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Jamie Dimon’s Obfuscation = JP Morgan’s Guilt?

13 May

I want to draw your attention to one of the most important things Jamie Dimon said to David Gregory in their recent conversation of JPM’s $2 billion proprietary trading loss:

GREGORY: The immediate question, the SEC is looking into this: Did the bank break any laws? Did it violate any accounting rules or SEC rules?

DIMON: So we’ve had audit, legal, risk, compliance, some of our best people looking at all of that. We know we were sloppy. We know we were stupid. We know there was bad judgment. We don’t know if any of that is true yet. Of course regulators should look at something like this, that’s their jobs. So we are totally open to regulators and they will come to their own conclusions. But we intend to fix it and learn from it and be a better company when it’s done.

The question Gregory asked was extremely simple: did you break any laws, accounting rules, or SEC rules? The answer Dimon gave was essentially this: “We’ve looked into it and I know the answer, but I’m not going to say right now what it is.”

Think about all the different things he could have said. Think about why he might have said this. This is bad, folks.

When baseball players are asked to testify before Congress about steroid usage, they obfuscate like this. When cyclists are asked to testify about blood doping, they obfuscate like this. When Jon Corzine responds to questions about MF Global, he obfuscated like this. Why? Because the level of cover-up is so massive that drawing any attention to the truth is overwhelmingly frightening for them. What you see from Mr. Dimon is a high level of fear about what this problem means for him, his bank, America, and the world.


Peter Schiff Pigeonholed More than Ever

28 Mar

No one is a more outspoken and passionate critic of the actions of the Federal Reserve than Peter Schiff. Having accurately called the housing bubble of 07-08, Schiff has said repeatedly that the next bubble will be the bond market. The reasoning isn’t complicated, because the primary solution to the housing crisis was government and central banks confederating together to buy up toxic assets from the real estate bubble.

So what’s the problem when he mentions it on CNBC? Why are these people so reticent to engage in a discussion of the issues he brings up?

As you will notice in this video, Schiff clearly articulates the dilemma that the Federal Reserve has put itself into. On the one hand, it has lowered interest rates significantly in order to prop up the highly leveraged banking system of the United States against the massive losses it stands to take when/if just a few important components of its portfolio fails. On the other hand, the lowering of interest rates creates massive inflation which make it extremely difficult for every non-banking sector of the economy to create, manufacture, and distribute products for a profit.

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