There are still no facts, but it’s
reported that the now infamous $2 billion - maybe $3 billion - proprietary trading loss at JP
Morgan Chase (JPM) comes from credit default swaps on
not-for-profit trades.
WTF?
As we understand the term, a
credit default swap (CDS) is some contractual arrangement between two huge
parties, one or both of which may be sham entities set up to transfer
disclosure away from the actual gargantuan financial institution that started this,
often in a process designed to remove financial risk from big guy’s balance
sheet as well, and whatever they’re doing involves public securities in some way
that’s not going to turn out good for somebody before this thing is over. Each CDS is different, so there can be no
public market, and they’re totally unregulated because nobody but the racketeer
pulling off this swindle can understand them anyway – until somebody iphones somebody's blackberry, or however that works, claiming the cell phonee lost a bundle and better pay up. Or else, presumably.
Then there’s that “not-for-profit
trade” thing. The expression must’ve
been coined by some delusional MBA who was on crack, or one of those, at the time,
especially when applied to a Wall Street bank.
Typically, in the context here anyway, one sells your traditional
derivative to hedge – making dough if the hedged position goes sour – and the
counter-party loses his a$$. Or one buys
the same derivative as a speculation, and said speculator loses his a$$ if the price heads the other way instead.
It’s our understanding that, by
definition, nobody loses anybody's a$$ on a not-for-profit transaction. Like contributing fifty bucks to the Hug a
Tree Foundation. All right, a hundred
and fifty. Whatever.
We know this doesn’t help Post
readers understand what’s going on with the JPM news all that much, but it does
go to show just how useless the media has come to be in the New Plutocracy. Every story on this one is getting couched in
words that tell us nothing. Absolutely nothing
at all.
So where are the voices saying that ain't right? That's what we need to know. Anybody else want to speak out? Anybody at all?
