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Wednesday, May 30, 2012

How deep does the rabbit hole go.

JP Morgan is ranked as worlds largest publicly traded company, according to Wikipedia, and US largest bank.

It is estimate the the global GDP 61T total output is exceeded by JP Morgan's off balance sheet investment exposure by topping 70 Trillion.

A few weeks ago, the mass media reported a 2 billion dollar loss linked to "bad trades".   Now Bloomberg reports "JPMorgan CIO Swaps Pricing Said To Differ From Bank".

On the surface this tells me that the amount of money and liabilities are so great, the the "pennies on the dollar" of risk is what these companies are reaping money from.  But how can these companies ensure a positive outcome?  Why manipulating the market of course.  And since the markets are unregulated, I am not even sure it is illegal.  Lets assume it isn't illegal, what it does mean is the valuation of these off-balance sheet assets cannot be valued correctly.

And that is exactly what Bloomberg is suggesting, that the assets are manipulated and valued in a questionable manner.  Combine this with the change in FDIC insurance laws in place since the great depression to insure ONLY low risk savings accounts.   Now the FDIC is exposed to higher risk assets.

UPDATE: Market Ticker post on this topic, top quote:
The net amount of credit-swaps protection sold by JPMorgan soared eight-fold to $97.4 billion in the three months ended March 31, Federal Reserve data show. The bank held total credit swaps contracts on $6.05 trillion, the biggest among the six-largest U.S. bank holding companies, the data show.
So if you're making a "mistake" in the value of those positions by just one percent you would show a $60 billion difference against reality -- or roughly half of JP Morgan's market capitalization!
UPDATE:  Senator Mike Lee Luxury home who's valuation dropped below what he owed, was absorbed by JP Morgan.  I am not sure what the difference is between this and giving $$ to Mike Lee.

Referring back to 2008 to today, I now believe we have crossed over into realm of "all in" for the US economy and currency crisis.  What could have been dealt with decades ago has been continually kicked the can into a larger disaster.   Now the only question is how this plays out.

For more on JPMorgan, the FFIEC removed the public documentation on JP Morgan's finances, but you can still find it on google's cache here.

What I have issue is the off-balance sheet casino that the US entire financial system is based upon.  JP Morgan's off-balance sheet direct dealings tops over 6 trillion in accordance to federal PDF.

I am adding this to financial Ground Zero, as this is cracks in the largest ponzi scheme ever, off balance sheet liabilities totaling over 200 trillion across US banks.   And nothing material has been done since 2008, so it is safe to say nothing will be done until after there is no other choice but to reconstruct from the next disaster.

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