Greg Hunter of USA Watchdog published a short but incredibly poignant article exploring the possibility that JP Morgan’s surprise announcement of a $2bln trading loss could be just the tip of the iceberg. Similar to how MF Globals originally stated loss of 700 million blew up to over 3 Billion, JP Morgan has not yet disclosed how much this trade will eventually cost them. We have been hearing for some time that there is a momentous amount of changes in store for the financial system, and this most assuredly is another one of those pivotal events contributing to that change. Along with all the announcements to conduct oil trading in gold, the new BRICS financial alliance, and the IMF recently becoming a buyer of Gold, JP Morgan’s trading loss signals a broader trend that the fiat empire is coming down. Click Here for full article.
JP Morgan Black Swan?
The surprise announcement by JP Morgan that it lost $2 billion in trading derivatives was portrayed in some mainstream media outlets as no big deal. The Associated Press reported Friday, “Bank stocks were hammered in Britain and the United States on Friday, partly because of fear that a surprise $2 billion trading loss by JPMorgan Chase would lead to tougher regulation of financial institutions. . . .”The portfolio has proved to be riskier, more volatile and less effective as an economic hedge than we thought,” CEO Jamie Dimon told reporters on Thursday. “There were many errors, sloppiness and bad judgment.” (Click here to read the complete AP story.)
I think the market thinks this $2 billion surprise loss is much more than fear of “tougher regulation,” or that it was just “sloppiness and bad judgment.” Remember MF Global and its bankruptcy on Halloween last year? It, too, was trading in risky derivatives, and it lost $6 billion that wiped out the firm along with $1.6 billion in segregated customer cash. In the aftermath, we still do not know where the customer money is, but we did find out MF Global was leveraged 40 to 1. It would be hard to believe other big banks were not leveraged in risky derivative trades the same way. This is why traders on CNBC were hitting the panic button last week. Joe Terranova said, “I will dump my Bank of America on this news.” Other traders on the show were equally scared. “I can almost guarantee it’s not just JPMorgan,’ added trader Guy Adami. ‘JPMorgan looks like it’s going to bring down the entire space,’ said Steve Grasso.” (Click here for the complete CNBC story.)