Major Banks Shorting JPMorgan Before Before London Whale Made Public?
Although the mainstream media is pushing the cognitive dope that the losses suffered at JPMorgan – which amount to “officially” $3 billion dollars but analytically as high as $18 billion dollars – came as much of a surprise (and the losses were referred many times by the mainstream as “surprise”) to JPMorgan as it did to outsiders, there are myriad reasons to believe this is a mirage conjured by the managers of the U.S. and world economy.
Adhering to the notion that there is very little differentiation to be made – other than stock symbols and CEO personalities – between major transnational banks , one might assume that some sort of deal was made between JP Morgan and other major banks in order to bring in a London Whale scenario. After all, the financial sector has much to gain from market volatility and, counter-intuitively for most, government regulation. First of all, under our current financial system, for well-connected institutions, profits are privatized and losses are socialized. Second of all, they are above and beyond law that applies to everyone else. And so, government regulation works towards limiting the freedoms of many businesses, but not the transnational institutions which are most out of control. According to the Wall Street Journal:
The trading blunders that have cost J.P. Morgan Chase & Co. at least $2 billion are shaping up as a boon for some of the bank’s biggest rivals.
A group of about a dozen banks, including Goldman Sachs Group Inc. and Bank of America Corp., have scored profits that collectively could total $500 million to $1 billion on trades that sometimes pit them directly against J.P. Morgan’s Chief Investment Office, according to traders and people close to the matter.
For the greater good of the financial sector, it is reasonable to presume that collusion between major banks, intended to preserve some stability in the financial sector, took place before JP Morgan’s losses were made public. From these arrangements, other banks in the financial sector made money off of JP Morgan’s losses, whilst the mainstream media – beholden to the financials as they are – touted the losses as a “surprise,” to everyone including JP Morgan.
Since the revelations were made, Wall Street has shrugged the losses off. Obama might be touting the efforts he made to redirect the economy and reel-in corruption and abuse of power on Wall Street in this an election year, but the corruption and abuse of power remains – in line with Wall Street’s expectations.
“Occasional losses are inevitable,” said Blackstone Group P (BX)’s Stephen A. Schwarzmann, 65, CEO of the largest private-equity firm. “Publicly excoriating JPMorgan serves no purpose to reduce people’s confidence in the financial system.”
So, basically, to acknowledge and analyze the destructive, mutual business plan of the financial sector, abetted by governments which serve as tools to reach ends that are acceptable for transnational banks, is of no use to society. It would be best for everyone if we came to accept the plays of power consolidation. It is best that people’s confidence in the financial system are not reduced, and so therefore it is best if they do not understand its inner-workings.
Wall Street accepts that this is the way it is.
“I kind of shrug,” said Bill Archer, 58, a former co-chairman of Goldman Sachs Group, Inc’s capital markets committee. “That’s just the way the word is.”
The way the world is abets chaos, and against this the financial sector must hedge, even if it is at the expense of everyone else. The major international banks are like the soldier: the instinct of self-preservation is sharpened and acute.
“Even a great banker like James Dimon can’t really manage such a huge operation,” Sylla said.
So, if the operations of the major financials are unmanageable, then banks like JPMorgan, Goldman Sachs and Bank of America – and all of the “too-big-to-fail” banks (a euphemism for ruling banks) – must be positioned to profit from chaos. Assuming that the losses were known about before they were made public, and before JPMorgans’ stock price took a nosedive, one can be fairly confident that major institutions like Goldman Sachs and Bank of America had short positions out on the company – thus positioning themselves to profit from the coming chaos.