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Mark Mobius, executive chairman of Templeton Asset Management's emerging markets group, said another financial crisis is inevitable because the causes of the previous one haven't been resolved.Never in the history of the world have we ever seen anything like this derivatives bubble.
"There is definitely going to be another financial crisis around the corner because we haven't solved any of the things that caused the previous crisis," Mobius said at the Foreign Correspondents' Club of Japan in Tokyo today in response to a question about price swings. "Are the derivatives regulated? No. Are you still getting growth in derivatives? Yes."
Bruno Iksil, a trader working in the bank's London office, placed a massive bet in the derivatives market. Derivatives "derive" their value from the value of an underlying asset, like stocks, bonds, currencies, or a market index. The specific type of derivative used in Iksil's bet was a credit default swap index, known as "CDX.NA.IG.9."So if the real number isn't 2 billion dollars, how much will JP Morgan eventually lose?
CDX.NA.IG.9 tracks a basket of corporate bonds. Iksil's positions on the index were so big (one report put it at $100 billion) that they were moving the market and interfering with other traders' positions. These annoyed traders -- hedge-fund managers -- dubbed Iksil "the London Whale" for his outsize bets.
"I am not going to play in this dirty game. This is not democracy. These elections are a joke" - Abdel Fattah, Egyptian subway worker, explaining why he cannot support either Mohamed Morsi, the Muslim Brotherhood candidate, or Ahmed Shafik, President Hosni Mubarak's final prime minister, in the two-candidate election runoff to determine Egypt's next President (NYT, "Some Disdain Both Options in Egypt's Narrowed Race," May 26, 2012).Last week, the journal Foreign Policy published an extraordinary article - not extraordinary because of what it says, but because of who said it. It was written by Aaron David Miller, a lifelong D.C. foreign policy bureaucrat who served as a Middle East adviser to six different Secetaries of State in Democratic and GOP administrations. Miller's article, which compared Barack Obama and Mitt Romney on foreign policy, was entitled "Barack O'Romney," and the sub-headline said it all: "Ignore what the candidates say they'll do differently on foreign policy. They're basically the same man." It began this way: "If Barack Obama is reelected, he ought to consider making Mitt Romney his new secretary of state" because "despite his campaign rhetoric, Romney would be quite comfortable carrying out President Obama's foreign policy because it accords so closely with his own."
Comment: For a better idea of what is really going on in Syria please read the Sott Focus: NATO's 'Civil War' Machine Rolls Into Syria by Joe Quinn and Niall Bradley and Syria's Bloody CIA Revolution - A Distraction? by Joe Quinn.
For additional information read:
Mossad, Blackwater, CIA Led Operations in Homs
Wikileaks: US-led NATO Troops Operate Inside Syria