Word has it that JP Morgan made some bad bets to the tune of something like two hundred million. Or two billion. What’s an order of magnitude when the soshulist liberal government can always make you whole out of the food stamp budget.
Does anyone know what exactly happened? From what I understand some traders made some very stupid bets and lost. What were the bets about? And who won those bets? Any help would be great.
MikeJ
An interesting question, since Wall Street is zero sum. Why should we even care that one group of pirates fucked over another group of pirates?
amorphous
test
so slots is ok
Fallsroad
Credit default swaps!
http://www.salon.com/2012/05/10/jamie_dimon_falls_to_earth/
beltane
Is there a connection between the JP Morgan disaster and the large Spanish bank that was nationalized yesterday?
Gex
There’s only one solution for this. More deregulation, more tax cuts, and privatizing social security.
General Stuck
Don’t know what happened, but it had something to do with derivatives, all over again. Stories like this make me physically ill, at the depth of how toxic our capitalist system is these days. It really is like a house full of heroin junkies, needing fixes for get rich quick schemes, usually gambling with other peoples money. With republican politicians enabling them by using their minority rights to block any serious reform to the scale it needs to be. And many of them, still so big that if they fail, they take a lot of innocent citizens with them.
Ripley
The American people won those bets! And now it’s time to cash in our freedom chips.
Anne Laurie
In case Cole doesn’t read the comments on his last post… A troll that hadn’t been seen here in some time showed up in the “Something Weird” post, feeling pleased with itself. I have no idea if the weird posting glitch & the re-emergence of this particular POS are related, but I blacklisted (re-blacklisted?) it, just in case breaking the fuck-off barrier somehow busted the whole thread function as a side effect.
Suffern ACE
Im fine with them losing these bets, as long as I don’t have to pay them this time.
imonlylurking
In order to properly hedge a transaction, you a) have to know your true position, and b) you have to know how much you want to hedge and how much you want to leave uncovered, and c) you have to be reviewing your hedges so if the market is running in your favor you can unwind them.
This doesn’t sound like hedging to me. This sounds like an attempt to speculate while calling it hedging. You’d be amazed at what banks will try to get you to do, as long as they call it something other than what it is.
Odie Hugh Manatee
“Word has it that JP Morgan made some bad bets to the tune of something like two hundred million. Or two billion.”
Maybe the problem is that the banksters are using McMegan’s calculator.
Maude
I’m going to be listening to Bloomberg radio in the morning.
This well could take down JP Morgan.
Insanity: doing something a second time and expecting a different result.
Maude
@Anne Laurie:
Thank you, I saw that comment.
We could all email him.
beltane
And I remember the good old days back in 2009 when Jamie Dimon warned us not to say mean things about bankers. Can we say mean things about him now?
Jim, Foolish Literalist
Clearly what we need is a smart guy like Mitt Romney, someone who understands high finance, running the economy.
kdaug
@Ripley:
I like freedom chips.
Do we get free salsa, too?
BGinCHI
NPR said something like “they reported that their risks were riskier than they expected.” Seriously, it was something that mysterious and uninforming.
Obviously finance can be complicated, but are these guys stupid or what? They have so much money to make money with and yet they still fuck up by overextending and losing big.
Maybe we should drug test them? Shareholders, why don’t you start collecting some piss?
David Kochd
Freedom isn’t free
PeakVT
The Zerohedge loony-bin isn’t the best place to go. Try this or this instead.
David Koch
Freedom isn’t free
The Sanity Inspector
Here and here and here.
And as for hatin’ on J. P. Morgan, let it be remembered that they, at the government’s behest, bought out the disintegrating Bear Stearns and Washington Mutual–without which the 2008 financial meltdown might conceivably have been much worse, and protracted.
David Koch
@PeakVT: nakedcapitalism isn’t a loony bin? they’re the kooks who say elizabeth warren is a secret republican.
Mr Stagger Lee
A couple of weeks ago I saw a movie called Margin Call with Kevin Spacey, Demi Moore and Jeremy Irons. I wonder if that plot of the movie is was what actually happened at Chase?
Villago Delenda Est
@General Stuck:
You mean those financial instruments that had to be explained to the Chairman of the Federal Reserve?
This is insane. These people do not know what they are doing, and there are no consequences (for them) for fucking up. Instead, it’s classic socialize the risk, privatize the profit.
This shit has to stop.
Tim F.
@Anne Laurie: That’s a little cryptic. Darrell? I almost miss that guy.
AA+ Bonds
Hahahaha, see, it’s funny because if bankers lose money it’s actually our money, so we should rise up and take it from them
Jim, Foolish Literalist
Don’t really get it high finance, but …
missed the rumors. On April 13, Dimon called it “a complete tempest in the teapot.” Ooops!
Andrew Leonard at Salon
Maude
@beltane:
I just read BBC online and Dimon basically said: Mistakes were made. Wow, haven’t we come a long way since Ronnie?
This could be a too big to fail issue.
In the finreg, too big to fail doesn’t get bailed out.
I love the language Dimon used, errors etc.
No one is really to blame, it just, ummm, kinda happened.
Anoniminous
Check out Yves Smith’s take at Naked Capitalism.
Apparently a trader was making $200 billion bets in the Credit Default Swap market.
beltane
@Tim F.: It was our old friend the baker.
burnspbesq
A $2 billion loss doesn’t appear to be life-threatening for JPM. It made over $5 billion in Q1. From the 10-Q it filed today:
AA+ Bonds
We were talking about a Million Rifle March earlier I believe
Seems pertinent here
Tissue Thin Pseudonym (JMN)
They made exactly the same mistake that LTCM made in 1997. They looked at two different indexes that should, in theory, always move together and found that they had diverged significantly. So they put on a huge bet that the two would reconverge and they’d make a ton of money.
Instead, the spread widened even farther, just like happened to LTCM. And like in that case, I suspect that the two will move back to their logical place and we’ll hear a lot of whining about how they were right all along and they should have made a lot of money. At which point, the proper response is that in derivatives trading, timing is just as important as direction and things can always move the wrong way for a while.
That’s tough to say without knowing more of the details of the transaction. My guess is that you are correct that they decided to call a prop trade a hedge in order to get through a loophole. However, it depends upon what client they were working with and exactly what went on. The other scenario that is plausible to me is that they had a *customer* that wanted to hedge a position and so they took the other side. I’m not sure how that would play with the Volcker Rule as it is being implemented.
MikeJ
@Mr Stagger Lee: I saw One Crazy Summer, also starring Demi Moore last week. I think Wall St lost a rowing/sailing/motoring all in one boat race.
AA+ Bonds
I mean I hope all of you realize that it’s your money they lost and it would still be correct to think of it as your money even if they did not collect it directly from tax revenue as distributed by your oppressive government
burnspbesq
The 8-K that JPM is going to have to file in the next couple of days should make for interesting reading.
AA+ Bonds
@burnspbesq:
Agreed – they’re not the ones who will die as a result; we ain’t there yet
burnspbesq
@AA+ Bonds:
Say what, now?
danielx
Does it matter? Some trader trading with a publicly held firm’s money screwed the pooch in the process of a) trying to line his own pockets and b) showing that he’s a big swinging dick. Which doesn’t exactly differentiate him from a thousand other asshole Wall Street traders; as long as they get what they consider to be their due they could give a fat rat’s ass what the consequences of their trades are for other people.
AA+ Bonds
@The Sanity Inspector:
And I understand they have offered to fuck us until we love them
Villago Delenda Est
Jamie Dimon needs to be drawn and quartered on the steps of the New York Stock Exchange.
AA+ Bonds
@AA+ Bonds:
Wait, “offered” isn’t the word . . . or maybe “fuck” should be something else . . . I’m sure everyone can figure it out
burnspbesq
@AA+ Bonds:
Way to take what I wrote completely out of context. Alas, I can’t accuse you of being intellectually dishonest, because in order for that charge to stick, there would need to be some evidence of an intellect at work.
Anne Laurie
@Tim F.: No, the pizza guy. I have no idea if he was the culprit, but he wasn’t adding anything to the conversation, either.
Hill Dweller
OT: I’m sitting here watching Joe Kline and Ted Strickland laugh at video of Willard attempting to take credit for the auto bailout. Both are saying they’ve never seen anything like it during their respective time in/covering politics.
Romney is an inveterate liar; and everyone is starting to realize it.
Donut
Shit, if JP Morgan really starts swirling the bowl any time between now and Nov, it’s gonna inject a craaaaaazy dynamic into the 2012 elections really fuckin quick, and one that’ll make 2008’s September shit-sammich look like a tasty treat.
Just sayin.
AA+ Bonds
@burnspbesq:
Well, technically, it’s not our surplus until we take it back from them – I agree that nebulous talk of “rights” gets us on the wrong track here and a material approach is best but I try to meet people halfway
AA+ Bonds
@burnspbesq:
Look, I’m trying to give you as much credit as possible
burnspbesq
@Villago Delenda Est:
You’re just jealous because you don’t get to be asleep at the switch while the people you hired do haphazard shit with billions of dollars of the shareholders’ and depositors’ money.
Egg Berry
Obviously, they had placed massive bets on the ‘over’ on Albert Pujol’s home run totals for April this year.
AA+ Bonds
@Villago Delenda Est:
Hee hee you would need little tiny ponies for the top steps :D
trollhattan
@Maude:
F*ck, I have one of their credit cards and I think I’m going to say that camera gear I just bought was, well, mistakes were made and I don’t need to pay the balance.
There. I even walked past a hedge today.
James Gary
@Mr Stagger Lee:
Awesome movie….that last scene is genius. I can’t say more without giving it away, folks. Just watch it.
AA+ Bonds
Mitt Romney caused the auto bailout through the butterfly effect when he gay bashed that kid
AA+ Bonds
@Villago Delenda Est:
I agree. overthrow capitalism
trollhattan
@Anne Laurie:
OOooh. Taking time off from his stalking duties, or multitasking from an ipad strategically positioned on his lap?
If he were in California I’ll wager Chez pizza would have a Megan’s Law symbol on the map.
PeakVT
@David Koch: Yves still writes some good stuff, though anything related to politics is worthless. Zerohedge rarely provides any insight, but offers in goldbuggery, relentless doomerism, and a dash of right-wing Obama hate instead.
AA+ Bonds
The only question I have for Mitt Romney is whether he’s still got it
He’s a grown man now, can he beat up a grown gay man. Can he beat up a different gay man in all 50 states
Maude
@trollhattan:
And I saw a hedgehog. I like the way you think.
It isn’t Dimon’s money.
Bloomberg has very little information on this.
Enjoy the camera.
AA+ Bonds
Can and will Mitt Romney assault Glenn Greenwald’s Brazilian hubby
Literally the only literal question of 2012
Can he do it . . . for Mexico. Will he do it . . . for honor
srv
I just wanted to announce that I’m rejecting my Swiss citizenship too. Thanks Michelle for making me proud to be an American again.
jurassicpork
Mr. Willard: Hair Stylist to the Elite.
FlyingToaster
@AA+ Bonds: Dude, Mittens couldn’t beat up a gay man in Massachusetts, ’cause he might get gay cooties. And I’m pretty sure the butch lesbians can take him.
HerrDoktor Toaster opines that he desperately wants Willard to campaign against GayMarriage™. It would make the Bishops and the SouthernBaptistConvention happy and everyone else either vote for Obama or stay home.
gaz
@BGinCHI:
It often only takes 2 clean days to “study” for a drug test if you are using cocaine.
The only thing drug tests are good for is catching dirty pot smoking hippies.
Ergo, it’s for the proles. The MOTUs have nothing to fear from a urine test.
FuriousPhil
This stuff they lost a bunch of money on is literally made up. Synthetic CDOs, credit default swaps, etc. There’s nothing real and tangible, it all exists on paper and in some MIT graduates mind. Whereas stock is literally ‘stock’ in a company’s inventory (if they have one) and bonds are debt, derivatives are a bunch of nothing that bankers like Goldman Sachs, Chase, BoA make billions on.
As far as “risks being riskier than we thought” no worthwhile finance professional would ever say something so stupid. Nobody can predict the future, but if you know how to do the right kind of analysis, you would never be hanging out for 2 billion unless somebody majorly fucked up. I get the impression that even the bankers have no idea what they’re doing. Nobody in congress understands these things, otherwise we’d might have had a clamp down post-bailout. This isn’t the end of Chase though, not even close. But, c’est la vie, life goes on, and my finance degree looks nice on the wall while I make a living in construction. It’s honest work.
randalms
Some useful information …
http://ftalphaville.ft.com/blog/2012/05/10/995211/jpmorgan-whale-harpooned/
randalms
Some useful information …
http://ftalphaville.ft.com/blog/2012/05/10/995211/jpmorgan-whale-harpooned/
Comrade Nimrod Humperdink
These sums that just get shuffled back and forth between computers all fucking day long, win some lose some, hang in until the big score and then retire…. Jesus Christ. What kind of infrastructure or research achievements could be had with even a fraction of this fucking money that basically functions as casino chips?? The chips chase other chips, insure against other companies losing their chips, over and over again, for many times what the company or its assets might be worth, all in pursuit of the next big fucking score…
Somebody needs to take a machete to the derivatives market. And then use the dull blade on Alan motherfucking Greenspan.
Greyjoy
Margin Call is indeed an awesome movie. I especially like the scene where Jeremy Irons and Zachary Quinto are describing the upcoming apocalypse in very quotable terms.
Lurking Canadian
Good to see the financial markets are still playing their vital role of ensuring that capital is efficiently allocated to productive enterprises. Wouldn’t want to stand in the way of that important, even Godly, work.
Montarvillois
What I find amazing is that rogue trades can’t be quickly flagged within the corporation’s computer systems.
Nemesis
If financial instruments created from thin air become too complex to manage, this will happen over and over again.
Just another in a long line of anomolies that will be blamed an one individual trader. You watch. Not much will come of this.
debbie
That’s just it. It’s not rogue trades. It was sanctioned by Dimon, supported by Dimon, and will now be excused by Dimon.
deep
Don’t worry, they’ll still get their bonuses, and if you don’t give them their bonuses they’ll GO GALT!!
jonas
Tells you something about how huge JPMorgan is when they can loose $2 billion in one day in a speculation scheme gone awry and it sucks, but doesn’t really rock the boat much. Rogue trader Nick Leeson lost just over that — in today’s money — for Barings in 1995, and it instantly bankrupted England’s oldest and most venerable investment bank.
We need to go back to a day when fucking up meant that you actually had to pay for it, and if a bank did fuck up and went broke, it didn’t bring down the world economy. If JPMorgan ever went under today, it would trigger another major financial crisis.
MCA1
I didn’t take Dimon’s quotes on this as skirting the issue – in fact, he seemed pretty upfront: “We fucked up; it was a bad strategy with sloppy execution and bad timing” was essentially what I heard. What pissed me off about his statements was the whining about how, although technically compliant (allegedly) with the Volcker Act as currently interpreted, this disaster is just going to get the hippies all up in his face about regulating banks again. Yeah, dude, you’re right, because this sort of shit is what depository banks holding billions of citizens’ life savings shouldn’t fucking be doing. We have Goldman Sachs and a million and one hedge funds out there who can undertake all the extremely risky and highly sophisticated derivatives trading action the uber-wealthy could need. You can go work for one if you want – your function, as a BANK, is to safekeep the money of individuals and operating companies, and loan money to industry.
The Sanity Inspector
@Villago Delenda Est:
He seems to be taking responsibility so far, let’s see what he actually does in the coming weeks.
sparrow
@Tissue Thin Pseudonym (JMN): I respect people that seem to understand this stuff because I have physics degrees and I don’t. However, do you ever think about what these people (sorry if you are one of them) do all day and think gosh this contributes fucking nothing to society?
I mean banking is necessary of course. A banker describing how he wrote out lone paperwork for Jimbob would be fine by me. But whatever the hell you just described sounds like someone playing a video game.