Posted on 05/17/2012 5:41:21 AM PDT by Kaslin
President Obama and his lackeys on the left will do and say anything to destroy our capitalist system that has made us the greatest nation to ever grace this earth. Let’s face it; the President is a utopian idealist, who has no real world experience working with the “free-market” system.
His primary purpose is to push his agenda of “fair-share” and to increase the individual’s dependency on “Big Government”. With the Justice Department today indicating they are launching a criminal probe into a $2 Billion trading loss at JP Morgan, the President’s Administration is at it again.
JP Morgan Chase recently lost two billion dollars of Company money in roughly six weeks. This on the surface seems like a lot of money, but looking at their overall numbers this bank is a 2.3 trillion dollar company with a $190 billion capital base. The money Obama is making a big deal about is roughly 1% of its total capital base. It is uncanny how we haven’t instead heard more from the White House about the unemployment rate sitting at over 8% (with the real U-6 unemployment number over 14.5% according to the Bureau of Labor Statistics).
A criminal inquiry is underway now as regulatory pressure rises on JP Morgan. On Tuesday our Treasury Secretary, Timothy Geithner, pushed the need for more financial regulation reform by saying regulators, ”are going to take a very careful look at this incident.” This is just the type of “crisis” the Administration is using to insist on more regulations that are crippling small businesses, which make up the majority of total businesses in America. Even though J.P. Morgan is a huge entity, regulations created for the largest of entities tend to roll downhill inequitably onto the smaller businesses. Let me give an example of the increasing regulations we are being forced to swallow as American businesses.
Regulations
2009: 3,503 new Federal Regulations
2010: 3,573 new Federal Regulations
(about 10 new regulations per week on small business)
The U.S Small Business Administration reports the average regulatory cost burden on U.S firms of any size to be approximately $161,000. The manufacturing sector is being pummeled by Obama’s ridiculous government regulations with the cost at roughly $688,944 per manufacturing company.
Connecting the dots here is simple, with the continuous adding of harsh regulations and Obama’s socialist views he will continually push for “government knows best” bailouts and stimulus, (i.e: TARP, QE 1, QE2). This drive towards socialism is leading to government ownership of these companies and is killing the engine of this country, which is small business and private sector economic growth.
A careful look at the government gutting of Chrysler shows the danger that can happen to investors when the government assumes it knows best. While the unions fared pretty well in The Chrysler Deal – it was a “tails you lose heads I win” situation for the bondholders and shareholders. If more “Big Government” was the answer how does one account for such programs as Social Security, Medicare, and the U.S. Post Office? All of this becomes a cascading “self fulfilling prophecy” as more regulation hinders growth, which causes a loss of jobs which necessitates more government aid, which causes bigger government…which makes more regulation.
Capitalism is a historically proven system and liberals try to attack it by going after companies with rhetoric that is twisted in its thinking. These liberals chastise companies by saying that making money is “greedy”. What they don’t get is some businesses work and some fail, but in this country you will most certainly have the opportunity to try again.
Scott Iskowitz. "U.S. launches criminal inquiry into $2 billion bank trading loss." Houston Chronicle [Houston] Wednesday, May 16th, 2012.
http://factreal.wordpress.com/2011/09/15/obamas-regulations-killing-businesses-and-jobs/
Default Credit Swaps do seem to be criminal.
Hey obamo and little Timmy Geitner- how’s that investigation of obamo’s money-man Jon Corzine going? You know, the guy that misplaced a couple billion dollars of investor’s money he was in charge of.
Guess they aren't paying their "fair share" of campaign contributions.
You can thank Blyte Masters at JPMorgan Chase for creating the credit default swap. You can thank Wall Street for making it a big-time market and fighting all attempts to shed transparency on the market. And, no, the pricing of credit default swaps is not transparency. It’s just pricing of a black box. No one knows what’s inside.
There is nothing wrong with the basic concept of a credit default swap being insurance against default - if you are the holder of the security in question - it is a form of insurance policy then. If you are not the holder of the security, it becomes a novel way to short the security. It’s like allowing me to buy insurance against your house - which in turn gives me a vested interest in your house burning down.
Hmm, the Justice Department must have already wrapped up its criminal probe of obama bundler Jon Corzine (sarc)
Didn’t he also lose $2 Billion of OPM (Other Peoples’ Money)?
(crickets)
I guess all we can hope is that some of the money Corzine stole belonged to the cartels and the Russian mafia. They don’t need no steenkin’ Justice Department
Chuck and Barney will eventually propose the following:
Because JPMorgan-Chase has demonstrated;
- banks can’t manage risk
- and to protect the government from being victimized by tax avoidance schemes before they can be outlawed
- The Federal Government will confiscate all of your savings and investments
- and all paychecks will be placed on deposit with the Federal Government.
You will be issued a government ATM and make withdrawals, up to the Federally approved limits......
first off the AG needs to be imprisoned and impeached...not going after a financial institution for making poor investments.
after that the _resident needs impeachment and imprisonment along with Holder.
these Stalinist scum need to go NOW!
Help me work through this please... JP Morgan, Dimon invested money (thats his job) and lost. MFGlobal invested money (without permission and NOT his job) and lost. There is a difference right? and Corzine seems unscathed. not that Dimon losing money doesnt suck but......am I crazy?
My understanding is that Dimon SOLD DCSs which is more like a bet.
Correct, but doesn’t limiting it to just the security holder limit its liquidity and defeat the purpose?
A cabal of 20 arsonists can buy insurance on your house (for it's full value) and then burn it down bankrupting the insurance company. Two losers - you and the insurance company.
No one knows how many other nearly identical instruments are out there in the weeds either.
What is the core purpose of a CDS? To me, it should be insurance to the security holder and only that. AIG got burned because they failed to realize the back-end underwriting risks they were amassing by selling swaps to so many folks who didn't own the underlying security. And AIG was smart in other areas of insurance underwriting. Do you think they would have sold homeowner's insurance to someone who didn't own the home in question? Of course not. Yet they rushed pell-mell into selling swaps, blinded by the money they were making.
And liquidity? Last I checked, our problem over the last decade became too much liquidity - too much money sloshing around the globe looking for any place to make a buck, smart or not.
What we need is less liquidity and more fiscal castor oil - for those who failed to recognize risk to assume the consequences of such instead of having governments bail them out. I'm sure we have some other festering high-risk derivatives being sold as we speak for wonderous profits, with the assumption that governments and central banks will bail out the eventual downside.
I have no problem with wonderous profits - as long as you are prepared to assume the underlying risk yourself. That moral hazard is long gone.
Really interesting how the losses of over $12 Billion at MF Global are not getting anywhere near the play that JP Morgan is getting. I am now wondering just exactly what the initials M F really stood for!!
Wonder how much that is because of Barry’s Democrat friend, Jon Corzine???
I was a bookkeeper for small businesses for over 37 years. If I could not explain a shortage of even $5, I would have been in very hot water.......
Before I was a bookkeeper, I worked as a grocery checker in a very large chain store. When I left, my manager told me that my drawer was only off one time in all the time I worked there. I was short a quarter!!! He really didn’t want to see me go.
“Default Credit Swaps do seem to be criminal.”
Important articles:
2008
THE RECKONING; Behind Biggest Insurer’s Crisis, A Blind Eye to a Web of Risk
By GRETCHEN MORGENSON
Published: September 28, 2008
http://query.nytimes.com/gst/fullpage.html?res=9A00E6D81F3AF93BA1575AC0A96E9C8B63&ref=gretchenmorgenson
“.....When Mr. Cassano first waded into the derivatives market, his biggest business was selling so-called plain vanilla products like interest rate swaps. Such swaps allow participants to bet on the direction of interest rates and, in theory, insulate themselves from unforeseen financial events.
Ten years ago, a “watershed” moment changed the profile of the derivatives that Mr. Cassano traded, according to a transcript of comments he made at an industry event last year. Derivatives specialists from J. P. Morgan http://topics.nytimes.com/top/news/business/companies/morgan_j_p_chase_and_company/index.html?inline=nyt-org, a leading bank that had many dealings with Mr. Cassano’s unit, came calling with a novel idea.
Morgan proposed the following: A.I.G. should try writing insurance on packages of debt known as “collateralized debt obligations.” C.D.O.’s. were pools of loans sliced into tranches and sold to investors based on the credit quality of the underlying securities. ....”
More from 2008:
http://topics.nytimes.com/top/reference/timestopics/people/m/gretchen_morgenson/index.html?offset=270&s=newest
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2012
At JPMorgan, the Ghost of Dinner Parties Past
By GRETCHEN MORGENSON
Published: May 12, 2012
http://www.nytimes.com/2012/05/13/business/jpmorgan-shooting-itself-in-the-foot-fair-game.html?ref=gretchenmorgenson
“JP Morgan Chase recently lost two billion dollars of Company money in roughly six weeks. This on the surface seems like a lot of money, but looking at their overall numbers this bank is a 2.3 trillion dollar company with a $190 billion capital base. “
And 1% of Americans understand this, so Obama is off to the races..
If AIG executives had their personal fortunes seized, and were forced to work in hard labor camps to pay off their debts, then you could say they got burned. But that didn't happen.
Honest people benefit from minimizing correlation of risk. Those who are in a position to welsh on bad bets, however, benefit from maximizing the correlation of risk. Consider the following two weekly lottery schemes:
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