JPMorgan Trading Loss May Reach $9 Billion - Yahoo! Finance From $2 B to $9 B? Just 4.5 x estimates and it may get worse.
Any one, or any company, or any organization of any flavor that buys derivatives is asking for trouble. A bundle of crap is just as crappy as each individual crap in the pile, and dilution with more crap does not help with the risk. "What do you get when you put a drop of wine in a barrel of sewage? -- A barrel of sewage. What do you get when you put a drop of sewage in a barrel of wine? -- A barrel of sewage." Same story.
Question is Ghrit, what part of our economy is not effected by these CDS's and other type of junk derivatives? As of today, there are more than $730 TRILLION, (Yes, Trillion) dollars worth of these currency and credit derivatives world wide.
Y'all know what the best part is don't you? The tax payers of the nations that these bank operate in are the ones that are guaranteeing the down side of the CDS and other insane bets made by the banks. Too big to fail. We've already seen it. And we are going to see it over and over until the bankers have bankrupt everyone.
Look, these folks have a 20-25 billion dollar profit per year. The real crime is playing with shareholder equity on something that was clearly not well understood from a risk perspective. They happily took profits to the bank when the CDOs were out of the money. I equate their behavior to smoking while reloading in their parents house. Wasn't Dodd-Frank, Sarbanes-Oxley supposed to protect the consumer from this activity?
What I dislike about the derivatives play is that We The People will be the ones who bail out the too big to fail. We ended up buy AIG as a result of their derivatives play for around $80 B if I remember correctly and I believe the bailout for them actually when much higher. It is the interconnectivity of the trades among the various tranches that is concerning. I am sure JP Morgan Chase is too big to fail. We have created a bailout system that does not allow the market to actually clean up the mess, but rather spreads the unwealth equally to the misery of the masses.
