Jamie Dimon

Well, my hat is off to the global central planners for averting the next stage of the unfolding financial crisis for as long as they have. I guess there’s some solace in having had a nice break between the events of 2008/09 and today, which afforded us all the opportunity to attend to our various preparations and enjoy our lives.

Alas, all good things come to an end, and a crisis rooted in ‘too much debt’ with a nice undercurrent of ‘persistently high and rising energy costs’ was never going to be solved by providing cheap liquidity to the largest and most reckless financial institutions. And it has not.

Jamie Dimon Thumbs Nose at Law by Pretending that Big Speculative Bets are Hedges

But Bill Black Demolishes Dimon's Fake PR Campaign

Update: not so fast: Bloomberg reports that the whale is still beached: JPMorgan Chase Still Employs Trader Bruno Iksil, Spokesman Says. So... pile into the IG9 trade still?

Yesterday we speculated that the final confirmation that JPM has unwound its disastrous skew trade will only came once Bruno Iksil joins all the other members of the CIO team in being involuntarily retired: "As for the question of how much additional P&L loss JPM has sustained from Friday through today is a different matter entirely, and we are confident the next announcement from JPM will come momentarily, coupled with the announcement that Bruno Iksil, the last remnant of the CIO desk, and now having completed his duty of unwinding the trade that brought so much pain for Jamie Dimon, has been retired." Sure enough, the NYT reports that Iksil is now history.

All you need to know.

12-year old Victoria Grant drops knowledge on adults that can't put two and two together and figure out that our immoral, morally reprehensible fractional reserve banking system is responsible for the  majority of misery and suffering in the world today.

From the 2008 financial crisis to Bernie Madoff, federal regulators have consistency proven too incompetent or too in-the-pocket to actually catch big disasters before they happen.  Their interests, like all government employees, are politically based.  State bureaucracies seek more funding no matter performance because their success is impossible to determine without having to account for profit.  There is never an objective way to determine if the public sector uses its resources effectively. The news of JP Morgan’s loss has reignited the discussion over whether the financial sector is regulated enough.  The answer is that regulation and the moral hazard-ridden business environment it produces is the sole reason why a bank’s loss is a hot topic of discussion to begin with.  Without the Fed, the FDIC, and the government’s nasty history of bailing out its top campaign contributors, JP Morgan would be just another bank beholden to market forces.  Instead it, along with most of Wall Street, has become, to use former Kansas City Fed President Thomas Hoenig’s label, a virtual “public utility.” Take away the implied safety net and “too big to fail” disappears.  It’s as simple that.

Today, for the first time since the advent of the JPM prop trading fiasco last Thursday, the IG9-10 Year skew has diverged, dipping from -3 bps to -5 bps as the index remained flattish while the intrinsics widened by about 2 bps. While hardly earthshattering, this move likely means that either JPM's CIO trading desk is playing possum and is no longer unwinding its original pair trade exposure (either because it no longer has anything to unwind, or because it can't take the pain any more and is out of the market entirely), or the hedge fund consortium has had enough of pushing IG 9 wider in hopes that max pain would force JPM to cover its synthetic leg. As a reminder, this is where last Thursday we said the time to push JPM would likely end. As for the question of how much additional P&L loss JPM has sustained from Friday through today is a different matter entirely, and we are confident the next announcement from JPM will come momentarily, coupled with the announcement that Bruno Iksil, the last remnant of the CIO desk, and now having completed his duty of unwinding the trade that brought so much pain for Jamie Dimon, has been retired.

"I don't know why anyone would ever want to own a financial stock personally"

What's $2 Billion for Ben Bernanke's Chosen Son?

Earlier we were complaining that the newsflow was on its way to getting full-retard surreal. It just crossed that line. From NBC:

NY FBI Opens Inquiry into JPMorgan Chase Loss

All you need to read.

As either taxpayers or long-term JPM investors, we should be more grateful than sorry about the JPM CIO Ina Drew.

• JPMorgan Said to Weigh Bonus Clawbacks After Loss (Bloomberg)
• Obama Says JPMorgan Loss Shows Need for Tighter Rules (Bloomberg)
• Greeks Try New Tack, Seeking Technocrat Slate (WSJ)
• Euro zone finance ministers dismiss Greek exit "propaganda" (Reuters)
• Romney’s business record under fire (FT)
• Tide Turning in Japan Deflation Fight, BOJ’s Top Economist Says (BBG)
• Euro Chiefs May Offer Leniency to Greece (Bloomberg)
• Portugal's Progress Won't Guarantee Funding (WSJ)
• EU Bank-Liquidity Bill Proceeds; U.K. May Protest (WSJ)
• Cameron pressed to boost enterprise (FT)

It’s 1933 and the country has undergone several years of painful Depression following the 1920s speculation that crashed in the fall of 1929. Investigations into the bank related causes began under Republican President, Herbert Hoover and continued under Democratic President, FDR. Okay, that’s pretty common knowledge. But, here’s something that isn’t: of all the giant banks operating their trusts schemes and taking advantage of off-book deals, and international bets in the late 1920s, it was an incoming head of Chase (replacing Al Wiggins who shorted Chase stock in a network of fraud) that advocated for Glass-Steagall. Indeed, despite all pedigree to the opposite (his father was Senator Nelson Aldrich architect of the Federal Reserve and brother-in-law, John D. Rockefeller), Chase Chair, Winthrop Aldrich, took to the front pages of the New York Times in March, 1933 to pitch decisive separation of commercial and speculative activity arguments.  Fellow bankers hated him. His motives weren’t totally altruistic to be sure, but somewhere in his calculation that Chase would survive a separation of activities and emerge stronger than rival, Morgan Bank, was an awareness that something more – permanent – had to be put in place if only to save the banking industry from future confidence breaches and loss. It turned out he was right. And wrong. (much more on that in my next book, research still ongoing.) Financial history has a sense of irony. JPM Chase was the post-Glass-Steagall repeal marriage, 66 years in the making, of  Morgan Bank and Chase. Today, it is the largest bank in America, possessing greater control of the nation’s cash than any other bank.  It also has the largest derivatives exposure ($70 trillion) including nearly $6 trillion worth of credit derivatives.