JPMorgan Loses $2B on Synthetic Credit Securities

Then whose notion were you talking about?

 

Sorry man.

Three things in that link.

1) I hate the premise that "If they are too big to fail, then they shouldn't be allowed to. ... This notion of "too big to fail" has poisoned us. They SHOULD fail if they are too stupid to run their business. We would have half the problems today that we do (trllions of dollars of debt on the Federal Reserve's balance sheet and monetary policy driving this country into the ground) if the attitude had been "They screwed up so bad that they DESERVED to fail."

2) I am guessing what Jonathan guessed, which is that these were not bona fide hedging losses. But until we know otherwise (and we probably never will) it's speculation. It's a rhetoric game they are playing with the people trying to stick heads on posts. If they simply say, "Our proprietary trading desk made some really crummy trades that we wish we had never gotten into," it gives red meat to every jackal politician and Paul Volcker to sound ridiculous warning alarms for why they need to extort more money from the banks in return for watered down regulations.

3) If Iksil (and has there ever been a better nickname than "The London Whale"?) really was moving these small credit markets with $100 billion of cash in play, it would have pissed off traders at other banks. A BAD NEWS scenario is always that traders can manipulate these markets in cahoots with each other and commit fraud. But it appears that the exact opposite was going on here (which is a good thing) because right now it sounds like JP Morgan is taking an even bigger beating than it would like because everyone else is making them pay to the bone in order to unload their positions. That is competition -- which is ultimately a good thing, because it will be a deterrent for traders in the future to put too much to work in markets that aren't liquid enough.

All of that said, I am sorry you are watching your JP Morgan stock get killed. I don't own any (don't touch any equities), but if I was in your shoes and really believed in what JP Morgan was doing before this, I would sit tight and maybe even consider buying more while it is beaten down. This is a pretty heavy reaction for something that by the accounts so far is totally recoverable from.

 

Um, no. You created a strawman about JP Morgan going out of business. Attributed it to me. And now you are telling me about a rabbit hole, while STILL putting words into my mouth. Here is my post:

I said early on on the thread, that this PARTICULAR trading loss will have absolutely no affect (and I even qualified it -- I said at least it shouldn't based on what we know) on anyone except Morgan's shareholders. Don't now try to weave some bullshit about how "YOU are the one talking about how JPMC's financial future in no way shape or form "affects" anyone but its shareholders."

That is your stretch, not mine.

I'll refer to my post above. LOTS OF THINGS AFFECT people. It's not only a duh statement, but I actually posted the exact opposite of your silly rabbit hole gotcha strawman. What part of "If JP Morgan Chase goes out of business it affects a lot of people," lines up with the words you just put in my mouth?

It's also a meaningless standard for trying to regulate the world. But it "affects" me!