JP Morgan Chase Smith Barney whatsis

[lukethedrifter]

It's news just to have news, overreaction.

I think your reaction is exactly why [expletive] like the mortgage crisis happened.

that....or maybe people getting loans on homes that had no business even trying to get a loan.

Yes. Some poor people getting loans did it. Not the enormous financial companies that ... oh never mind.

[Freed Roger]

It's news just to have news, overreaction.

I think your reaction is exactly why [expletive] like the mortgage crisis happened.

that....or maybe people getting loans on homes that had no business even trying to get a loan.

Yes. Some poor people getting loans did it. Not the enormous financial companies that ... oh never mind.

Yes, it's ACORN's fault. If only the markets had less oversight, lower taxes on investments, and power over govt... nevermind.

[ghostrunner]

It's news just to have news, overreaction.

I think your reaction is exactly why [expletive] like the mortgage crisis happened.

that....or maybe people getting loans on homes that had no business even trying to get a loan.

I think that take is pretty common, but oversimplifies it quite a bit. If you're not experienced in real estate, like I wasn't back in 2004, you think you can afford what the experts tell you that you can afford. Unlike a doctor, a second opinion isn't likely to vary. Realtors want to sell expensive houses, and the whole industry appears to have had a warped idea of what was affordable.

Our house was probably too much for us at the time, but luckily we've been able to keep up and were both making enough to handle it and two surprise kids comfortably enough now. But nowhere did anyone suggest it was too much and in a few cases realtors suggested we could handle quite a bit more.

If personal finance and home economics were high school subjects like they ought to be, then I'd be more inclined to put blame on consumers.

[Popeye_Card]

Speaking of real estate, does anyone else get a kick out of the ad with the concerned old grandpa, worried that his grandson may never be able to own a home? For the first time, the dream of home ownership is threatened!!! Except that it is an incredible buyer's market right now--good deals and incredible interest rates.

[greenback44]

They used it to incorrectly hedge risk - totally different.

It's not totally different. One reason (of the many) that folks thought they could make dumb loans was that they thought they were hedged against some risks via credit default swaps from AIG. Well, that turned out OK for those folks, I guess, but only with a helping hand from the federal government. This is also a little like Howie Hubler's disastrous subprime trade for Morgan Stanley. Hedging strategies such as these work most of the time, but they have a tendency to break down precisely when they're most needed. This kind of obfuscation of risk is how bankers make the big bucks.

[AdmiralKird]

They used it to incorrectly hedge risk - totally different.

It's not totally different. One reason (of the many) that folks thought they could make dumb loans was that they thought they were hedged against some risks via credit default swaps from AIG. Well, that turned out OK for those folks, I guess, but only with a helping hand from the federal government. This is also a little like Howie Hubler's disastrous subprime trade for Morgan Stanley. Hedging strategies such as these work most of the time, but they have a tendency to break down precisely when they're most needed. This kind of obfuscation of risk is how bankers make the big bucks.

It's totally different in that this specific hedging strategy isn't something being used by the overall market. 2008 featured most big financial institutions investing in subprime loans with similar hedges - the problem was industry-wide. Financial companies will, in the course of business, develop new ways of managing risk to beat their competitors. Some will be good, some okay, and some awful flops. In manufacturing, this would be the equivalent of developing, investing, marketing, and creating new products. Some, like say Coke Zero, are rather effective, others like new coke, just suck and cost the firm a lot of money.

This was the new coke of JP Morgan. But to say that there is a huge market problem is like saying that as soon as new coke came out, pepsi, dr. pepper, and mt dew all suddenly tasted terrible.

[pioneer98]

They used it to incorrectly hedge risk - totally different. 2008 was due to giving loans to people who shouldn't have loans. Furthermore, JP Morgan has $2.25 trillion in assets. I'm sure they will be fine. It's news just to have news, overreaction.

I still feel like I am [expletive].

They have a net income of about 18 billion dollars each year. Even if your own account had those losses passed into it, you would only lose 10% of your gains for this year. So instead of earning 10% on your portfolio you earn 9%. woopty doo.

Try buying derivatives. My account fluctuates about 10% each week.

There are still many reasons why I think this could be a big deal.

$2 billion may not be much to JPM, but is this going to spread to any other banks, like dominoes (like it did in 2008)?

Also, I think the bigger deal is that this provided a window into the factory and we got a glimpse at how they make the sausage. If they lost $2 billion here, what else do they got going on that we don’t know about? Heck, the CEO didn’t even know about this (so he says).

And if JPM is one of the more “reputable” banks, and they are still taking huge risks hidden from their CEO, then what about the less reputable ones? It seems like another 2008 could happen. None of the rules have changed, and obviously there are things going on in the dark corners of the market that no one even knows about.

It’s a lot easier to lose trust than it is to build it back up. These mega banks (or the government) really haven’t done anything to convince me they are any safer now than in 2008. The stress tests? Eh. Not convinced.

[pioneer98]

[pioneer98]

It's totally different in that this specific hedging strategy isn't something being used by the overall market.

How do you know that? Their CEO didn't even know they were doing this stuff.

[pioneer98]

http://finance.yahoo.com/blogs/breakout ... 10320.html

It's been four days since J.P. Morgan (JPM) dropped a bomb on the financial world with a hastily arranged conference call announcing an unexpected $2 billion loss in their trading and/or hedging operation.

The issue isn't the $2 billion. The issue isn't really even the degree to which analysts and the media remain ignorant as to precisely what happened, save for the fact that something went very wrong at J.P. Morgan's Chief Investment Office.

What really frightens the Street is that it isn't at all clear that JPM or CEO Jamie Dimon knows precisely what happened.