This is one issue all sides seem to agree upon (in theory). It is just a matter of getting gvmt to act which is usually nearly impossible (ie. until they MUST).

Karl said "But the real problem is found in how the bank got this position on and funded it in the first place."

My first thought is similar to what MF Global did - Did JPM use customer deposits?

By allowing these banks to trade derivatives without any regulation, you get this end result. How much of this toxic waste is floating around right now? The markets are phony in every respect and this government refuses to do a thing about it.
The Fed, SEC and every other regulatory agency has completely ignored what the banks are doing. We need Glass Steagall put back into place immediately. When will these trades be tied to peoples savings accounts? With all the derivative exposure, that answer is right now.


http://www.guardian.co.uk/commentisfree/....

An inside view of how things are, and why they will continue (h/t WikiLeaks):

http://documents.republicans.oversight.h....

Specifically:

Geithner e-mails and + 14-May-2010 16:41 22M
R1-195657 and R3-029833

The first was a "Thatta' boy!" on Maiden Lane. How did that work out?

Second, the insiders, including it's own Counsel, of how to hide the corruption:

"what not to publicly disclose" and ("Need to say something here about why company was still systemic").

CONgress will continue in either their ignorance or enabling behavior. I don't have an answer how "we" will remedy this with barely a 50% voter population turnout. JPM et al, along with crony corruption and fraud will continue.

KARL. don;t be silly. Now that the FED fully knows this trade is on and it WAS going against them, the FED will do what ever it takes to make that LONG the market bet work.

If you see the market this morning, they are already hard at work making money for Jamie.

Business as usual.

What? One dollar of capital? Why that would make banking into a stodgy old enterprise like a utility or something, that merely provides its services the real economy. What fun would that be, compared with leveraging to the moon to loot it lock, stock and barrel? And what's next, after that? Forcing the banksters to wear eyeshades and arm garters?

Quote:

It is just a matter of getting gvmt to act which is usually nearly impossible (ie. until they MUST).

This time the only way it happens is if something like trillions in the derivative market unwinds and implodes. Something like a financial nuke goes off caused by all the leverage and risk.

Jstanley wrote..

And what's next, after that? Forcing the banksters to wear eyeshades and arm garters?

I think eye patches, hooks for hands, peg legs and the odd parrot here and there would be more appropriate.

only if we get to remove their hand, leg and eye first. parrot costs extra.

...and currency fluctuations.

Japan awaits.

market rally in 3,2,1...

Its going to an very interesting rest of 2012 fer sure. I am sure that the bare ass of JPM is being targeted (now) by 100 heat seeking TOWs. This is going to be one big "screw 'em" fest. The only problem is what this will do, along with the pending bond repudiations in Europe, Japan's expanding crisis and the Chinese "hard landing". As I have written before, the event horizon of the debt reconiliation black hole is sucking everything into itself. All capital, all collateral, all income, all resources are being sucked into the Singularity.

All trading funds should be segregated. I have no problem with a big bank trading as long as it is done with segregated funds that do not count towards capital requirements.

I'm not in favor of one dollar of capital in lending. As all loans will not go bad simultaneously. I think allowing unlimited collateralized lending (if collateralized at 125%) and maybe 25 to one gearing on fully collateralized lending and about 3 to 1 gearing on unsecured lending would halt all the nonsense.

Until the people demand the revolving door from NYC to DC is welded shut then nothing will change. Most people don't know there is even a door yet alone one that revolves. Top news story today that I'm sure people DO know about is Bri'nay is the new judge on X-factor. ****ing retards...

Here is the problem Karl. The world needs more credit to go on and the politicians know it. The politico/banker game is up without this stuff. This is why these people rig the markets so they get their money out first, where instead of them owing us, we owe them. I don't believe these guys are going to fall on their sword to save us. They are running a heads they win, tails we lose game. Guys like Thomas Jefferson warned about this mess before it all got going good. Seems they understood what the bankers and politicians do right under our noses. Bankers have never as a group loaned from deposits, they create them and merely need them to balance their books. The ignorance of this action is so widespread that even people educated to this effect miss it. Derivatives are merely fake deposits that move for or against the bankers. Mainly, they are structured to move against Harvard University, Jefferson County Alabama and all the other patsies that beg to be left holding the bag.

The bankers have devised a game of Russian roulette, with a full gun and we have to go first if we want to start the game. The entire nature of the game has to change in order to go to the capitalization level requested in this post. It isn't that I don't agree. It is more a case of having a champion horse with a broken leg and the Derby starts today. The horse just isn't going to run.

I brought up an idea in a post a day or so ago. It was pretty much a nutty idea that to my knowledge would be the only real way to get to 100% reserve banking. That is the government would have to buy the debt with cash and service the debt. Deposits and lending would have to be separated. The government could sell back into the system a good amount of the good debt and use the proceeds to buy back their own debt. They could be forced to keep the size of the subscription limited to what ever the initial purchase price of debt was and maybe a 1% annual increase. Private credit schemes would be allowed, but not under the monopolistic banking game that goes on now and these entities would be open to runs or demands for performance on their liabilities. I don't have the details together other than to say we need a method to move out of the status quo, which is a political game of class warfare between the people and the politico/banker cartel.

Bernanke is kind of doing this with QE, but the problem is the QE is being used by the bankers to cash hot checks and speculative games like this one of JPM. Access to the money supply and debt has to be severed. All money in the world today is bank credit, linked directly to the current system of banking. In order to move to a different system, it has to become something on its own. ie: gold and silver or something on its own that can be used in payment of debt. The dollar isn't based on the full faith and credit of the US as is widely believed. It is based on its contractural position in payment of debt, public and private. As it stands now, there is no real market method to determine the balance of money and credit or debt or good and bad debt instruments, meaning there is no legitimate means of liquidating what can't be paid or directing the losses associated with such.

Mannfm11: I read your post twice - and I don't get what you mean "Access to the money supply and debt has to be severed". How is this done on a pratical level? How will this play out in my life.... will the stores not stock shelves for a period of time because their credit is no good, as is the trucking company, etc, etc...?

Is this what the policial / banking cartels fear? Civil unrest? Starvation?

Am I not getting it?

This is where a Bank could use deposits to fund this kind of trade?
But the real problem is found in how the bank got this position on and funded it in the first place. That's a problem.

OK...could I be reading too much into the conference call?

Why would Jamie Dimon go out and explain things? Why would he allow EVERYONE to know the hedge is huge and now a NET LONG position?

Wouldn't that be a death request from the market? See blood.....kill the wounded.

Could it be that He did this for the sole purpose of letting BEN BERNANKE know that JPM needs to be saved at any cost. We need the market to go higher... make it go higher? The action I saw this morning seemed to be just that. QE3 is back on the table now as JPM needs it.

Yeah, maybe I am reading too much into this.....

i don't understand how it is that a major bank can issue its signed, sworn, and sealed 10-Q without making any mention of this and yet less than one month later drop such a bombshell without violating sarb-ox. its not like it was news to the CEO up until yesterday.

Mann- Only solution is to default bad debt. After that we can:

a. Be adult and go to full reserve banking and stop with the credit fiasco bs up and down cyle nonsense.

or

b. Try and repeat the past 25 years.

i was trying to find an image of iksil, and on a google search your picture (denninger) pops up first on page 2.

small world.

Personally I think in the case of the very largest banks that the best tool for really regulating them so they don't just "blow up" is to have a requirement that they maintain classes of bonds where any derivatives on such bonds are unenforceable (i.e. to prevent any funny games), all bonds issued/sold/regulated domestically, and the total market value of all bonds in such an issue must meet a certain percentage of their deposits total and this percentage rises as their market cap rises. I'd suggest it be 5% of the total deposits when greater than 20bln, 6% for 60bln, 7% for 180bln, 8% for 540bln, 9% for 1.62T, 10% for 4.86T, etc. and that anytime the bonds total goes under this level for more than 5 days they go into receivership with real PCA.

There are many people on this site that have an educated and experienced knowledge base superior to my own for sure. But what I have, and they lack, is a set of fresh eyes and mind. My intense observations over the last five years has revealed a total manipulation over almost every market.

It seems to me that any of the old school rules do not apply in any category. Yet, that is what we are still bombarded with.

Technology has changed every market. And not for the good.

It took you 5 years to figure that out?