‘London Whale’ upsets J.P. Morgan
As many of you may already know, insvestment banking firm J.P Morgan recently lost nearly $2.3 billion dollars on some very, very, bad bets.
Sources in the MSM accordingly, show a trader only dignified by the sobriquet ‘London Whale’ was able to hedge together larger shares of Morgan company money and place them on malevolent trade returns. They did not pay off.
Some circles call it business as usual. Other circles call this collusion, or extended risk. Yet others would call this, hedging- or: placing large assets on wide-open targets, at just the right time and place. I don’t need to mention the implications of this; we’re back to 2007, when the Recession we are currently in, evolved- by these means.
Now, clearly- you could claim- the company knew what it’s employees were aiming at with their stoked assets. They didn’t. This story is just emerging, but it seems clear that this is a perfect example of those who don’t know what they are doing, laksadaising large amounts of money; and wielding power so great, there could be serious repercussions.
Gladly, at least so far, there have been few.
Nevertheless, what this shows is not only nefariousness on the part of some, but also the evident close ties in finance between Europe and the United States. We may think this country is just pulling from a recession, when in reality we’re right back to 2007, or earlier.
Entire Markets and nations are tanking in Europe: acidic debt scouring away at the health of entire economies. The European Union ready to dissect into multiple breakaway-province nationalities. National furor is high, while economic support has hit all-time lows.
At first sight, the entire investments-gone-wrong scenario would yearn for more oversight- but beware of what you ask for! Oversight by whom? I don’t think market regulation is a particularly good example of solving fiscal ‘problems’ by any stretch of the economic imagination.
But what can, or should we do?
The network of trades and alliances of CDS (credit default swaps) were nebulous, as to neither attract much attention from company CEOs, nor to generally raise much antipathy. It is a complicated facet of investment companies, to both avoid European ‘volatility’ while at the same time avoiding price-raising and liquidity disruption by domestic government councils like the ICC, FCC, SEC and a disturbing litany of others.
At the moment, the Obama Administration is pumping so much colluded and diluted capital into the markets (domestic) that it’s hard to discern whether there is any effect!
Early in his flop of an outing, the President was touting the plan of Reaganite Federal Reserve chairman Paul Volcker (who has changed his stance on government intrusion), and his so-called ‘Volcker Plan’ that asks for more oversight.
Problematic as it is, oversight is usually an enormous impediment to companies and markets; adding more risk to trades, slowing monetary conversions, stacking the deck against start-up companies and adding unnecessary fees and taxes where they are least needed.
Again: for markets to function properly; government needs to stay out of economic activity. All together! Pack it up, and leave. We need regulations, that curb government!
We should remember, that while traders and companies often lose out and make dubious mistakes, even the 2007-2008 credit crunch, and housing crisis were not foreseen. Hence, no regulatory agency on Earth, would have made a difference as to the recessionary slowdown of today’s economics.
In times of hardship for some, it is always easiest for the media, the public, governments, pundits and ‘agencies’ to crucify the few in charge: bankers, investors, portfolio holders, CEOs, billionaires the very people who sprout jobs. It’s a healing therapy for the ones who actually have work, a target where they can vent their grievance.
Attacks on the most active members of society, are happening all over the world: from Japan, to Europe (France, Switzerland, Germany, UK) and the United States. In fact, it is precisely the intrusion of government into the market place, that makes everyone’s (especially traders’, analysts’) lives more difficult and creates booms and busts.
In a time of political-inspired disunity, when we desperately need companies to start adding to the pay rolls, and begin rebuilding jobs, we have many governments that are acting with iron-fisted behavior. Best thing to do in uncertain markets, is to keep watch and toe the line. Keep trading, even if you post a large loss.