:02 | 2417411 CPL
CPL's picture

It's 2 billion leveraged 100 times.


200 billion is what they are owing, 2 billion loss on borrowed money on a company with a market cap of 146 billion.


Good luck with whatever math you are doing.

Fri, 05/11/2012 - 11:08 | 2417444 HarryM
HarryM's picture

Agreed - "On the surface 2 billion is tit"  - the true fallout is down the road - could be the first real tremor


Fri, 05/11/2012 - 11:24 | 2417493 Zero Govt
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MF Global was the 1st tremor... we've yet to hear from the/any counterparties caught up in this JP Morgan trading fuck-up

Fri, 05/11/2012 - 12:47 | 2417797 Levadiakos
Levadiakos's picture

Some guy named Paulson structurd the trade for them

Fri, 05/11/2012 - 12:25 | 2417667 pkea
pkea's picture

whatever the leverage is it is at least 1;25 which still makes it sizeable 50B, but still not big enough to make them go away. the world needs to get off the oil and chemicals in order for them to go away for good which as likely as the end of the world at the moment

wouldn't it be fun if the bundesbank and paribas of the world with the ecb blessing maybe some scandinavians  just give them a tiny push. it would be so much fun:)

Fri, 05/11/2012 - 13:00 | 2417851 BudFox2012
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If not more.  160 billion in "assets", 80 Trillion in derivatives would be 500:1 (if any of those numbers is actually accurate).  Anyway you look at it, could be a lot deeper than 2 billion

Fri, 05/11/2012 - 15:02 | 2418223 walküre
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JPM market cap 140 billion and dropping.


SELL SELL SELL get me out of here!

Fri, 05/11/2012 - 10:50 | 2417367 vast-dom
vast-dom's picture

JPM has given the markets a nice mini-rally today. All is in the green. See how well this always works out!

Fri, 05/11/2012 - 11:36 | 2417545 boogerbently
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let's hope for more bad news, my portfolio needs a boost.

Fri, 05/11/2012 - 10:53 | 2417374 CPL
CPL's picture



There's no volume, because there are no buyers except HFT/ALgo Boxes.  If you, as in you personally, took a hundred grand today, you could be the market volume.


That's how bad it is.  Go look on your trade platform.  Pure sell side...not one single buyer to be found.


But because the markets aren't allowed to be shorted or fall, the ALGO's will now run the market up to when the QE money runs out.  Then it'll be frozen and they can ship it to the smithsonian and show off the market nobody trades in but has all that liquidity trapped in it.

Fri, 05/11/2012 - 11:29 | 2417508 pkea
pkea's picture

nice explanation cpl for non players but curious about it how the " market" works:) really only the ecb can kill this insanity and the beast in the US is pissed off.... ha

Fri, 05/11/2012 - 12:05 | 2417630 J 457
J 457's picture

"That's how bad it is. Go look on your trade platform. Pure sell side...not one single buyer to be found."

That's a big stretch stating no buyers.  There are always buyers.  ALWAYS. 

Fri, 05/11/2012 - 14:53 | 2418197 CPL
CPL's picture

It's not the fact a store exists.


Or the fact a store has a location.


Or even if the store has an owner.


Having a customer to actually buy something is more important.  That's the market.  It's a giant walmart, full to the brim with items nobody wants and only secret robo shoppers floating around picking things up and putting them down repeatedly to make it appear there is some action in the store.


That's it.  That's all.  No real customers shop at that mythical walmart.  Just robo's and house detectives pretending like they are showing up to work for something to happen.


Pathetic, sad and pointless describes "capitalism" now.

Fri, 05/11/2012 - 10:55 | 2417381 Hippocratic Oaf
Hippocratic Oaf's picture

"today market being heavily supported to avoid panic"


While true, do I up-tick you or down-tick.......I'm so confused?!?!?!?

Fri, 05/11/2012 - 11:03 | 2417423 CPL
CPL's picture

uptick with a twist of lime.


Who knows anymore and honestly nobody should care.  Stick a fork in it it's done.

Fri, 05/11/2012 - 11:34 | 2417500 Zero Govt
Zero Govt's picture

will a pitchfork do?

Sat, 05/12/2012 - 19:21 | 2420390 Debt-Is-Not-Money
Debt-Is-Not-Money's picture

A five-tine manure fork is more appropriate!

Fri, 05/11/2012 - 11:03 | 2417427 dereksatkinson
dereksatkinson's picture

When does JPM unwind their silver short?  That's what I want to know.

Fri, 05/11/2012 - 11:10 | 2417449 HoofHearted
HoofHearted's picture

Come on, Blythe was on the MSM telling us they don't take prop bets but that they were only hedging their book to keep it flat. WE always can believe those nice people at JPM...people like Blythe and Jamie Dimon...oh shit. Nevermind...glad I'm long the physical stuff.

Fri, 05/11/2012 - 11:30 | 2417509 Zero Govt
Zero Govt's picture

JPM can't unwind their Silver position

just as the US Govt couldn't let Morgan go down because they are a Primary Dealer and raise all the debt for the credit card spending junkies in DC the Fed needs Morgan in the metals market to rig the prices

everything you ever heard about conflicts of interest is there by the oil tanker load at the very heart of the rotten machinary of Govt

Fri, 05/11/2012 - 11:24 | 2417485 pkea
pkea's picture

finally, their anti european position got revealed to the public that anyone who gets anything should have known all along and chases's size is playing against them, hopefully draghi and weidman will be able to cause even more damage. the delay may drag until this fall. this is the best scenario for games. it was one of the best days,

cheers to the ecb and the europe...

who is dimon kidding, he didn't know(come on people). of course he knew if not originated this hedge to begin with

i all of the sudden may stop being agnostic, to find, reveal and exploit their weakness is a long awaited gift. i really thought they are smarter than what happened,,,maybe "god" does exist after all:)

Fri, 05/11/2012 - 11:33 | 2417532 GeneMarchbanks
GeneMarchbanks's picture

Interesting take albeit a speculation; I doubt this was something inherited over from the Global Motherfuckers.

Fri, 05/11/2012 - 11:33 | 2417533 Whatta
Whatta's picture

Anyone buying PM's today?

Gold is looking cheaper, and better, by the day.

Fri, 05/11/2012 - 12:08 | 2417641 SRSrocco
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The RULE OF THUMB is... the longer the LIES go on and the more the BANKING SYSTEM is propped up, the FASTER WE FALL OFF THE CLIFF.  I am simply amazed at the lack of understanding of just how horrible the situation has become in the banking system.

Almost 4 years later since the system almost died, and its even worse.  Any clowns that think gold and silver aren't the best SAFE HAVENS, need to check themselves into the nearest clinic and get a BRAINSCAN or MRI.

Sat, 05/12/2012 - 10:31 | 2419697 monoloco
monoloco's picture

Yeah, Damage control is in full press mode, I listened to Bloomberg radio at work, they had one Jamie Dimon apologist/sycophant after another on all day long minimizing the whole mess.

Fri, 05/11/2012 - 10:42 | 2417315 Chaffinch
Chaffinch's picture

It was the same story when the Nick Leeson scandal broke - his bosses didn't have a clue.

Fri, 05/11/2012 - 10:50 | 2417362 silver500
silver500's picture

Of course they know:
1. Iksell reports directly to Ina who reports directly to Dimon

2. This was reported not just on ZH but on Bloomberg months ago

3. Counterparties were angry about the manipulation and complained to the media, dont you think they would complain to JPM exectutives?

4. The nominal size of the transaction is material to JPM

Fri, 05/11/2012 - 11:05 | 2417428 haskelslocal
haskelslocal's picture

Yep. Let's just give them 95% knowing. 5% they "don't know". And this 5% is purposeful insulation from the things that if they knew, then they'd have to say NO to it, which means by not knowing they know it! 

(Like when a cop knows his buddy smokes pot, so he just says, "don't tell me and don't do it in front of me so I don't know....Means he knows.)

Fri, 05/11/2012 - 10:52 | 2417375 TrulyStupid
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The bosses deliberately insulate themselves from their traders in a preemptive effort of buck passing - plausible deniability of responsibility when things go south. They take responsibility for trading outcomes come bonus time. The sheeple continue to be disinterested.

Fri, 05/11/2012 - 11:35 | 2417538 earnyermoney
earnyermoney's picture

buck passing, plausible deniability of responsibility when things go south. I'm still waiting for a prosecuter to file charges under Sarbanes-Ox. That law was supposed to prevent the buck passing and plausible deniability.

Fri, 05/11/2012 - 10:56 | 2417392 Chaffinch
Chaffinch's picture

Incidentally if you google Nick Leeson he's had quite an interesting life since then.
They let Barings fail. He got scapegoated. Just start letting the damned banks fail! They add nothing - they take everything.
All I want a bank to do is boring old fashioned high street stuff. None of this derivative shit.

Fri, 05/11/2012 - 10:45 | 2417317 CvlDobd
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I made this point in another thread, fits here. If those operating on inside knowledge and fed ownership can fuck it up this bad what hope do us underlings have?

Entire night of weakness erased in 40 minutes. Look at a 1 minute chart. ES plunges at 4:30, surges at 9:30. Bullshit. Damn lies.

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