"We're getting to the heart of why you own gold" - long time friend and colleague, Wistar Holt (Holt & Shapard Capital Mgmt)I think every useful blog under the sun has re-hashed the JP Morgan/Jamie Dimon bombshell dropped on the market last night, so I'm going to try to be brief, to the point and hopefully add some "color" and information that is new.
First, Jamie Dimon did a superb job of throwing very expensive, opaque lipstick on the world's ugliest pig and catering the to the Wall Street analysts and media who take what he says and spin it to the public in the best possible light. In fact, I just saw one headline on Marketwatch that said "JPM stock is lower due to a a bad trade." A "bad trade?"
What we just saw last night was the result of Wall Street's equivalent of unsupervised special ed. children playing with financial nuclear triggers. How do I know this? I used to be one of those unsupervised kids back in the 1990's, when the magnitude of the capital being played with was a small fraction of what it is now.
This is not a "bad trade." This is a massive proprietary (i.e. bank trading/speculation portfolio) position that has blown up. Dimon fraudulently refers to it as "an economic hedge" that didn't work as well as they expected.
Jamie Dimon is either completely ignorant of what is going on in JPM's speculation-ridden proprietary trading operation or he's lying. Or a lot of both. If he's clueless, then he should be terminated by the board immediately. If he's lying, he should be investigated by the Obama Justice Department. But we know the latter has no chance of happening, as Eric Holder's Justice Dept has taken financial fraud prosecutions to a 20 year low. Not surprising since JP Morgan and other Wall Street banks are the heart of the client list of Eric Holder's pre-Justice Dept law firm.
Comment: Tip of the iceberg?