JPMorgan Chase loss only going to get worse – $6-7B
“The number being bandied about now is closer to a range of $6 billion to $7 billion”
“Since JPMorgan Chase is basically the only one on its side of the bet, a worsening market makes it even more expensive to keep this position and more difficult to find other places to offset these losses.”
“JPMorgan Chase’s main bet has been on an index, known as IG9, of 125 U.S. investment grade companies.”
JPM’s CIO Loss Widens to $5 Billion … but other sources claim it is $100B
“Last weekend we advised SD readers that our sources had informed us that JPMorgan’s derivatives losses sustained by their CIO desk were actually $100 Billion, not the $2 Billion admitted by Jamie Dimon to investors.”
“Well, one week later, the MSM (WSJ) is now reporting that JPM’s CIO has now lost $5 billion.”
“Jamie Dimon personally approved the delta-hedging of its interest rate swaps positions which has resulted in the FUBAR derivatives losses for JPM.”
INTEREST RATE SWAPS are one of the other DERIVATIVES after CREDIT DEFAULT SWAPS and FIVE TIMES BIGGER than CDS and they are now living up to what multi-billionaire Warren Buffett said they were – WEAPONS OF FINANCIAL MASS DESTRUCTION.
I fully expect JPM, with their $70 trillion derivative book, to be financial TOAST in the not too distant future. To be followed by Citibank with their $52 trillion derivative book and so on and so on.
Th JP Morgan website says ‘Our aim is to be the world’s most trusted and respected financial services institution’. They have got to be kidding. I don’t trust them at all and I don’t respect them at all.
I am anti-corruption not anti-government, if corruption is given an inch it will take a mile and I hope after reading/listening/watching some of the following material you all agree with me that our society is being consumed by this runaway corruption.
I have to laugh when I see CNBC trailer their program about the billions of dollars sent to Baghdad that are now missing.
Senate Banking Chair Calls Jamie Dimon to Testify: But JP Morgan Chase is His Biggest Contributor!
Will this Senator bite the hand that feeds him ?
How JPM’s “Hedge” Blew Up In One Easy Charthttp://www.zerohedge.com/news/how-jpms-hedge-blew-one-easy-chart
“it was a combination of the Fed/ECB’s actions to squelch systemic risk entirely and a total reliance on models that is now bleeding to every other credit index and just as we said – leading to increased losses at JPM.”
How’s that systemic risk looking now, Mr. Bernanke ?
BBC Interview with Nassim Taleb (Professor of Risk and Engineering) on JPMorgan
Also the author of ‘The Black Swan’.
Greyerz – Customer Shocked “Allocated” Gold Not in Swiss Bank
“Egon von Greyerz (EvG): Founder and Managing Partner of Matterhorn Asset Management AG & GoldSwitzerland. Since the 1990s Egon von Greyerz has been actively involved with financial investment activities including Mergers and Acquisitions and Asset allocation consultancy for private family funds. This led to the creation of Matterhorn Asset Management -MAM an asset management company based on wealth preservation principles. MAM is part of the Aquila Group, Switzerland’s largest independent asset management group. EvG makes regular media appearances on CNBC, BBC, etc. and publishes articles on the world economy and wealth preservation.”
Not a case of a gold bar drilled out and filled with tungsten, this is a case of someone thinking they own gold in a bank vault when they don’t.
ABSOLUTELY ASTONISHING FRAUD and even more ASTONISHING is that it’s from a Swiss bank.
Here is an audio copy of the same interview
Facebook At All-Time Lows; -31% From Highs … following on it’s first day last Friday
Heck, did they overprice Facebook or what. A massive vote of no confidence in the Wall Street Masters of the Universe. -90% here we come on.
FOUL LANGUAGE: Accidentally Released – and Incredibly Embarrassing – Documents Show How Goldman et al Engaged in ‘Naked Short Selling’
“The lawsuit between Overstock and the banks concerned a phenomenon called naked short-selling, a kind of high-finance counterfeiting that, especially prior to the introduction of new regulations in 2008, short-sellers could use to artificially depress the value of the stocks they’ve bet against. The subject of naked short-selling is a) highly technical, and b) very controversial on Wall Street, with many pundits in the financial press for years treating the phenomenon as the stuff of myths and conspiracy theories.”
“Now, however, through the magic of this unredacted document, the public will be able to see for itself what the banks’ attitudes are not just toward the “mythical” practice of naked short selling (hint: they volubly confess to the activity, in writing), but toward regulations and laws in general.”
““Fuck the compliance area – procedures, schmecedures,” chirps Peter Melz, former president of Merrill Lynch Professional Clearing Corp. (a.k.a. Merrill Pro), when a subordinate worries about the company failing to comply with the rules governing short sales.”
“These hard-to-borrow stocks, stocks that cost money to borrow, are called negative rebate stocks. In some cases, these negative rebate stocks cost so much just to borrow that a short-seller would need to see a real price drop of 35 percent in the stock just to break even. So how do you short a stock when you can’t find shares to borrow? Well, one solution is, you don’t even bother to borrow them. And then, when the trade is done, you don’t bother to deliver them. You just do the trade anyway without physically locating the stock.”
“Thus in this document we have another former Merrill Pro president, Thomas Tranfaglia, saying in a 2005 email: “We are NOT borrowing negatives… I have made that clear from the beginning. Why would we want to borrow them? We want to fail them.””
“Trafaglia, in other words, didn’t want to bother paying the high cost of borrowing “negative rebate” stocks. Instead, he preferred to just sell stock he didn’t actually possess. That is what is meant by, “We want to fail them.” Trafaglia was talking about creating “fails” or “failed trades,” which is what happens when you don’t actually locate and borrow the stock within the time the law allows for trades to be settled.”
“If this sounds complicated, just focus on this: naked short selling, in essence, is selling stock you do not have. If you don’t have to actually locate and borrow stock before you short it, you’re creating an artificial supply of stock shares.”
“In this case, that resulted in absurdities like the following disclosure in this document, in which a Goldman executive admits in a 2006 email that just a little bit too much trading in Overstock was going on: “Two months ago 107% of the floating was short!””
“In other words, 107% of all Overstock shares available for trade were short – a physical impossibility, unless someone was somehow creating artificial supply in the stock.”
Or reaching into an alternate universe for the 7%.
“The import of this is that it made it cheaper and easier to bet down the value of a stock, while simultaneously devaluing the same stock by adding fake supply. This makes it easier to make money by destroying value, and is another example of how the over-financialization of the economy makes real, job-creating growth more difficult.”
UNCLE SAM BULLYING BROKERS OVER SILVER? [Plus, JPM’s $7 Billion Blunder] – Woody O’Brien
“Federally regulated brokers should not be giving advice to the common folks about buying physical silver”
“This is too stupid for me to participate in… take this job and shove it.”
“Silver is not a security in any way, shape, matter or form.”
Are people supposed to buy hugely overpriced Facebook shares instead ?
“Allegations of pro-inflationary views”
“Keynes has been characterised as being indifferent or even positive about inflation. Keynes had indeed expressed a preference for inflation over deflation, saying that if one has to choose between the two evils it is “better to disappoint the rentier” than to inflict pain on working class families. However, Keynes was consistently adamant about the need to avoid inflation where possible.”
“In The Economic Consequences of the Peace, Keynes had written:”
“Lenin is said to have declared that the best way to destroy the Capitalist System was to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.”
“Keynes remained convinced of the dangers of inflation to the end of his life, during World War II he argued strongly for policies that would minimise post-war inflation.”
Ben Bernanke is most definitely an inflationista.
Intelligence Shortfall (Slight language warning for those with tender auditory canals)
“Prosperity shortfall puts Obama at risk; but Romney’s not yet seized the day.”
“You might hear that in an economics textbook. Of course, your average dumbed-down American haven’t cracked a book in the last 35 years so they wouldn’t know that this is not a real term – prosperity shortfall. We don’t have a prosperity shortfall in America we have a jargons jubilee.”
“The bankers tell you ‘we will create these bogus non-issues and let people get literally split right down the middle and debate one guy versus the other while we’ll make out like bandits’.”
“This prosperity shortfall is like telling a hooker she’s got a virginity shortfall.”
“I call it ‘The Dumbening’.”
Nationalized Spanish Bank Plummets On News Of Bank Run
“El Mundo report that “customers had withdrawn €1 billion over the past week.”
The Bank Runs In Greece Will Soon Be Followed By Bank Runs In Other European Nations
“Since May 6th, nearly one billion dollars has been withdrawn from Greek banks.”
I expect it won’t take long for the withdrawals of Spanish deposits to reach and surpass the 1% ratio to the deposit base per week as Greece and I wonder what is happening in Italy.
Now I will tell you what awaits us in the economy. There will be either debt deflation or price inflation or a recollateralisation of the currency.
For an example debt deflation look no further than the Wall Street Crash of 1929
“After a one-day recovery on October 30, where the Dow regained an additional 28.40 points, or 12%, to close at 258.47, the market continued to fall, arriving at an interim bottom on November 13, 1929, with the Dow closing at 198.60. The market then recovered for several months, starting on November 14, with the Dow gaining 18.59 points to close at 217.28, and reaching a secondary closing peak (i.e., bear market rally) of 294.07 on April 17, 1930. The following year, Dow embarked on another, much longer, steady slide from April 1931 to July 8, 1932 when it closed at 41.22—its lowest level of the 20th century, concluding an 89% loss rate for all of the market’s stocks.”
“The crash followed a speculative boom that had taken hold in the late 1920s, which had led hundreds of thousands of Americans to invest heavily in the stock market. A significant number of them were borrowing money to buy more stocks. By August 1929, brokers were routinely lending small investors more than two-thirds of the face value of the stocks they were buying. Over $8.5 billion was out on loan, more than the entire amount of currency circulating in the U.S. at the time.”
“The rising share prices encouraged more people to invest; people hoped the share prices would rise further. Speculation thus fueled further rises and created an economic bubble. Because of margin buying, investors stood to lose large sums of money if the market turned down—or even failed to advance quickly enough. The average P/E (price to earnings) ratio of S&P Composite stocks was 32.6 in September 1929, clearly above historical norms. On October 24, 1929, with the Dow just past its September 3 peak of 381.17, the market finally turned down, and panic selling started.”
“In 1932, the Pecora Commission was established by the U.S. Senate to study the causes of the crash. The following year, the U.S. Congress passed the Glass–Steagall Act mandating a separation between commercial banks, which take deposits and extend loans, and investment banks, which underwrite, issue, and distribute stocks, bonds, and other securities.”
This separation was removed by the Gramm-Leach-Bliley Financial Modernization Act of 1999 which President Clinton signed into law on November 12, 1999.
With the demise of JPM staring us in the face we have 70 trillion reasons to want this separation re-established.
For an example price inflation look no further than Germany 1919-23 for which I have attached a file showing the prices experienced.
U.S. Banks Sold More Swaps on European Debt as Risks Rose
Beats the crap out of me why they sold additional CDS on European debt.
“JPMorgan Chase & Co. (JPM) and Goldman Sachs Group Inc., two of the top CDS underwriters in the U.S., say they have bought more protection than they sold, indicating they may benefit from defaults in the region. That outcome is called into question by JPMorgan’s $2 billion loss on similar derivatives, which shows that risks don’t vanish when offsetting bets are taken, said Craig Pirrong, a finance professor at the University of Houston.”
““All these hedges trade one risk for another,” said Pirrong, whose research focuses on derivatives markets. “The banks say they’re flat on European risk, but that’s based on aggregated positions. We don’t know how those will hold off if the European crisis blows up.””
So they are increasing their exposure and they may be flat European risk but what about being flat on each individual national risk across Europe ?
And of course they are fully exposed to counterparty risk.
“Not all protection sold by banks is matched exactly by protection bought. CDS purchased and sold on Spanish sovereign debt can have different expiration dates. Banks also can net a swap on a Spanish bank with one on another lender. Even if those two firms are in a similar condition at the time of the trades, one could deteriorate faster, increasing the cost of CDS.”
“Some of the swaps sold by U.S. banks were bought by European lenders trying to reduce exposure to the five so-called peripheral countries. Since it’s considered insurance, a German bank can subtract the value of the contracts it purchased on Spanish debt from the total value of its holdings, with the understanding that if Spain doesn’t make good on its payment, the CDS underwriter will pay instead.”
“JPMorgan and other banks rely on proprietary models to gauge the risks of such correlations in their derivatives positions. Dimon said last week that some of those models had proven wrong.”
The markets are driving a panzer division through these proprietary models, who the hell would have thought that ?
“Lenders try to mitigate this risk by asking for collateral from their counterparties as the value of the CDS or other derivative changes. Dexia SA (DEXB) failed in October when the bank faced 47 billion euros of such margin calls on interest-rate swaps it sold. If Dexia hadn’t been bailed out by Belgium and France, it wouldn’t have been able to put up the collateral, causing losses for its unidentified counterparties.”
““Collateral is a great way to protect yourself,” Pirrong said. “But when the financial system is in a crisis, you might end up holding an empty bag.””
I think we are going to see a tsunami of empty bags.
“Greece is huge deal & it’s coming to the forefront right now. This week it was announced the ECB is starting to cut off some of the Greek banks. This is a precursor to the inevitable, which is Greece succeeding from the Euro currency. This will not be a simple event, and it will result in reneging on hundreds of billions of debt; it will cause hyperinflation and bank runs across Europe then it will move up the totem pole to Great Britain, Japan and the US. This will cause people across the world to really question what debt means and if you can renege on it.”
“I don’t want to talk about JP Morgan any more.”
“I don’t think blatant bail outs are going to work… This time banks are going to go under.”
Bilderberg Agenda Attracts National Exposure
“However, as we have exhaustively documented with numerous different examples, Bilderberg does indeed create the consensus for setting policies of global significance, including the introduction of the euro single currency.”
Thank you, Bilderberg, for submerging the diverse economies of Europe into the same currency so the lesser economies gorged themselves on cheaper credit than they otherwise would have access to and now witness the inevitable crunch.
Numerous countries will be facing their Minsky Moments, the time when the government concludes it can no longer service its debt, let alone pay it off.
But we have the latest G8 meeting at Camp David saying blah, blah, blah again about the European debt crisis for the Nth time.
CNBC are reporting that Greeks are returning to bartering. Faith in the euro currency is fast evaporating.
Sky News are reporting that Greek elderly are scrounging for food.
Liberty City Seven Trial Travesty
“At a nationally televised news conference, then-U.S. Attorney Alberto Gonzalez told the country that the dirt-poor black defendants were prepared to “wage a full ground war on the United States.””
Are we to believe that these 7 guys were capable of waging a full ground war ? They probably couldn’t take a brown paper bag.
Charlie Brooker’s How to Report the News – Newswipe – BBC Four
This may be why mainstream media is losing its audience in droves.
Classified Woman-The Sibel Edmonds Story: A Memoir, national security whistleblowers
“We have been doing national security litigation for more than 30 years, and in our view, this is the most egregious misuse of the classification authority we’ve seen.”
—Michael Kirkpatrick, Washington Times
“Having lived under tyranny in Iran and elsewhere, Edmonds knows what it looks like. In her case, and in many other recent cases, tyranny comes in the form of the state secrets privilege, a foolproof mechanism of the federal government to hide executive branch corruption, incompetence, and illegal activity. This is a practice more at home with czars and nabobs, and should have no place in the United States. But Edmonds gave the government something it never expected—a no-holds-barred battle. She hoisted the black flag and went on the attack by forming the National Security Whistleblowers Coalition, an organization dedicated to changing the law, exposing government misdeeds, and giving hell to those who richly deserve it.”
—Professor William Weaver, University of Texas
“She’s a First Amendment cannonball. She speaks up for what she believes in. She’s a leader. The fact that she, not only, was a strong advocate for her own case, but she became a strong advocate for the public policy, for the greater good.”
—Congresswoman Carolyn Maloney (D-New York)
“She had the intuition, the courage, and the backbone to stand up and do it. And we are very grateful to her. And the PEN Award is significant in that regard. Tell the public what happened—Sibel Edmonds was a heroine in this.”
—Senator Frank Lautenberg (D-New Jersey)
“Sibel Edmonds is certainly one of my heroes and I’m glad to have heard of her effort. I admire what she is doing very much. I think she’s serving the country very well.”
—Daniel Ellsberg, “Democracy Now”
“Sibel Edmonds’ Kafkaesque ordeal underscores how easily government powers, especially powers wielded in the name of national security, can be abused to keep the public in the dark about official failings. PEN is deeply troubled by Sibel Edmonds’ story and by the growing number of reports of efforts by the administration to silence government employees.”
—Larry Siems, PEN American Center
“Sibel Edmonds is an American Patriot. She has a classic story to tell—which is the story of an immigrant, who came here seeking more freedom, and seeking a real democracy—and was unfortunately shut down when she tried to exercise her rights under the First Amendment.”
—Ann Beeson, American Civil Liberties Union
“For nearly a decade, Sibel Edmonds has fought against excessive government secrecy, built up an organization of more than one hundred national security whistleblowers, and exposed government attempts to cover up abuses.”
—James Bamford, bestselling author and award-winning journalist
“The silencing of Edmonds has been remarkably silent. Which is probably just what the FBI was counting on in the first place.”
—Clay Risen, The New Republic
To Ela & F.R. Deniz
“By the media and the public, I’m commonly referred to as the State Secrets Case, the Gagged Woman or the Classified Whistleblower.”
“Among legal experts I’m cited as “the most egregious case of unjustified secrecy and classification”; “the most gagged woman in the known history of the States”; and “the unprecedented case in application of State Secrets Privilege.”
“Many of my old friends and associates consider me “too dangerous to associate with,” “too risky to get close to,” and “a reason to land us on a government watch list.””
“The United States government has declared me “a woman who knows too many sensitive secrets,” “a woman who should remain gagged,” and “a person who should be classified at every level and in every aspect.””
“The United States government has officially declared my birthplace, my heritage, as Top Secret Classified Information containing State Secrets.”
“My birth date has been designated classified, and its divulgence a serious threat to the United States’ sensitive diplomatic relations. The United States judicial system has agreed with this designation and ruled for its enforcement.”
“I am forbidden to reveal my mother tongue; all languages I speak have been banned from being officially stated. Per the government’s demand, the federal courts have ruled against those who tried to ask me what languages in which I’m fluent.”
“My employment history has been classified as top secret. Those who have requested this information have been prevented by court orders.”
These people who think they will hear what whistleblowers bringing to light the corruption had better think again. Sibel is publishing her memoirs from her time as an FBI translator herself because every major publisher declined.
In fact, I urge my representatives to reply.