As the Senate Banking Committee tip toes around the embarrassing, immoral cult of Jamie Dimon today, I am nauseated at the infantile comments and coverage.
First of all, the type of trading now under scrutiny made billions in profits for JP Morgan traders, executives and other shareholders over the past many years. Of course they are taking huge risks! Everyone on the gravy train wallowed in the glory of the upside, they have therefore no right to be shocked and offended at the inevitable outcome of a losing trade. Gains and losses are two sides of the same risk-taking coin. You cannot have one without the other. Jamie’s promise to try and avoid losses in the future is meaningless and amounts to an “as you were Sir” free pass to continue. Shareholders who have lost money in JP Morgan shares since this story hit ought to have understood the specific company risk they were taking in buying those shares, they have no grounds for outrage beyond forcing an ouster of current management if they deem fit. That is the right of shareholders. Stamping their feet and demanding compensation for loses in the share price is a childish, outrageous idea that reflects how little people understand today about “investing” in public companies.
The real story here, the reason that the Senate Committee feels obliged to go through the circus and charade of scold talk now on this, is that they have recklessly and foolishly enslaved taxpayers to underwrite the downside of these trading operations. This all goes back to the catastrophic error of removing Glass-Steagall divisions between banking and trading ops and allowing Too big to fail institutions to merge into conflicted, bottomless pits of doom for the general economy.
We must separate these institutions so that the stable old banking side is removed to a separate entity who’s depositors are backed by the taxpayers via FDIC and Central Bank operations. The other risk-seeking side is then free to trade, gain and fall on its own knife when it loses money. Its shareholders will be exposed to the up and downside of the risk they have taken on, and adults will then chose their exposure and investment strategy accordingly.
The excess complexity of Dodd Frank and other proposed bank regulations since 2008 have come from the fatal refusal to date to reinstate the simple separation of banking operations globally. Time to admit the truth.
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Excellent post, Danielle. However, everyone knows the truth, so lack of recognition of same is not the problem. The problem is a weak government that has been captured by the banks and which no longer works for the people. The people have to get their government back. That’s the only real solution.
What I find truly amzing and possibly “infantile” is that intelligent, thoughtful people think the corruption, the collusion will somehow be expedited in some reasonable political and societal shift and all will once again be wonderful.
The time has passed. If ever there was a moment in time for the expedition it was on the wings of the Great Hope that the Big O soared to power with. He has thrown the faith and hope back in the face of the citizenry in a most cruel way. The entitled masses will not stand to be rolled much longer.
We will get change, that is assured, but it will not be in the form most envision.
Until then stay loose and consider holding a small part of your liquid assets in energy and precious metals, what you can comfortably afford to lose half of, for insurance.
I do not think everyone realizes the truth. I talk to friends about this exact post and they have no idea what I’m talking about. They do not understand what the banking sector used to be and what it is today. People are slowly learning thanks to youTube, blogs like this, lets hope the common folk continue to learn and listen.
What Danielle is doing is what we need more of, education on the current problems, without this we cannot get our government back.
I’m 30 yearsold, a business major in uni and until a year ago I really didn’t understand the corruption of the banking sector. It’s not a sexy topic but like learning the alphabet should be required knowledge for everyone
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In a SANE world, reinstating Glass-Steagall would be a no-brainer. Sadly, with members of Congress lined up like pigs at a trough for bank campaign donations, the chances of it happening in THIS world are slim to none.
I am not an American!
Can you spell corruption? Wake up my neighbours…..Get involve….
Thanks Danielle….as always a good read, scary but good.
For most people, if you lost $2Billion+ dollars at work, you would be fired… and charges will be filed against you.
My comment wasn’t intended to be taken so literally. Of course not “everyone” knows. Most people don’t even know what money really is, let alone what’s wrong with our financial system.
Not all problems would be solved by the people taking back government. Most certainly not. But history is a constant struggle between the haves and the have nots. Over the past half century or so, the power of the middle class, which gained great political, social and economic power in the early half of the twentieth century, has waned and the financial elites have “captured” government. This is largely a reflection of of an economy that has become increasingly dependent on non-productive debt (the product of finance) and consumption for “growth.” It has now reached the point where without new debt, the system will not only stop growing, it will die.
We now realize that it is a severely flawed and unsustainable paradigm. However, as the system itself is dying, the situation is becoming more and more extreme, as reflected in the concentration of wealth in fewer and fewer hands. I’m reminded of France on the eve of the French revolution. At some point the people must recognize their collective potential and recapture government so that it once again can be of, by and for the people. Thomas Jefferson who said, “The tree of liberty must be refreshed from time to time with the blood of patriots and tyrants.” The next revolution need not be bloody, but it must come.
PS: Obama was always a sham. I could never understand why more people could not see it. And even now, after everything that’s happened, most still don’t. Indeed, perhaps before we see the light of dawn, the skies may get darker yet.