[cactmh]

We just did a case study on the Metallgesellschaft AG debacle. Management screwed up big time. Had they waited it out, they would've done ok. (it was a big cash drain)

[meenie]

JPMC probably anticipates it has become too big to fail and is willing to gamble the taxpayers money as well as its own.There is a limit to what manipulation the Fed can do to prop up a bank with this large an exposure without destroying the credibility of our fiat monetary system.

This bank is our monetary system in so many words. So much of the derivatives is used to hedge various foreign exchange and market risks in our world financial system. We talk about world government, we already have a world banking system that dictates that we become world-governed to support the financial system.

[NativeNewYorker]

the Metallgesellschaft AG debacle

was simply a case of mismatched maturities between their exposure and their hedge.

IIRC, they had way forward oil price exposure, but stoopidly hedged it with short-dated crude oil contracts.

When the spread between the two moved against them, the game was over.

It was the kind of mistake a ROOKIE trader with NO SUPERVISION might make.