ARmy Rumour SErvice

**alib** · 12-05-2012, 08:52

Originally Posted by mercurydancer

Robert Peston made a point today that the JP Morgan transactions which resulted in a loss of 2 billion was conducted in London because the transactions/trade would be illegal in New York.

How stupid are we?

You might recall in background of the Lehman crisis was a small London office of AIG that made a shit load of money selling very dubious CDS's. AIG ended up 80% nationalized by the Fed as a result, Goldman might have gone down otherwise.

This sort of thing isn't by any stretch of the imagination "capitalism in the raw", it's a pretty bloodless buisness. As Adam Smith noted large players will always seek to dominate and rig markets which is why you need government but these guys are huge transnational entities that even DC has limited control over. This is a very sheltered arrangement with an almost fully socialized risk for biggest players, the odds are at worst they'll end up wards of their host state while they recover more likely the larger players bloat up as they cannibalize the smaller fish that still live in the wild.

**terroratthepicnic** · 12-05-2012, 09:33

Originally Posted by Effendi:4395556

Originally Posted by terroratthepicnic

JPMC have just lost this quarters profits. It really is a drop in the ocean. They will have clawed it all back by the end of the year.

Although their shares took a 9% fip today, it will bounce back. St the end of the day, they didnt become the largest finance bank by not taking risks.

They've lost nowt mate. The twat running the department was treated as a walk on water type, normally someone at his level gets to manage around 5%-9% of a banks total exposure so the even bigger twat who was his boss let him run to 15%'ish exposure. In the round I say they've lost nowt because their first half earnings are around 15 Billion so they just mark the loss against that.

He'll get a feckin huge fuck off payment and open an off licence in brighton - cos he'll never work for a bank again. When I say feckin huge payment, think of numbers around his annual bonus which will probably have been millions - seriously. Fuck up in banking and they pay you to fuck off, nice work if you can get it.

But what do I know about JPMC ;))

Probably the same as me. Although everyone was chunting about their shares and next years bonus in the restaurant.

**wm1965** · 12-05-2012, 11:21

The funniest thing about the financial crisis (so far) is that politicians haven't really learnt any lessons from the past. But hey, more regulation always works!

Politicians, in implementing Basel III, have seriously crimped bank profitability for the next few years. Yay. The result? Banks are already re-structing their businesses away from those parts of the business that are penalized such as CDO trading & issuance (not that they need much of a push here)...but also lending to risk businesses because it's prohibitively expensive in capital terms.

The end result of this new legislation is banks move further from their core businesses of lending and will create new products not covered by the rules (as they always have) and most importantly of all competition will be crushed as the barriers of entry to the industry have been raised A LOT. So banks end up with greater profitability in the long-run and much bigger banks.

It's like forcing banks to pay higher salaries to reduce the bonus component. In the old days crap bankers would leave (when they didn't get good bonuses) to go to shitter banks and then their careers were over. No it's damn hard to fire them and they cling on to their high base salaries.

**detmold_padbrat** · 12-05-2012, 11:30

Wheres this 2 billion gone ? .... if JP Morgans lost it... whos gained it ? maybe a host of smaller and more deserving institutions ?
maybe an eccentric philanthropist intent on saving a tribe of Amazonian indians with an abundance of herbal lore ..

**detmold_padbrat** · 12-05-2012, 11:31

Originally Posted by terroratthepicnic

Probably the same as me. Although everyone was chunting about their shares and next years bonus in the restaurant.

Id go to a different sit down and eat place if thats the case.

**wm1965** · 12-05-2012, 11:33

Originally Posted by detmold_padbrat

Wheres this 2 billion gone ? .... if JP Morgans lost it... whos gained it ? maybe a host of smaller and more deserving institutions ?
maybe an eccentric philanthropist intent on saving a tribe of Amazonian indians with an abundance of herbal lore ..

Hedge Funds were mostly on the other side of the trade.

**detmold_padbrat** · 12-05-2012, 11:49

Originally Posted by wm1965

Hedge Funds were mostly on the other side of the trade.

I see. Thankyou for that clarification. What will they do with the money.... put it in a bank sureley ? so a bank will get it back..

**Pigshyt_Freeman** · 12-05-2012, 11:51

Originally Posted by detmold_padbrat

I see. Thankyou for that clarification. What will they do with the money.... put it in a bank sureley ? so a bank will get it back..

Yes. It's not real money, more like casino chips in a big silly game of 'who guesses right?' played between the sort of people who try to piss the highest in a urinal.

**detmold_padbrat** · 12-05-2012, 11:54

... so if a bank/ investment house gets the money back I cant see the prob.. were back where we started... christ, thats not an economy.. its a money-go-round.

why can t Britain train its kids to build and invent stuff anymore.

**wm1965** · 12-05-2012, 11:56

Originally Posted by detmold_padbrat

I see. Thankyou for that clarification. What will they do with the money.... put it in a bank sureley ? so a bank will get it back..

90% of it will go back into new trades, 10% of it in bonuses. Of the 90% some of the individual investors in the hedge fund may pull it out and put it in new investments.