Didn”™t we just do this?
As the amplitude of JPMorgan Chase & Co.”™s trading loss becomes apparent, we are slowly coming to realize that the 850-page document with which U.S. Sen. Chris Dodd collared Wall Street may not ward off these disasters as promised.
It”™s like trying to collar the Hydra.
You know it”™s bad when we are at the point that we break out into a sweat only when big banks, insurers, hedge funds or whomever stick double digits in between the “$” and “billion” in the loss column. $-x-billion? No sweat.
There is no crime in losing money. It”™s just that it”™s starting to feel like the ton of prevention of the past few years didn”™t even amount to an ounce of cure. And that should cause us all to break out into a bit of a sweat.
“I think what the government is doing is pretty powerful medicine,” JPMorgan CEO Jamie Dimon said. “I”™d say the governments around the world (are administering) pretty powerful medicine and I think you will start to see some beneficial effect of that.”
Actually, Dimon said that back in October 2008 as the economy spun out of control. Fast track to five weeks ago, just before JPMorgan disclosed the trading loss, and Dimon was mulling the risk-reward of investment portfolios.
“Every bank has a major portfolio ”“ in those portfolios, you make investments that you think are wise, that offset your exposures,” Dimon said. “At the end of the day, that”™s our job ”¦ To invest that portfolio wisely and intelligently; over a long period of time to earn income and to offset other exposures we have.”
But there”™s that nettlesome matter of irrational exuberance that we can never seem to quite cure ourselves of, and which was on full display in May even among the masses. As it turns out, about the only hiccup in the mad rush to the Facebook IPO was the Nasdaq itself ”“ at least until the smartest guys in the room signaled the company perhaps is not quite as valuable as it had previously been made out to be.
Don”™t worry, there will be another. The Hydra always has another head to grow.
Comments 9