JPMorgan’s trading loss is said to rise at least 50% to surpass $2 billion

May 16, 2012 by · Leave a Comment
Filed under: Credit News 

I didn’t want to jump all over this story because it seemed to be really hyped up.   First I saw headlines that were talking about “a fresh look at banking regulations because of loss”, like we didn’t need to strengthen them after the 2007-08 crisis.  As if  we all just forget about the trillions of dollars that were sucked out of the market, declining housing prices and major government support to almost any companies that could call themselves a “financial institution”.

I hope our attention span is longer than that.

Now I am reading on CNBC that the $2 billion was just an initial estimate and these positions are not “unwound” and could still materially affect the bottom-line of JP Morgan.   At the same time I am hearing of a possible default and exit of Greece in Europe.  From what I have read, it looks like these bets are connected to Europe and if they are taking a bath like this, it would be safe to assume they have some exposure to this developing situation.   Many experts were stating on the record that the European debt crisis was not over and that all the stop-gap measures the ECB was implementing were not permanent fixes.   Could this be the straw that breaks the camels back and starts unforeseen events down the road?

The Federal Reserve did meet today and it seemed to be warming to the possibility of more stimulus to support our “recovery”.  Emphasis was added because it still feels like we are still in the same muck as before with gas and food prices becoming more elevated.   Gold prices have been soft as of late but it is May so we will need to sit back and see what transpires.

CNBC – The trading losses suffered by JPMorgan Chase have surged in recent days, surpassing the bank’s initial $2 billion estimate by at least $1 billion, according to people with knowledge of the losses.  When Jamie Dimon, JPMorgan’s chief executive, announced the losses last Thursday, he indicated they could double within the next few quarters. But that process has been compressed into four trading days as hedge funds and other investors take advantage of JPMorgan’s distress, fueling faster deterioration in the underlying credit market positions held by the bank.

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Greece CDS sellers payout $2.89 billion to settle contracts

March 29, 2012 by · Leave a Comment
Filed under: Credit News 

Hopefully this will work out in the end and this nation among others will get their budget and entitlements in order.  At the end of the day, you need to have services that match what you can tax from your people so that you are not incurring debt that can have disastrous effects in the long run.

This is a major issue America will tackle over the next 50 years and hopefully we will learn a lesson that will stick with our citizenry and be taught to future generations.   We need to break this horrible habit of believing there is such a thing as a “free lunch”.   There always is a cost at some point that needs to be addressed and or offset.

Bloomberg  – Banks, hedge funds and other investors that sold credit-default swaps protecting against losses on Greece bonds paid a net $2.89 billion to settle the contracts, according to the Depository Trust & Clearing Corp.

The payouts were completed yesterday after the nation took steps to force investors this month to participate in the biggest sovereign-debt restructuring in history, New York-based DTCC, which runs a central repository for the market, said in an e-mailed statement today.

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Greece steps up pressure on investors to take bond deal

March 7, 2012 by · Leave a Comment
Filed under: Global News 

Looks like Greece and cocked the hammer.  They are putting the feet of private investors in Greece to the proverbial fire.   Basically they are telling this group of investors to “take the deal” or we will pull the trigger and default.  This would create contagion and they know it.  The investors most likely will take the deal because they already are bailed out in the fact they made loans to a country that could not afford to service them along with having very rich social service programs that would take a very productive economy to support.

There is no easy answer to this problem in Greece and this is not a new problem with them having a large amount of social entitlement programs.   I am hopeful their transition will be successful in the end and hopefully it will give a new perspective on the next generation about what they should expect from their government and what they should expect from themselves and the associated communities.

CBS – Greece stepped up the pressure on its private creditors Tuesday to sign on to a crucial bond swap without which the country will default on its debts this month, but which some investors fear may prove unsuccessful.
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