As we watch the absurd melodrama surrounding JP Morgan’s multi-billion dollar “trading loss” unfold before us, there are many things we still don’t know. However there is one thing we do know: that the truth is totally different than what is being depicted by JP Morgan and the talking-heads of the mainstream media.
To understand that this is pure financial farce requires putting numbers into perspective. Let’s start with this one: JP Morgan’s derivatives portfolio alone amounts to more than $70 trillion in highly-leveraged, ultra-risky bets. That is the amount JP Morgan admits to. Thus whether we are talking about a “$2 billion” trading loss or the $4-5 billion figure now being rumored is irrelevant. These are trivial numbers.
Even if we assume a $5 billion loss that would be equal to less than 1/10,000th of its derivatives portfolio. If the media Chicken Littles wanted to really stoke some fear they would be talking about the imminent risk of JP Morgan (and its Wall Street cronies) being forced to make good on $trillions of (ultra highly-leveraged) credit default swap contracts – should one of Europe’s other (larger) Deadbeat Debtors “go Greek” and default.
So we can now conclude this is a totally staged event. If there were any doubts about this, Jamie Dimon himself has put an end to them with his poor job of acting. For nearly four years Wall Street has fought even the tiniest bit of re-regulation of their sector, simply restoring a small portion of the banking regulation regime which used to be in place.
This fanatical obstructionism – led by Jamie Dimon and JP Morgan – has occurred despite the $15+ trillion bail-out package heaped upon the (surviving) Wall Street Oligarchs after they had completely wiped-out their own sector (and themselves) with $100’s of billions of bad bets which had all detonated simultaneously in 2008.
Thus what we are to believe is that despite the fact that JP Morgan saw no need at all for any regulation following the Crash of ’08 that this tiny “$2 billion” trading loss has caused JP Morgan to do a 180-degree turn on the subject of regulation. Jamie Dimon has suddenly been born again, and now he “sees the Light”: the bankers need some regulation. It is about as plausible as a bull volunteering for castration.