What Jamie Dimon didn't tell you on 'Meet the Press'

[RWebb]

What Jamie Dimon didn't tell you on 'Meet the Press' - latimes.com

[mikeesik]

"sure we lost $2 billion but we got billions more!"

-What it really should have said was-" sure we lost an extremity , but we have 3 more!"

Uggghh!

[KFC911]

I own a chunk of JPM . I'm sure the lady in charge (Chief Investment Officer) is crying all the way to the bank over their "gambling losses" (reportedly the FOURTH highest paid exec, pulling in approximately 30 million over the past TWO years). I could've rolled the dice for a lot less compensatioin

[p911dad]

As of today, losing money still isn't a crime in the US, though the nanny state we have become is surely working on it. It looks like it's JP Morgan's business, and not the Gov't's. I mean, what's all the excitement about anyway. This is chump change compared to what has recently been wasted in the name of economic stimulus. Last I looked, JP Morgan is still a private concern answerable only to its shareholders and directors.

[steve911]

IMO, the LATimes writer is a moron, more intent on trying to sell papers and grab eyeballs than to adequately explain the situation.

JPM was attempting to hedge some of their corporate banking risk - they lend to THOUSANDS of companies world wide and proper risk management dictates that they take steps to mitiigage some of that risk. Clearly the hedge didn't work quite the way they thought it would.

While $2BN isn't a small number, it needs to be looked at in the context of the size of the overall enterprise.

Further, politicians claiming that this loss now justifies further regulation to protect the taxpayer and the financial system is just plain hooey. If the regulators/regulations were so good, how come the government's stress tests didn't pick up on the hedge as a problem. Politicians don't have a clue and regulators even less so.

[widebody911]

If the regulators/regulations were so good, how come the government's stress tests didn't pick up on the hedge as a problem.

I don't think the 'stress test' is run on a regular basis.

politicians claiming that this loss now justifies further regulation to protect the taxpayer and the financial system is just plain hooey

So you're saying less regulation would have prevented this?

[steve911]

Originally Posted by widebody911

If the regulators/regulations were so good, how come the government's stress tests didn't pick up on the hedge as a problem.

I don't think the 'stress test' is run on a regular basis.
The latest stress tests were run in the last few months. The hedges have been in place for a while.

politicians claiming that this loss now justifies further regulation to protect the taxpayer and the financial system is just plain hooey

So you're saying less regulation would have prevented this?

I'm saying that more regulation is not the answer, as the regulators are incompetent. Further, the company was attempting to hedge its corporate debt portfolio; I don't see how or why this should be regulated. As others have said, shareholders should (and have, witness the decline in the stock price) be the ones who suffer.

[RWebb]

I am amazed that less regulation is thought to be a fix for lax regulation.

Banks used to do just fine at what they do, until the regulations enacted after the Great Depression were removed; then we got the Great Recession.

JD is supposed to the be smartest guy around and supposed to have the very best team. They went way beyond using hedging to control risk - way way beyond that, and into speculation, tho I would not call it gambling. It bit them (and those who depend on them).

Now, if THEY effed up, then what about others???


I do not agree with everything from the LA Times writer, however.

[daepp]

The only regulation should be from shareholders who fire all those involved.

And BTW - this event underscores exactly why deposit insurance should be abolished - it encourages risky behavior by the insureds with other people's money and at the same time provides a fall sense of security.

[tabs]

In a town full of Lepers Mr Dimon was the only one left with all his fingers. Sadly that is no longer true. Mr Dimon is being enumerated handsomely and as such should be able to think through ALL the ramifications of all the decisions he makes. Even larger than the financial risk that JP was taking was the POLITICAL RISK and that was a consideration that Mr Dimon failed to consider. Now from what little one has heard Mr Dimon say, he seems to now be well acquainted with that risk and has made statements that he hopes will ameliorate the political fury into nothing more than sound.


Let one reiterate what one has previously stated.


1. The American people grudgingly went along with the first Bailout, because they were told it was the lessor of two evils. However they do not TRUST the Lepers on Wall Street and if there perchance should occur the need for a second bailout the tar and feathers will be followed by a public lynching.


2. There will be NO SECOND BAILOUT of Wall Street. With the current debt levels the United States, Europe and Japan are running any further bailout would sink the system. In other words there ain't no more money to give, print nor borrow.



There is a popular notion that the United States if it should continue on the unsustainable path it has chosen will turn into a Greece. Reality suggests that the United States already has turned into a Greece with a printing press. For the unalterable truth is that the Federal Reserve now buys 61% (WSJ) of American Treasury Bonds. The rest presumably are being bought by foreigners who are pursuing an ON THE BEACH STRATEDGY because they are deathly afraid of their own nations insolvency and are opting for that last safe haven that the United States represents.

[KFC911]

Originally Posted by tabs

.... For the unalterable truth is that the Federal Reserve now buys 61% (WSJ) of American Treasury Bonds. The rest presumably are being bought by foreigners who are pursuing an ON THE BEACH STRATEDGY because they are deathly afraid of their own nations insolvency and are opting for that last safe haven that the United States represents.

I don't even pretend to keep up with this stuff like you do tabs. Certainly the Fed was purchasing a significant chunk when QE was in play, but is that 61% still true? I also find the presumption about foreigners to be just that. From a couple of years ago, I seem to recall that China held about 1+ Trillion (maybe up to 2) and Japan another 1 T....with most being owned right here in the US. Has the landscaped really changed that much? Not questioning...just curious.

[patssle]

I am amazed that less regulation is thought to be a fix for lax regulation.

Banks used to do just fine at what they do, until the regulations enacted after the Great Depression were removed; then we got the Great Recession.

That's what happens when one side breeds economic terrorism. Funny how bad the economy was in the 1990s when we had those regulations and the taxes were slightly higher. Then we remove those regs and lower the taxes and BOOM - if we were to add them back - it's SOCIALISM!

[KFC911]

Originally Posted by RWebb

I am amazed that less regulation is thought to be a fix for lax regulation.

Banks used to do just fine at what they do, until the regulations enacted after the Great Depression were removed; then we got the Great Recession.
....

I firmly believe that the interstate banking deregulation that began in the mid-80s was the beginning of the end. Mega-banking became all about "growing" and putting merger/acquisitions together, while fiscally conservative "well run" banks were consumed in Pacman fashion. The deregulation of the late '90s was just the straw that broke the bankers back imo...but it was a BIG straw

[59GS]

Originally Posted by steve911

JPM was attempting to hedge some of their corporate banking risk - they lend to THOUSANDS of companies world wide and proper risk management dictates that they take steps to mitiigage some of that risk. Clearly the hedge didn't work quite the way they thought it would.

While $2BN isn't a small number, it needs to be looked at in the context of the size of the overall enterprise.

Further, politicians claiming that this loss now justifies further regulation to protect the taxpayer and the financial system is just plain hooey. If the regulators/regulations were so good, how come the government's stress tests didn't pick up on the hedge as a problem. Politicians don't have a clue and regulators even less so.

When one has a position in a financial market they are said to be long that position to hedge or protect the downside from that "long" position you seek out some other instrument or play that puts you "short" in proportion to your original "long".
As an example I am a corn farmer I have many acres of corn growing outback. To hedge my "long" position - I own corn - protecting me from lower prices when the corn is ready for harvest and sale I would use the commodity futures market to sell some corn futures. Now I have created a "short" corn position to hedge or protect my original"long" position. So, simplistically, if "long" you hedge by getting an offetting "short" position; if short you hedge by getting an offsetting "long" position.

What JPM did was have a very long position and THEN they INCREASED the risk by getting even longer so sure were they that they were right. IDIOTS gambling with OPM because they don't believe a downside exists for them. The next bailout from the left teat is there for the asking if they "ef" up.

It is a shame this schyte is so complex that it exceeds most peoples ability to grasp and therefore discuss but trust me when I tell you this stuff has to stop this is 100 times more threatening to the average taxpaying citizen than who gets elected in November. Oh BTW way the number is now estimated to be 4 billion and the meter is still clicking upward!

[techweenie]

Originally Posted by kc911

i firmly believe that the interstate banking deregulation that began in the mid-80s was the beginning of the end. Mega-banking became all about "growing" and putting merger/acquisitions together, while fiscally conservative "well run" banks were consumed in pacman fashion. The deregulation of the late '90s was just the straw that broke the bankers back imo...but it was a big straw

+1

[john70t]

Emergency Banking Act - Wikipedia, the free encyclopedia

[Seahawk]

Thank you.

Originally Posted by 59GS

When one has a position in a financial market they are said to be long that position to hedge or protect the downside from that "long" position you seek out some other instrument or play that puts you "short" in proportion to your original "long".
As an example I am a corn farmer I have many acres of corn growing outback. To hedge my "long" position - I own corn - protecting me from lower prices when the corn is ready for harvest and sale I would use the commodity futures market to sell some corn futures. Now I have created a "short" corn position to hedge or protect my original"long" position. So, simplistically, if "long" you hedge by getting an offetting "short" position; if short you hedge by getting an offsetting "long" position.

What JPM did was have a very long position and THEN they INCREASED the risk by getting even longer so sure were they that they were right. IDIOTS gambling with OPM because they don't believe a downside exists for them. The next bailout from the left teat is there for the asking if they "ef" up.

It is a shame this schyte is so complex that it exceeds most peoples ability to grasp and therefore discuss but trust me when I tell you this stuff has to stop this is 100 times more threatening to the average taxpaying citizen than who gets elected in November. Oh BTW way the number is now estimated to be 4 billion and the meter is still clicking upward!

[daepp]

Aside from a very easy to understand explanation for which I thank you, you also have an enticing user name. Care to post a photo?

[59GS]

Originally Posted by DAEpperson

Aside from a very easy to understand explanation for which I thank you, you also have an enticing user name. Care to post a photo?

Boy, do I wish I could. It was the first Porsche I ever drove. My dad's friend, Rudy Zurman, bought the car from Augie Pabst about 1961 or 2. Silver with red interior, dual plug, roller cam, etc, etc. I was 14 or 15 I think, knew exactly zero about driving it which was just slightly less than I knew about the car. I terrorized residential areas of Friendly Hills in Whittier for about an hour until I fowled a set of plugs limped home to change them holding my breath for, oh, about 6 years hoping no one knew. Wet my pants as I got my first lesson about oversteer as I came very close to looping it on a downhill offcamber section. What made me hit the throttle instead of lifting I'll never know. My dad's friend had driven the car out here from Milwaukee and sold it to some guy who drove up in a 1950 black Oldsmobile. Sold for some insane amount of money like $2500 and it was pristine to the 10th power. Today, given the ownership provenance I'm sure it is atleast a $200K piece. I wonder if anyone here knows anything about the car's history after my attempt to write it off. lol

I use the screen name to remind me what started the love affair with early Porsches and a driving lesson I'll never forget - DON'T LIFT! TRUST IT!

[KFC911]

Originally Posted by 59GS

...What JPM did was have a very long position and THEN they INCREASED the risk by getting even longer so sure were they that they were right. IDIOTS gambling with OPM because they don't believe a downside exists for them. The next bailout from the left teat is there for the asking if they "ef" up.
....

When Jamie Dimon says it was "stupid" and suposedly didn't know what a overseas "rouge trader" is doing making hedges (bets) with billions of OPM, then the system is "broken" . We need to return to the "old days" imo...