Markets today..

[cashmcall]

Yes the hedges have circled the wagons on JPMorgan. The reality is the trade​

may have been a rear view mirror trade from oil. Thats what I suspect. So there isn't much fall out but the real risk with JPM is their whale trade balance sheets which make this trade the tip of the potential ice berg in that JPM leverage is still off the map. ​

Anyone had to know that the Goldman Morgan pushing up the futures could have been a bad trade especially as margin rates were being pressured to rise. ​

It is still murky but eventually more will be released on what happened. Goldman is the kind of firm that would short the market first then announce the losing trade. ​

Without more disclosure, nobody knows how to respond to it, however it shows one thing; you can call morgan and goldman banks if you want but they are still hedge funds​

using the Fed liquidity to deal recklessly in the global markets. They never should have been allowed to convert to banks. But since they did, I would force them to stay and I would clip their speculative wings to the nub. ​

Notice how quite all the other news has become. Hedges are not trying to drive the markets down. Like I said yesterday as long as nobody moves things will remain as is. Small investors​

should be cautious.​

 

[Richard Savage]

The Wall Street Journal is full of news of the losses sustained by J.P. Morgan Chase; which highlights the problem with regulating financial derivative contracts that I posed in Post# 44, supra. And, it will happen again because the Congress lacks the political will to establish regulatory control over financial markets. Dodd-Frank - which the banking lobby is working night and day to have repealed - is not the answer. Regulation must be measured, but effective; and not so heavy-handed as to stifle economic growth. To work, there must at least be a level playing field, which requires more transparency that will promote value over speculation. If there are no penalties for failure - if executives are rewarded for running their companies aground - there is no incentive to exercise restraint over irresponsible action.

 

[Gipper]

The Wall Street Journal is full of news of the losses sustained by J.P. Morgan Chase; which highlights the problem with regulating financial derivative contracts that I posed in Post# 44, supra. And, it will happen again because the Congress lacks the political will to establish regulatory control over financial markets. Dodd-Frank - which the banking lobby is working night and day to have repealed - is not the answer. Regulation must be measured, but effective; and not so heavy-handed as to stifle economic growth. To work, there must at least be a level playing field, which requires more transparency that will promote value over speculation. If there are no penalties for failure - if executives are rewarded for running their companies aground - there is no incentive to exercise restraint over irresponsible action.

Agreed, but in addition, we need to limit the size of corporations. JP Morgan is way too big and needs to be busted up as do many of the large banks and corporations...GE included. The policies of this government have only made the big banks bigger and more powerful. And of course these huge banks and corporations have considerable power resulting from buying off politicians. As has been done for decades, these huge corporations make sure their smaller competitors are squashed by rules, regs, and laws imposed on them by those same politicians who are bought and paid for by the big corporations.

Watch as this latest debacle plays out. Our stupid government will impose more rules and regulations on banks that will not impact the big guy's financially, but will be a huge cost for the smaller banks resulting in more centralization of the banking sector into ever bigger banks. CRAZY!!!

 

[Richard Savage]

The reason why banks have gotten so big is because they have been allowed to speculate on the financial markets with immunity. In the first half of the last decade, there was a campaign by bank lobbyists to loosen government regulation of financial products; and part of it was the exemption of financial derivative contracts from bankruptcy that was codified under the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005.
Specifically, derivative contracts (forward contracts, repurchase agreements, credit default swaps, future contracts and options) are currently exempt from the automatic stay provisions under section 362(a); the rule against enforcement of ipso facto clauses under section 365(e)(1); and also protected from trustee avoidance actions for transfers that would otherwise be deemed as voidable preferences or fraudulent transfers under the Bankruptcy Code. See 11 U.S.C. §§ 546(e)-(g) and (j). To put it simply: the bankruptcy laws do not apply to derivatives. This exemption operates to shift the risk of loss on to the banks; which unlike their parent holding companies (e.g., Washington Mutual, Inc. vs. Washington Mutual Bank), are ineligible for bankruptcy reorganization; and, ultimately, on the taxpayer when the bank fails and is taken over by the FDIC. These derivative contracts act like a government subsidy that favors big banks at greater risk and higher potential for consequential damage and loss. The question is whether this is a good thing. It is not, as the current financial crisis and bailout attest, as well as the recent losses sustained by J.P. Morgan Chase, and the bankruptcy case of MF Global Funding. There needs to be a clear division between banking and the financial markets. In the final analysis, we need to get back to an economy that is based on making things rather than just making deals.

 

[dogtowner]

Agreed, but in addition, we need to limit the size of corporations. JP Morgan is way too big and needs to be busted up as do many of the large banks and corporations...GE included. The policies of this government have only made the big banks bigger and more powerful. And of course these huge banks and corporations have considerable power resulting from buying off politicians. As has been done for decades, these huge corporations make sure their smaller competitors are squashed by rules, regs, and laws imposed on them by those same politicians who are bought and paid for by the big corporations.

Watch as this latest debacle plays out. Our stupid government will impose more rules and regulations on banks that will not impact the big guy's financially, but will be a huge cost for the smaller banks resulting in more centralization of the banking sector into ever bigger banks. CRAZY!!!

as small banks were beginning a comeback with people getting fed up with the big boys, along comes Dodd-Frank to burden them. not a coincidence.

 

[Gipper]

The reason why banks have gotten so big is because they have been allowed to speculate on the financial markets with immunity. In the first half of the last decade, there was a campaign by bank lobbyists to loosen government regulation of financial products; and part of it was the exemption of financial derivative contracts from bankruptcy that was codified under the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005.
Specifically, derivative contracts (forward contracts, repurchase agreements, credit default swaps, future contracts and options) are currently exempt from the automatic stay provisions under section 362(a); the rule against enforcement of ipso facto clauses under section 365(e)(1); and also protected from trustee avoidance actions for transfers that would otherwise be deemed as voidable preferences or fraudulent transfers under the Bankruptcy Code. See 11 U.S.C. §§ 546(e)-(g) and (j). To put it simply: the bankruptcy laws do not apply to derivatives. This exemption operates to shift the risk of loss on to the banks; which unlike their parent holding companies (e.g., Washington Mutual, Inc. vs. Washington Mutual Bank), are ineligible for bankruptcy reorganization; and, ultimately, on the taxpayer when the bank fails and is taken over by the FDIC. These derivative contracts act like a government subsidy that favors big banks at greater risk and higher potential for consequential damage and loss. The question is whether this is a good thing. It is not, as the current financial crisis and bailout attest, as well as the recent losses sustained by J.P. Morgan Chase, and the bankruptcy case of MF Global Funding. There needs to be a clear division between banking and the financial markets. In the final analysis, we need to get back to an economy that is based on making things rather than just making deals.

Well one simple fix is re-instituting Glass Steagall.

On a macro level though, some corporations whether in banking or not, have gotten too big. And with this huge omnipresent statist central government working in tandem with the huge corporations, Americans get screwed by the lack of competition and costly corruption. Hence we have MF Global with that sleazeball Corzine still walking around freely. In a sane nation, he is in the cell next to Madoff...I still hold some hope that will happen...but not much.

 

[Gipper]

as small banks were beginning a comeback with people getting fed up with the big boys, along comes Dodd-Frank to burden them. not a coincidence.

Yes. A close family member works for a small bank. He has many horror stories of the costs his bank incurs to meet federal regulations. They have a large group on staff for this purpose...the big banks do too, but they can easily cover those costs where it is an imposition for a small bank.

 

[Richard Savage]

Yes. But the Congress still needs to repeal the "safe harbor" provisions for derivatives. (I would add to the list the like provisions that immunize leveraged buyouts "LBOs" as these transactions have a high potential for fraud and abuse and consequential damage to the economy.) Elimination of these safe-harbor provisions will force the counterparties to these contracts to disclose their transactions in order to protect the priority of their security interests in bankruptcy. Then, at least, everyone will know the risks and where they stand. As it stands now, these contracts are undisclosed (viz. carried "off-balance sheet"): and are being used not to hedge risk, but rather to speculate ( i.e.,"gamble") on the financial markets.

 

[kowalskil]

How much has all the money printing devalued the dollar? I heard that they have increased the money supply by 300%. Is that right? ...

Then inflation would also be 300%. We definitely have inflation but not even close to 300%

Ludwik Kowalski (see Wikipedia)
.

 

[Gipper]

The end of the socialist and Keynesian charade is fast approaching...we can only hope it results in the death of liberalism and all it's evil sisters....and a revival of liberty and capitalism.

Libertarian billionaire investor says dump stocks, become a farmer

The U.S. government continues to print U.S. Dollars which continues its devaluation and promotes future inflation concerns. Rogers paints a bleak few years ahead for the United States and its citizens directly due to the policies the Obama administration has chosen to put in place. Other measures could have been taken to stave off the economic crisis America is in, however they have all fallen on deaf ears during the most recent Bush administration and the current Obama administration. Rogers feels U.S. stocks will continue their fall and sees great opportunity in the purchase of farm land or its derivatives. Last year Rogers called for the resignation of President Obama due to the destruction he and his administration was causing to the American economy.
Famed demographic economic, Harry S. Dent, Jr. has also beensounding the warning bells regarding the mismanagement of the United States government and his call for a DOW of 3,500 by 2014. Many find that position to be extreme, however those same individuals cannot argue his logic and suggest a decline of the DOW of over 20% is plausible.
Money manager Peter Schiff has also been talking about apotential significant decline in the near future due to the failing policies of the Obama administration. Schiff is famous for smartly calling the housing crisis and the major impact it would have on the U.S. economy before all mainstream financial commentators
Most Libertarians, like Rogers, feel the Federal Reserve, America's private central bank, is doing all the wrong things to get America out of the financial crisis; causing the crisis to be prolonged and be more painful than need be. Libertarians would like to see less crony capitalism and more free market capitalism to resolve the financial crisis quickly, allowing America to be the bastion of freedom it once was. As we reported on May 12, 2012, there has been an alarming rise of Americans leaving the country in the last few years in favor of less taxing countries and only through a more capitalistic approach can America save itself from a coming depression.http://www.examiner.com/article/libertarian-billionaire-investor-says-dump-stocks-become-a-farmer

 

[cashmcall]

JPM is a trapped animal. The longer they mess with this thing the more likely the hedge funds will find out exactly the trade and go for the kill. Right now JPM is just selling off stocks ​

in waves trying to build cash for the inevitable hit it will take. I have no doubt that this series of trades will cost them 5 or even 10 billion before they can clear and maybe much more. Hedge funds smell blood. ​

 

[cashmcall]

The markets mavens are claiming the issue is Europe but the real ice berg is JPM. As I pointed out their net worth went from 77 billion in 2009 to 380 billion this year. That is in a recession. So JPM is basically under attack by every hedge fund​

vulture out there. This is why JPM has never actually disclosed their trade. JPM may be trying to liquidate in a very round about fashion in order to not draw attention to the main trade fiasco. You are seeing oil fall and likely they are also selling off gold and silver holdings as well a a lot of equities where they had some profits. ​

This of course is skewing the options markets and undoubtedly Morgan has its hands full and is shorting in advance of their selling. That is why you get some stocks​

slammed in what seems like arbitrary fashion in this low volume environment. Markets can't be traded when the strategy of Morgan and the hedge funds is intentionally misleading. ​

I have always felt that hedge funds​

should be highly regulated and watched carefully. They have destroyed more wealth in America and created nothing. Banks like morgan and Goldman have ravaged this country just by their oil contracts alone. Their relationship with the Fed bank has conspired to delay the recovery by boosting the cost of energy to unsustainable bubble levels. ​

With these Aholes in trouble now oil is coming down which is the only plus. But businesses which benefit from low oil are still being sold down. That's once again Morgan trying to build a cash ring around their meltdown fire. Since habits are hard to kill, you can imagine that Morgan is shorting their own trades. The only reason this is not Lehman is that Morgan has a huge asset pool and still has power to short and abuse credit. I also suggest that Goldman is exposed as well. The greeks are small potatoes next to this meltdown. ​

The Fed is responsible for this because of their loose no strings loans and capitalization of Morgan and Goldman. The have conspired to rip off the Taxpayers with impunity. This is especially evident of their activities in commodities futures​

. Think about it. What is a Bank doing speculating in the oil patch? Ask Bernanke, he seems to be blind to everything. ​

 

[cashmcall]

Markets have gone idiot. Bonds were loading up and this is at 52 week highs. My guess is it is stupid foreign money buying. I can't imagine anyone buying US gov bonds at this juncture.​

I put in a small short position a few minutes ago and am in the green. It is absolutely absurd. ​

The bear pitch is that this is Greece. Ridiculous assertion. This is a classic hedge funds ​

squeeze on Morgan. By trashing the low volume markets they prevent Morgan from clearing any long positions or short positions. They just bare down. Meanwhile this short interest has to clear. My guess is that bernanke is going to come to the rescue of Morgan. After stuffing Morgan's pockets with free Fed money, they really have no choice. Morgan is at risk of toppling the global economy with their 380 billion in tied up highly leveraged positions. ​

Bernanke has been asleep at the wheel and was not paying attention to the kind of leveraged investment and risk that Morgan was using their Fed funds​

. Which is more irresponsible, turning hedge funds into banks to let them tap into the Fed free money, or the total lack of oversight by the Fed as to how the money is used? I say both are irresponsible. I see no reason why Morgan and Goldman became the largest buyers of crude oil futures in the world since 2008. ​

Two weeks ago the Whale was the toast of London. Now JPM who knew the risks all along, are now getting kicked in the street by every hedge fund on earth in a wolfpack style hunt. ​

I mentioned this weeks ago when Noticing the net worth balance sheet had improved from 2009 at 77 billion to 2012 at 380 billion in a recession while the markets had tanked. They were having a very good financial crisis but they were now stuck in these leveraged investments​

and could not get out. They set themselves up for this. The Fed should be held accountable for Morgan and Goldman's conduct and stoped it. ​

So JPM is out today again, selling off the good stuff. The low volume markets are absorbing nothing though the prices are great so some funds are buying and picking away. We may end up in the green today only because the FB IPO will generate some play in the markets which will require the shorts to clear. ​

the bottom line... there is no money in the Greek woe. It will have no effect on the US Markets other than to bring in foreign money. Morgan however continues. They will be scrambling for weeks to get this under control. They are not without claws and they will short themselves to generate cash. Morgan is in a bit of a squeeze but most certainly not dire straights. They have plenty of firepower especially if the Fed opens an additional line of credit; they could wipe out a lot of hedge funds attacking them. ​

 

[Cruella]

This doesn't sound good, or does it?

Time Bomb? Banks Pressured to Buy Government Debt

US and European regulators are essentially forcing banks to buy up their own government's debt—a move that could end up making the debt crisis even worse, a Citigroup analysis says.

Regulators are allowing banks to escape counting their country's debt against capital requirements and loosening other rules to create a steady market for government bonds, the study says.

While that helps governments issue more and more debt, the strategy could ultimately explode if the governments are unable to make the bond payments, leaving the banks with billions of toxic debt, says Citigroup strategist Hans Lorenzen.

 

[dogtowner]

This doesn't sound good, or does it?

Time Bomb? Banks Pressured to Buy Government Debt

US and European regulators are essentially forcing banks to buy up their own government's debt—a move that could end up making the debt crisis even worse, a Citigroup analysis says.

Regulators are allowing banks to escape counting their country's debt against capital requirements and loosening other rules to create a steady market for government bonds, the study says.

While that helps governments issue more and more debt, the strategy could ultimately explode if the governments are unable to make the bond payments, leaving the banks with billions of toxic debt, says Citigroup strategist Hans Lorenzen.

so the usual suspects who buy our debt stopped buying huh ? not news of course but this playing games with the regulation is nothing short of seeing the cliff and punching your transport into overdrive. 1929 is going to look like the good old days...