Chris Whalen: Will Jamie Dimon Tell the Truth, Because He Hasn't Done So Yet

"Of all forms of tyranny the least attractive and the most vulgar is the tyranny of mere wealth, the tyranny of plutocracy."

John Pierpont Morgan

Oh you must mean the vaporized money...

Chris Whalen makes some interesting observations and cuts to the heart of the matter, although he sometimes falls into the morality of the income statement.

The reactions of the CNBC spokesmodels and Andrew Ross Sorkin are worth watching.

Still I give them credit for having these sorts of discussions at CNBC, as compared to Bloomberg TV which has become an extended, often arrogantly frivolous, infomercial bordering on propaganda for the one percent. At least the print version of Bloomberg maintains solid journalistic standards.

It is interesting that the argument keeps coming back to the defense that Wall Street firms 'write off big losses all the time.'

It is not so much the size of the balance sheet, but rather the leverage and risks that are stacked against those assets, and the likely outcomes of cascading losses in a deeply intertwined financial system.

The bank has come far from when its founder, J. P. Morgan, did business with a person based on their integrity and character, and not on the size of their balance sheet or cleverness of their accountants, lawyers, and attorneys.

Asked: "Is not commercial credit based primarily upon money or property?"
"No sir," replied Morgan. "The first thing is character."
"Before money or property?"
"Before money or anything else. Money cannot buy it...Because a man I do not trust could not get money from me on all the bonds in Christendom."

John Pierpont Morgan

We do not know if Jamie Dimon will tell the whole truth his testimony, but there is little doubt in my mind that he will at least partially hide behind the CEO defense, claiming ignorance of the situation which he helped to create and from which he profited enormously. He may apologize for it, but he will not own it. And it was his doing in order to circumvent the impending Volcker Rule, of this I have barely a doubt.

It seems that JPM was mispresenting and mispricing their risks, egregiously to the point of making false statements to the press, the public, and probably the regulators, and they were doing so with public funds and government guaranteed deposits in the pursuit of outsized income for their traders and management. And it may involve regulatory capture and accounting misrepresentations executed by offshoring portions of their trade book, and perhaps fraud.

There seems to be a pattern of behaviour here, of a firm taking very large positions in the markets and rationalizing them as 'hedges' in order to take undisclosed risks for short term profits and thereby presenting systemic risk.

This is precisely the genre of problems that led to the collapse of Lehman Brothers.

We ought not to forget that JPM was also sitting on over $600 million in stolen MF Global customer money for many months, and quietly returned it over a weekend not so long ago.

And that they have claimed that 'hedging' is the rationale for their enormously large and leveraged short positions in the silver market, although I doubt that the truth of that will ever be allowed to come to light with any consequence.

Have we learned nothing?

When a people declare that 'greed is good' is their overweening motto and principle of action, then they have already forsaken their liberty, and ensured themselves and their children nothing more than a miserable and despicable decline.

The Banks must be restrained, and the financial system reformed, with balance restored to the economy, before there can be any sustained growth and recovery.

Gold Daily and Silver Weekly Charts - Metals Rise in a Flight to Safety - Refuse to Lose

“Yet while the rest of the populace was suffering, the rich just got richer. In 2009 and 2010, years in which millions were unable to find work, the top one percent reaped 93 percent of the 'recovery' income, and corporations are making more than they ever did. And the Republicans can still propose even further cuts in the taxes of 'job creators' whose only job creation has been for their own lawyers and lobbyists."

Garry Wills


"The terrible, cold, cruel part is Wall Street. Rivers of gold flow there from all over the earth, and death comes with it. There, as nowhere else, you feel a total absence of the spirit: herds of men who cannot count past three, herds more who cannot get past six, scorn for pure science and demoniacal respect for the present.

And the terrible thing is that the crowd that fills the Street believes that the world will always be the same, and that it is their duty to keep that huge machine running, day and night, forever."

Federico Garcia Lorca

It turned out to be a good day to be long bullion and short stocks if you ignored the price gyrations caused by obvious price manipulation and speculative excess fueled by hot money and loose regulations.

Greek elections which are on Sunday 17 June are overhanging the markets this week. The trade going into the weekend could be interesting.

If Spain takes the money from the ECB and uses it to bail out its banks, leaving the people with austerity and the debt payments, then the government will be on the path to self-destruction.

The economic recovery in Iceland looms large, where they rejected the banks' fraudulent legacy, and jailed two of the bank execs this week.

The Banks must be restrained, and the financial system reformed, with balance restored to the economy, before there can be any sustained growth and recovery.

"It is not the critic who counts; not the man who points out how the strong man stumbles, or where the doer of deeds could have done them better.

The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood; who strives valiantly; who errs, who comes short again and again, because there is no effort without error and shortcoming; but who does actually strive to do the deeds; who knows great enthusiasms, the great devotions; who spends himself in a worthy cause; who at the best knows in the end the triumph of high achievement, and who at the worst, if he fails, at least fails while daring greatly, so that his place shall never be with those cold and timid souls who neither know victory nor defeat."

Theodore Roosevelt, The Man in the Arena,, Paris, April 23, 1910


The difference between a successful person and others is not a lack of strength, not a lack of knowledge, but rather a lack of will.”

Vince Lombardi

Never give in to fear. Refuse to lose.

SP 500 and NDX Futures Daily Charts - Rough Day for the Bulls, Tyranny of Money

"There have been tyrannical gods, and there is the God who makes us free.

Tyrant gods, nowadays, do not, as a rule, assume the names of gods. They prefer pseudonyms. But their tyranny remains the same."

Henri de Lubac

There was euphoria to the upside in the overnight futures as the Spain bailout cheered the markets.

The reality of the situation and the impending Greek elections chilled the markets during the day, as stock went out near their lows in a big reversal.

The hysteria and mood swings will become worse as the year goes on.

Caption Contest

Playing with the big buoys.

Ben 'Big Ones' Bernanke

The Fed has a printing press, but it takes a pair of these to use it.

Ben is always ready for the next tsunami.

Thanks for the loan Jamie!


What do you think?