Derivatives- What of it Warren?

I mean we even lost 400 million 

Derivatives typically have a large notional value.  As such, there is the danger that their use could result in losses for which the investor (Bank) would be unable to compensate.  So many vehicles riding on one underlying where the vehicles reach escape velocity, far outperforming the original value of the financial product through leveraging and the huge dependencies on counterparties.     

The possibility that this could lead to a chain reaction ensuing in an economic crisis was pointed out by famed investor Warren Buffett called them 'financial weapons of mass destruction.'  A potential problem with derivatives is that they comprise an increasingly larger notional amount of assets which may lead to distortions in the underlying capital and equities markets themselves.

If the sale on these were called on as a whole, the spread on the leveraging could not be covered, the original product is distorted, lesser value if any.  That's a very large number 700 Trillion $dollars$ and that was in 2011, were above that now.  It's known that the Banks can only cover part of the spread, hell that sounds like a Bookie! 

There have been several instances of massive losses in derivative markets, such as the following:

Two former JP Morgan Chase & Co. (JPM) employees were charged by federal prosecutors with attempting to conceal trading losses at the largest U.S. bank last year as part of a probe of its US$6.2 billion loss on derivatives bets, story became to be known as the The London Whale.

From Wikipedia:
American International Group (AIG) lost more than US$18 billion through a subsidiary over the preceding three-quarters on credit default swaps (CDSs). The United States Federal Reserve Bank announced the creation of a secured credit facility of up to US$85 billion, to prevent the company's collapse by enabling AIG to meet its obligations to deliver additional collateral to its credit default swap trading partners.

The loss of US$7.2 Billion by Société Générale in January 2008 through misuse of futures contracts.

The loss of US$6.4 billion in the failed fund Amaranth Advisors, which was long natural gas in September 2006 when the price plummeted.

The loss of US$4.6 billion in the failed fund Long-Term Capital Management in 1998.

The loss of US$1.3 billion equivalent in oil derivatives in 1993 and 1994 by Metallgesellschaft AG.

The loss of US$1.2 billion equivalent in equity derivatives in 1995 by Barings Bank.

The loss of UBS AG, Switzerland's biggest bank, suffered a US$2 billion loss through unauthorized trading discovered in September 2011.

This comes to a staggering US$46.9 billion, the majority in the last decade after the Commodity Futures Modernization Act of 2000 was passed.

What of it Warren?

Bill George

Banksters Ship taking on Water

Next Bankster

Well, the public won't see any of this money but it's good practice to go after the ones who continue to line their pockets of false business.  If we're to ever move forward with America to gain respect of the government and corporations, that model is going to have to work weekends and around the clock, show me!  So much has come over the wire this past month I was waiting for it to accumulate and it's like a destroyer turning all guns and firing.  The government can't keep picking the pockets of the taxpayers to support what is wrong, the Federal Reserve can't keep printing money and add what is not collected to the taxpayers which in turn gets tacked to the national debt of future Americans.

I'll tell ya something, the dollar is just about to be burned at the stack and new money is needed in a big way, that's why all these suits are being hammered on the banks.  Not only that but some Banksters seem to have a conscience, let's take a look as the pot is boiling over!  To top it off the NSA scandal is also on the burner.  The US government support by the people, well I'll just say it, SUCKS!  

Ackermann Quit Zurich After Being Named in Suicide Note:
Ackermann, who led Germany’s Deutsche Bank AG (DBK) through the financial crisis in 10 years as the chief executive officer, said yesterday he was stepping down from Zurich Insurance.  Read more:

Microsoft, Google plan to sue over surveillance disclosure:
The U.S. Department of Justice's talks with Microsoft and Google have hit a wall as the government pushes back at the tech companies' demand for the ability to disclose the now-secret data requests they receive. Both companies may sue in order to "speak more freely."  Read more:

U.S. Bank Legal Bills Exceed $100 Billion:
The six biggest U.S. banks, led by JPMorgan Chase & Co. (JPM) and Bank of America Corp., have piled up $103 billion in legal costs since the financial crisis, more than all dividends paid to shareholders in the past five years.  Read more:

Regulators Prepare Penalties for JPMorgan:
Two federal regulators are preparing a series of enforcement actions and fines against JPMorgan Chase stemming from its dealings with consumers during the recession, presenting the latest legal threat to the nation’s biggest bank.  Read more:

JPMorgan's former 'London Whale' supervisor arrested in Spain:
Spanish police arrested former JP Morgan Chase trader Javier Martin-Artajo on Tuesday as he prepares to fight possible extradition to the United States over a $6.2 billion financial scandal at the United States' largest bank.  Read more:

Charges Against 2 Former JPMorgan Traders Fault Management:
Criminal charges brought against two former London traders on Aug. 14 continue to mar the reputation of investment bank JPMorgan Chase, intensifying the scrutiny surrounding its N.Y. executives. U.S. Attorney Preet Bharara publicly denounced the lack of oversight and controls placed on traders by senior management officials, as well as the practice of hiding significant losses.

InsideOut Ptv

U.S. vs JP Morgan Chase

Well, just a few days ago I mentioned who's next?  Here you have it, The Whale of all scandals is JP Morgan Chase, accused once again of cheating and stealing.  JP Morgan is more than willing to pay the fine, can't win this one and you still bank with them?  The U.S. Federal Energy Regulatory Commission (FERC) staff has found "eight manipulative bidding strategies" used by a JPM affiliate in 2010 and 2011, the regulator said. A civil penalty of $285 million and return $125 million in ill-gotten profits to electricity ratepayers In one scheme, JP Morgan traders made low end-of-day bids to attract large orders from buyers to provide power the next day, the FERC said. In the first two hours the next day, the bank demanded higher rates for making the power available, a maneuver that led the grid operator to pay it millions of dollars for a period in which demand is typically low.  Another ENRON, cooking the books and associated with manipulation of commodities!

“JP Morgan picked the pockets of California households and businesses, and their manipulation increased the electric bills that people pay,” Tyson Slocum, director of the energy program at Public Citizen, a Washington-based consumer advocacy group, said in an interview yesterday.  

Ya know something, want to see this practice go away, flush the toilet on this stock JPM.  Just maybe the public will start to practice what these Jack Wagons shove up everybody's ass!  Say the public buys up JBM, run up the price and on a single given day dump the stock.  Well, one would say this is insider trading of stock manipulation, no this is outsider trading, a new breed in the market and no one understands the complexity of market trade, it's what you taught us.  Sounds like fair game to me, don't do business with practices who steal from you and us.  Hey,  JP Morgan along with their golden boys are doing it to themselves, "notice the purple ties out there", read it and weep.  

Funny how we find humor in tragedy, like Dimon tied on a whale in the photo above.  This image represents Capt. Ahab on the back of Moby Dick.  In the movie,  Moby Dick crushes the launch boats along with the crew and Capt. Ahab on the back of Moby tangled in ropes, dead by drowning.  Mody now slams the ship and creates a whirlpool by swimming around the ship and sinks. 

I watched Moby Dick the 1956 movie again last night a Novel by Herman Melville published in 1851, Gregory Peck is Ahab.  JP Morgan can be proud of that but what if Moby Dick was the PUBLIC?  Is that spelled in all capital letters?   Aye        

Moby Dick

Wall Street Journal

Heads Start Rolling

From: Halah Touryalai, Forbes Staff
5/13/2012

JP Morgan you knew it was coming.  The resignations and firing of JPMorgan Chase employees who were close to the $2 billion trading loss are just getting started.

The first round of departures is starting at the top.  No, not CEO Jamie Dimon, but his chief investment officer Ina Drew.

Drew, 55, is one of the most powerful women on Wall Street.  Last week was a rough one for Drew who oversaw the unit responsible for the$2 billion trading loss.  Drew is among the highest paid execs at JPM. In 2011 her pay package was roughly $15 million.

Drew isn’t the only one on the way out. According tothe WSJ, Achilles Macris, who is in charge of the London-based desk that placed the trade and trader Javier Martin-Artajo, a managing director on Macris’s team are also leaving. The Journal reports that the so-called London Whale, Bruno Michel Iksil is expected to leave also but there’s no official word on him yet.

There may be more departures to come as Dimon tries to contain the damage done to his bank both reputationally and financially.  The bank’s shares fell 9.5% on Friday, the trading loss has highlighted once again the need to regulate banks’ risk-taking abilities.

Thanks for that report Halah (good work) 

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