Is JPMorgan a Bank or a Government-Funded Casino?
CNBC reported yesterday that up to nine banks will soon be allowed to pay back their TARP loans. JPMorgan has received some $25 billion from the TARP program, has petitioned the government to permit repayment, and will, in all likelihood, be among the banks permitted to do so.
Yet, by a long stretch that is not the end of the government's involvement with JPMorgan. The government stood able and ready to assist the financial sector through probably the most difficult financial crisis since the Depression, and certainly JPMorgan was one of the main beneficiaries of those actions. The $25 billion may no longer be needed now, but it was certainly crucial then to reestablish public confidence and trust in the system and each bank's viability. The ultimate aim was, and is, to permit these banks to function as banks, making it possible for JPMorgan and others to continue lending to business and consumers, unfreezing the credit markets and returning badly needed liquidity to the system. That was what was meant to be, but our banking institutions seem to have lost all ballast to what a bank is meant to be doing and its responsibility to its depositors and the public which in this instance helped it stay alive.
Just last week, a leading source of tanker operations info reported that the good people of JPMorgan hired the good ship, or better put, the VLCC Super Tanker 'Front Queen' for nine months, I repeat nine months, to carry 2 million barrels of heating oil for storage duty off Malta. One is compelled to question how many homes in California, in Michigan, or any where in the United States could have been saved from foreclosure, how many payrolls could have been met with the hundreds of millions poured into an oil trading gambit sitting off the coast of the far distant Mediterranean island of Malta. Is this why JPMorgan is rushing to repay its TARP monies so that its free wheeling ways of the past can proceed without the possibility of TARP constraints.
Our banks' propensity to risk other people's monies, while latching on to the public purse, seems to continue unabated. When a bank such as JPMorgan plays in the oil casino it does so with depositors monies which are guaranteed in part or in whole by our government's Federal Deposit Insurance Corporation. Is that what bank deposits are meant for? Is this a bank fulfilling its banking mandate? And this from a "bank" that has received an implicit guarantee from the government that in case of extremis the taxpayers will bail it out because the alternative would be unthinkable.
The very least one can ask is that the bank act as a bank and not as a trading house, making casino like bets that if they go sour, the taxpayers would be expected to pick up the pieces.
By playing the oil game JPMorgan bilks taxpayers twice. First, it is in part their money being played against them, and second by causing them to pay more for their oil, gas and heating oil. The kind of transaction entered into by JPMorgan provides a phony market for oil in that had the physical product entered the marketplace and not been stored away, it would have weighed on the price of oil and heating oil, pushing prices down. It is exactly these moneyed players/speculators who are keeping up a gamed level to oil prices. It is not coincidence, nor certainly not the free hand of the market that has natural gas prices, a commodity that usually trades in tandem with oil, at the cheapest to oil prices since 1992, and with natural gas touching a six year low this April.
It is untenable that banks, whose responsibility it is to provide the liquidity needed by the economy to prosper, use depositors monies to delve into trading of all manner of ancillary risk laden products be it derivatives, "securitized" real estate and residential debt, credit default swaps and on to title shipping documents attaining to cargos of oil, heating oil and soon to be if not already, bananas.
There is nothing wrong with a world-class bank helping in the financing of trade, and that is as it should be. But here the determinants are the competence of the parties to the transaction and their business viability, a determination that banks normally are schooled to make. And in doing so, they provide a healthy measure of oversight to the viability of the trade in question. But when the bank itself becomes the principal, the abyss and the next financial crisis is not far around the corner.
Are our banking regulators truly going to wake up to the profound dangers of the current construct of our banking institutions, or are they too closely aligned with the powers to be to change the ongoing risk fraught structure in a meaningful way!?
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2 million barrels of oil, at a daily consumption of 20 million barrels for the US alone, equals one tenth of a day. That's two and a half hours. But it gets even better: world oil consumption is 80 million barrels a day, So that's one fortieth of a day... a mere 36 minutes. Renting a supertanker for nine months to manipulate the market for 36 minutes. That makes business sense. No, it doesn't and it can be proven on the back of a napkin.
Oil demand is nonlinear.
High-end loan shark?
Fraud is what JPMorgan does.
JPMorgan created the Fraudulent CDS investment insurance without reserves scam that crashed the economy.
Letting grandmothers and children dies in the streets is just another business day for these banksters.
Wake UP
Read my profile for details and links.
Re regulate or die.
People are facing foreclosures, their incomes are shrinking, investments up in smoke, gas inching back to 3 bucks...When is enough, enough?
Because the old white oligarchs gave in, the banks have become way too powerful. The regulations are gone, banks have morphed into a cancer with tentacles throughout our economy. The investment houses are even worse. Read this if you have anything left in the market...
http://zerohedge.blogspot.com/2009/04/incredibly-shrinking-market-liquidity.html
here's your new link, folks:
http://www.whale.to/b/allen_b1.html#chapter3
read and learn.
the gist of it is this whole thing is being engineered by the FED. please read it and comment back
Nice post, most people are unaware of who the real puppet masters are. They continue to bicker back and forth, democrate against republican blah blah blah. The problem is both parties are the same and working towards the same agenda, a progressive agenda, a collectivism agenda. Wake up America, we are on the cusp of losing our republic.
Billions and billions for all the folks who got us into this mess and i cannot get my credit card company to reduce my rates ( they actually went up the day the Credit Card legislation was passes); i say, start new banks, get rid of the old ones who made the bad loans; who is there to bail me out? i am a small business and have nowhere to turn; Geitner is the worst pick Obama has made; he turned a blind eye while the NY Financial firms were doing their CDS, credit default swap BS thing;
Credit default swaps debacle has been swept under the rug; it's all a sham;
this is an article i found yesterday. it explains a lot of things. i am trying to get everyone to read it and pass it on. basically it's about the Fed's manipulation of our govt since it's creation, and how our income taxes go directly to them as payment of interest for their privilege of loaning us the money that we allow them to print for us. it's a complete scam.
http://www.john-f-kennedy.net/thefederalreserve.htm
please read, become aware, and be ready to do something about it. this is the root of our economic troubles, and always has been
Excellent. I am learning more each day--and it's seriously disturbing. Keep spreading the word.
JP Morgan is the biggest, baddest, most indebted and most evil bank in the world. They were the ones who triggered the 1929 market crash which led into the great depression. They were one of the main contributors to the Federal Reserve Act of 1913.
(1) FDIC Insurance
At 31 Dec 08 JPMC had $2 trillion of assets and roughly $1 trillion of deposits. 31 March 2009 figures were comparable.
But the amount of deposits over the US$250,000 threshhold is not insured. Nor are deposits in foreign offices.
Per the FDIC website, roughly 40% of JPMC's deposits are FDIC insured as of 31 March 2009, At the same date in 2008, roughly 28% were. The increase is due to the WaMu acquisition.
(2) Business
Is the author's contention that JPMC should focus all its lending and business activities on real estate?
It seems to me prudent that they do other business and diversify their risks.
And I'd note that the cost of renting a tanker for 6 to 9 months is relative peanuts when compared to other benchmarks - size of assets, size of revenues, size of the US mortgage crisis.
(3) Risks
Taking risks is the business of banks..
When a bank quotes a customer a five year rate on CD, it is taking a view on where interest rates will be.
When a bank makes a loan to an industrial concern, it is taking a risk that it will get repaid.
When a bank offers a customer a credit card, it's taking a risk that the client will pay.
In terms of performance, JPMC has demonstrated a very good risk culture. That's why it's not in the position of Citi or BofA.
Casino.
Don't anyone kid yourself, we're paying back that money in some form or another. Either in direct government funds such as AIG, interest rate increases, or in inflation due to renewed speculation.
Inflation and taxes and hidden taxes called fees; the whole country runs on investment and tax revenues; when one is down the other goes up;
.
the US Government has four branches"
-the Legislative
-the Judicial
-the Executive
-the Banks
as the old saying goes:
"money talks....B***S***walks"
one branch of our government talks;
three branches walk...
.
that's chump change for jpm.....heck, look at how they are gaming the spys on the equity markets. using tarp money to prop up the stock markets. check out the IOI daily on b'berg. lots of funny stuff happening but bottom line, they are taking orders from the fed, treasury to keep the market from collapsing.
there is NO free market in the usa.
Thanks to conservative-lead deregulation, it's a government funded casino. Just like the entire financial sector.
"Fiscal Conservatives".
Essentially correct, but look closely and you'll see the distinction between Republicans and Democrats is slim to non-existent in some cases.
Unfortunately for us, the banks own both parties.
Specifically JPM and Goldman have a revolving door with Treasury.
There are Democrats who want to break the stranglehold, but they're not in power.
Great article!
Actually it was Clinton who reversed the Glass Stegal Act.
Just yesterday here on HuffPo proof was given of Goldman's manipulations of the oil markets, and today this info re Morgan engaging in similar scams. And my guess would be that many of the manipulative events were done on behalf of the oil majors themselves as they bid their own product's price up or down.
But there was No manipulation, it was all peak oil and honest to goodness free market supply and demand--say the terminally misled.
Where are KTM and his crew of non-believers when the truth hits their fan? Now that the facts are getting out there, maybe it's time for, if not an apology, a general fessing up to their lack of knowledge or appreciation for the sociological criminality rampant in energy and finance.
yes indeed RoL
As mentioned in another post. Obama's economic team's handling of the finacial "crisis" is much like after hitting the iceburg, the captain of the Titanic backed up and ordered full speed ahead to ram it again
I read that and laughed both times. And now, even though we have at least a dozen true visionaries who called this mess as long ago as 1997 or 8, we still need to endure the excuses, spread by the MSM, that, "Gosh, nobody saw this coming; we're in uncharted waters." All while blame is shifted and avoided like the swine flu.
Reminds me of the guy found with 27 knife wounds in his back, whom the police declared a suicide.
Hello ROL,
It is funny that one of the few times I have agreed with Raymond, my comment was bumped! Probably due to saying, in English, that we missed our chance to nationalize the puta madre bancos.
Anyway, as to apologies:
Yes, I am sorry that people seek to make money at everyone else’s expense; That the easy oil has been pumped; that our amurican non-negotiable lifestyle is in decline, and that we wont have the money to invest in all the techno fantasies. I apologize that the nice man I voted for is more interested in BAU than real change.
But most of all, my apologies to this earth and it’s species for what this rapacious life form has done to it.
Hey Getabike, you know after all this time that I agree 100% and wish that we were more like the chicken who saved the corn for winter than the other animals that partied while the work needed doing. We ARE a shortsighted species. No doubt.
But I also see that a big part of why we won't have that money to give us the energy independence that even Henry Ford sought for us right from the beginning, is because the Wall Street banks that created this entirely manufactured economic crisis gamed the entire system--which included the energy markets--and have driven this country, our noble experiment in rule by and for the people, to the brink of destruction. All in the name of profit and power.
Will we run out of oil, natural gas, even uranium one day. We know that the answer is yes. Was the rape of the consumer last year and again now, the result of true free market supply and demand based on declining reserves.
No!
Were the runup in oil prices and the depression were fighting now related?
Absolutely.
"Just last week, a leading source of tanker operations info reported that the good people of JPMorgan hired the good ship, or better put, the VLCC Super Tanker 'Front Queen' for nine months"
Wed Jun 3, 2009 1:27pm EDT
http://www.reuters.com/article/marketsNews/idUSL365078320090603
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