JP Morgan Chase Smith Barney whatsis

[Arthur Dent]

Well, here we are excusing financial malfeasance as the cost- nay- harmless side effect- of Capitalism again. <sigh>

At this point JPM has lost about $3B on a $200B portfolio, or 1.5%.

The federal government lost 100% on its $450M "investment" in Solyndra.

It lost about 38% on its investment in GM.

I'm not sayin. I'm just sayin.

What is the point of this comment? Do you know what fraction of government assets (or even DOE assets) the Solyndra investment represented? It's tiny and the loss has far less significant impact. Furthermore, making a bad investment in Solyndra still results in the development of useful technology. It's hard to say that about JP Morgan's betting.

[lukethedrifter]

Stop bringing logic into this thread, HJ!

So I was not being logical then?



The current economic system has run amok. It is a completely man made artifice that keeps creating financial sleight of hand games in order to trade "money" to make more "money." We can all act like we fully understand the byzantine trades and swaps and rules and games but when push comes to shove, it turns out that the even the guys playing the money games don't really know what the rules are.
I find that illogical.

[Freed Roger]

Stop bringing logic into this thread, HJ!

So I was not being logical then?



The current economic system has run amok. It is a completely man made artifice that keeps creating financial sleight of hand games in order to trade "money" to make more "money." We can all act like we fully understand the byzantine trades and swaps and rules and games but when push comes to shove, it turns out that the even the guys playing the money games don't really know what the rules are.
I find that illogical.

Well said Guy Montag.

[Hungary Jack]

Well, here we are excusing financial malfeasance as the cost- nay- harmless side effect- of Capitalism again. <sigh>

At this point JPM has lost about $3B on a $200B portfolio, or 1.5%.

The federal government lost 100% on its $450M "investment" in Solyndra.

It lost about 38% on its investment in GM.

I'm not sayin. I'm just sayin.

What is the point of this comment? Do you know what fraction of government assets (or even DOE assets) the Solyndra investment represented? It's tiny and the loss has far less significant impact. Furthermore, making a bad investment in Solyndra still results in the development of useful technology. It's hard to say that about JP Morgan's betting.

Soyndra's business plan was to sell for $2 solar panels that cost it $3 to build. Or something akin to that. Their technology was a bit different and maybe 5-10% more productive than a typical panel, but its production costs were 50% higher. That's not a winning combo.

To catch up with Fist Solar, the industry cost leader, Solyndra would have have to lower its production cost by 2/3. That is a big jump.

Solyndra argued that it needed to open a brand new $700M plant to lower its costs. Maybe they thought fixed costs don't count or something. Some reports say that their existing plant had plenty of spare capacity, and a retrofit would have been a much more appropriate and less costly capex.

It should have been pretty evident to the DoE that this was a highly speculative loan. I am not sure what was useful about investing in a high cost producer without any appreciable technology advantage.

Re JPM, they allegedly were "betting" to hedge a large position that was against the global economy. Their hedge was to go long on the economy be selling CDS and buying some bonds. Banks hedge their exposure all of the time. A 1.5% loss on a portfolio is fairly insignificant (my portfolio lost about that yesterday) in the grand scheme of things.

And it's JPM shareholders who suffer, not taxpayers.

[lukethedrifter]

If you’re wondering why you should care if some idiot trader (who apparently has been making $100 million a year at Chase, a company that has been the recipient of at least $390 billion in emergency Fed loans) loses $2 billion for Jamie Dimon, here’s why: because J.P. Morgan Chase is a federally-insured depository institution that has been and will continue to be the recipient of massive amounts of public assistance. If the bank fails, someone will reach into your pocket to pay for the cleanup. So when they gamble like drunken sailors, it’s everyone’s problem.

Read more: http://www.rollingstone.com/politics/bl ... z1vFXXa6OH

[Hungary Jack]

Massive amounts of public assistance? JPM didn't need TARP funds, but were required to accept them by law so that the weak banks would not be singled out. It arguably has been the best run corporate bank over the past decade. But yeah, the banking industry is subsidized by the federal government, which includes Fannie and Freddie buying loans originated by Chase and others.

This decoupling of risk and reward got us into a much bigger mess than a hedge gone horribly bad at a bank investment office. JPM claims it was risk management, but it appears to be more like proprietary trading that caused this loss. Does the Volcker rule or a reinstitution of GS remedy this? Quite possibly not.

[Freed Roger]

This may sound political, but [expletive] it.

If you look at most any industry - there is a major squeeze and tightening of the belts going on. My wife works for a hospital supplier. Yes, they still have fat in their corp -but their product markup is being forced down to unsustainable levels. This is going on everywhere. Then there is a hyperfocus on public sector compensation, enough said there...

...But where is the squeeze on financial services industry? They cut back bonuses for one year, then it's back to normal. In the old days, banks were able to make money without all the technology which surely makes the backoffice side of the business gobs cheaper. Why do we still have 27.99% usury interest rates on Chase Credit Cards? $5 fees to withdraw from an atm? Somehow they make the money to provide 7 and 8 figure salaries.

It's already been mentioned, the FDIC and bailout history of financial companies. In addition, their overall sway over the economy causes reprecussions beyond the loss to investors of JP Morgan etc. This is rather obvious, in light of the post- 2008 budget crisises still hitting most every state, municipality and school district.

Yet, the tax rates and rules regulations, bankruptcy laws etc- predominantly favor the financial services sector and wealthy investors. (except for capital loss limits). All because it is capitalism, and all that goodness is supposed to trickle down, which is uncertain to occur. The only thing certain is the losses will gush down.

[wart57]

For a supposedly advanced species, we sure have a very unfair way of sharing the resources of the planet we live on.

[Freed Roger]

For a supposedly advanced species, we sure have a very unfair way of sharing the resources of the planet we live on.

Why must we have this ridiculous politicking in every thread? These masters of capitalism are smarter than you, so no worries.

[Freed Roger]

And another good commentary:

Hubris, Thy Name is Dimon


On NPR Marketplace the other night -good exchange between the host and a commentator

Ryssdal: Here's the thing though Heidi, you'd think we'd be smarter now because of that whole financial crisis thing.

Moore: No. We have the memory of goldfish. But the problems are also persistent, to be fair. I mean, the real question here is how do we make our banks profitable and are we really ready to accept less profitable banks? I can tell you that the people making $20 million a year are not ready to accept less profitable banks, so this is their kind of magical thinking. They take these big risks because they want the big revenues, they want Wall Street back the way that it was, but the way that it was is the wrong place to be. And there's no acknowledgment of that yet. We need to get Wall Street to acknowledge the trouble that it's creating for itself instead of seeing this as a government problem

Ryssdal: Yeah, which you haven't heard Jamie Dimon, the CEO of JPMorgan, talk about at all. Let me ask you this, though, Heidi. What are the odds that banks not as strong as JPMorgan -- which is the strongest bank out there -- that other banks are doing this?

Moore: The odds are very strong. In fact, Moody's is worried about a number of those banks. Standard and Poor's is taking a look at how it measures risk for those banks as well. There's a Wall Street saying: There's never just one cockroach in the kitchen. So if JPMorgan -- the biggest and supposedly the smartest bank in the country -- is taking these risks, why would anyone else not be taking the same risks? They are under the same pressures. Where are they going to get those profits? Where are they going to get those revenues? It's the equivalent of not being able to pay the bills and taking your last $20 and going to Vegas.