the gushing on cnbc thursday about j.p. morgan's great earnings was sickening.
for od's sake, how can they not have earnings.
the government is giving them a monoply and giving them billions.
what if those guys manage to screw this up?
these guys had huge losses in their loan portfolio and more than made the losses up with fees.
take a wild guess what the exposure is of the major banks to over the counter derivatives, to the stuff they do off balance sheet so that leverage is infinity.
$275 trillion
with counterparty risk and everything thrown in.
"but we're regulating them now arent we?," you ask.
it's right back to where it was. they just dont have all the bets on mortgages failing.
can you imagine $275 trillion.
j..p. morgan has a huge arket cap, but can you imagine what the capital ratio must be there?
j.p. closed last night at about $190 billion market cap.
do you really think that j.p. morgan should have $65 trillion in over the counter derivatives?
without exposure to the light of day and collateralization, these guys will do the buzz lightyear to the edges of infinity and beyond.
how many people are selling credit default swaps on greece that cant possibly cover.
greece is a very small country, but do we really think that one of our banks is going to cover their entire debt package?
j p morgan has $2.03 trillion in assets. assets would be property and loans, liabilities would be deposits.
they have $165 billion in equity. that's 8%, even with all the money the government has given them.
if they lose 5% on some stuff, they are right back down to zero again.
nothing has really changed.
you would think that ratio would be at least 15%.
how big is $2.03 trillion. the entire annual tax collection of this country is $2.4 trillion.
these guys are dug in like ticks.
if you thought the insurance lobby got a health bill that was essentially a windfall for the big insurance companies and is no health care reform at all, just wait till you get to the financial reform, because, if they dont do anything about that, then they have done nothing to change what got them into this problem.
what congress wants is to give the treasury secretary and a couple other folks in government the power to dismantle any entity that they deem has taken on too much risk and is too big to fail.
imagine they do.
j.p. morgan(and the esteemed jamie dimon) are liable for $60 TRILLION in over the counter derivatives.
if something goes bad, if one of his guys made a really bad bet, and somebody didnt catch it in time, and that thing starts to implode, say greece or new york state or ohio or illinois or california, or a moonshot that they insured, what will be done?
they'll bet on anything. they probably lost a bunch of money on tiger not winning the masters(that's a credit default swap).
can you imagine when the government says, they were too big to fail and tim geithner stepped in and shut down j.p. morgan?
the government would have you and me believe that if they had the power last time it would have been different. where will the money come from for the government to cover these massive wouldbe losses....?
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