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Ron Galloway

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70 Trillion Reasons JP Morgan Is Too Big

Posted: 05/18/2012 9:22 am

The Gross Domestic Product (GDP) of the United States, the value of our economy, is roughly $15 trillion. The GDP of the entire world is $63 trillion.

According to the Office Of The Comptroller of the Currency (OCC) the value of the derivatives on the books at J.P Morgan is $70 trillion.

That's nearly 5 times the size of our economy. That's more than the entire world economy.

At one bank.

Whose CEO admitted they didn't understand a derivatives position (which was not a hedge) of just over $100 billion, which will lose well over the initial estimate of $2 billion. That one infamous position, by the way, has a size equivalent to the entire economy of Vietnam.

If J.P Morgan can't get their arms around a $100 billion trade, how are they in a position to manage a derivatives portfolio 700 times that size? Their assets total $1.8 trillion, their derivatives total $70 trillion, so they, in effect, are leveraged 35 to 1. A 2% loss of value in this portfolio would be $3.5 trillion, the same size as the economy of Germany.

At one bank.

By way of comparison, Capitol One Bank has a $27 billion derivatives portfolio, supported by $133 billion in assets.

J.P. Morgan is the largest derivatives holder in the world. By virtue of their size, they are the market. And even the CEO Jamie Dimon doesn't understand what they are doing.

The top 25 banks in the U.S. hold $230 trillion in derivatives, which is 15 times U.S GDP. J.P. Morgan holds 30% of these weapons of mass financial destruction. These deriviatives are not risk hedges, they are vehicles for proprietary trading and commission generation. They produce nothing of value. They endanger the economy of the world.

If J.P. Morgan can't understand them who can?

 
 
 

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