Trade With Dave: Emerging from the bathwater, all appearances are the creature is looking to make a swap… by default. When the New York Times refers to America’s biggest bank, JP Morgan Chase, as a “problem child” it gets Dave’s attention. Sure it may be the spawn of the Creature from Jekyll Island, but childlike?… JP Morgan? Have you seen that bank?
Ever since Citizens United vs. Federal Election Commission made its way through the Supreme Court we have all witnessed corporations proclaimed in your best Doctor Frankenstein voice as “It’s alive!” What was once merely a piece of state chartered paper designed to limit liability has “creatured” into being fully human with all the rights and privileges of a U. S. Citizen. Corporations conveniently lacked that one key motivator of moral hazard avoidance known as spending punitive years behind bars for their wrongdoings. Instead, they merely paid financial fines. We’ve all watched Too Big To Fail play out on the big screen as the crony engineered gravy train carrying the rule of law has gone right over a cliff while defying economic gravity for the moment and experiencing its own Wile E. Coyote suspended animation (cough, Dow 15,000).
Is someone finally going to be held “personally liable” for everything that is wrong with the Americanized global financial system simply because they were on the receiving end of a Powerpoint and some e-mails? We’ll see shortly. Being the head of global commodities for JP Morgan while attempting to convince your audience that you are not a proxy for the U. S. Government is no easy task. Add to that the birthing of a product whose name was so ugly only a mother could love (the Credit Default Swap – mmmm where can I get some?) and life begins to imitate art for Blythe Masters as the media paints the picture of Chase Burning originally only conceived in the mind of Alex Schaefer, then chalked on sidewalks across America, sold on E-bay for $25,000+ (http://alexanderschaefer.blogspot.com/) and now playing out on the pages of New York Times Dealbook. What’s the deal exactly?
At $1.2 quadrillion in notional value (http://www.nakedcapitalism.com/2013/03/worldwide-derivatives-market-estimated-as-big-as-1-2-quadrillion-as-banks-fight-efforts-to-rein-it-in.html) the world’s global derivative market would be quite a flock of birds should it decide to come home and roost on Blythe’s self-vaunted “platform.”
It was only August of 2010 when Ms. Masters described her competitors as “scared shi(r)tless of us”… “They’d better be, because this is a platform that is going to win.” Will Ms. Masters be capable of taking some of her own advice as she exhorted here team in that same conference call by proclaiming “Don’t panic” and “No one is going to get screwed”? (http://www.bloomberg.com/news/2010-08-03/blythe-masters-says-don-t-panic-over-jpmorgan-commodities-loss-job-cuts.html).
Dave nearly fell off his platform when he read the words “personally liable” in relation to Blythe Masters in the New York times vegetable medley of an article covering everything from soup to nuts in the JP Morgan “model citizen” turned “problem child” enforcement actions expose’ (http://dealbook.nytimes.com/2013/05/02/jpmorgan-caught-in-swirl-of-regulatory-woes/). Who leaked the government’s FERC document to the New York Times? That’s a good question, but don’t count on finding the answer. You may want to start your search for leaks in the executive washroom. Certainly Blythe didn’t climb to the top of the commodities heap by failing to heed the just published words of her bosses progeny in regard to “going” at work.
CNBC on that journalistic taboo of failing to be “First In Business Worldwide”: http://www.cnbc.com/id/100706195
Laura Dimon on that office taboo of being “#2 In Business”. No doubt she makes her father proud if for nothing more than the comedic timing of her article and the quotient of bath/toilet water as compared with the cost of a Duke diploma/value of Cyprus Bank credit default swap: http://www.thedailybeast.com/witw/articles/2013/04/27/the-last-office-taboo-for-women-doing-your-business-at-work.html
Don’t get Dave wrong, he’s written his share of blog posts about Ms. Masters and her claims that JP Morgan can’t be blamed for starting market forest fires because of its commitment to maintaining a “matched book” as covered by Dave a year ago (http://tradewithdave.com/?p=9855). All along Dave has believed that somehow somewhere there was a connection between Bear Stearns short silver position and the London Whale trade and I have written as much more times than I care to count. If anyone is in a position to know the truth about that trade (at least the Glencore mining/Bear Stearns/London Whale/SLV-Lehman and throw in some Lyndon Larouche for good measure) it would be Ms. Masters and wrote as much on April 15th of this year (http://tradewithdave.com/?p=16171). Dave doubts that Eric Holder or ninety year old judge Robert Patterson ate two bad pieces of pizza, grew a conscious and had their Jerry Maguire moment especially if Mike Bloomberg imposes his fictional but funny nonetheless single slice ban. Why the sudden interest in the rule of law or enforcing personal liability on corporate executives for their actions after a half decade of free passes for everyone except low level traders and/or users of fully functional Goldman laptops discovered in New York garbage rooms?
No one has been held personally liable from the beginning of this entire fiasco. Not Dick fuld. Not Lloyd Blankfein. Not Jamie Dimon and most definitely not Carl “$#!%%^ deal” Levin the Israeli Citizen/U.S. Senator serving on the “permanent” subcommittee on investigations. Do you fail to understand the full meaning of permanent? Imagine that the power of enforcement over the entire financial system of the Western world was a blog and that it was named “Trade With Carl” and you get the picture.
In light of the recent post-White House conference orchestrated gold smackdown, who knows what financial crimes Blythe Masters may be guilty of, but “personally liability” is something that hasn’t been considered as an aspect of the commodity and futures regulation and enforcement regime since Bart Chilton’s mullet was knee high to a bitcoin ATM machine. What gives? Why suddenly is it not good enough to simply blame the multi-billion dollar global drug cartel laundering/LIBOR manipulating corporations and fine it a few hundred million in chump change and call it a day… or call it “Doing God’s work” while growing your Davos beard as an expression of new found confidence in the nine lives of a vampire squid.
It wasn’t that long ago when Dave ’bout fell off his platform again when he read the ridiculous Bloomberg piece by William Cohan where Bill called for “the death penalty” for UBS. Really? What do you do to execute a corporation; have Alex Schaefer pant a series of oils that not only show Chase Burning but buried too? Is the art exhibition a series including one of the casket containing the corporation’s charter and then one of the shareholder’s grieving over their extinguishment as Adam Smith passes by the grave and drops invisible handfuls of dirt into the deep sixing of free market capitalism? Here’s the proof courtesy of Dave and Mayor Michael “single slice” Bloomberg’s website that playing rock, paper, scissors and getting blood out of “killed corporations” should refresh Thomas Jefferson’s tree of liberty and our current tyrannical system that is a charade of genuine prices discovery http://tradewithdave.com/?p=15041
As Dave wrote…
The preposterous concept that a corporation can even break the law without the complicity and culpability of its management and employees is highlighted by William Cohan in his Bloomberg article that calls for the death penalty for UBS and their involvement in the LIBOR manipulation.
Don’t miss my point. Dave is all for allowing corporations to go bankrupt (starting with GS for Goldman Sachs, GE for General Electric and GW for Gee Whiz Hank Paulson couldn’t be trusted) and to go down the drain rather than to be rescued by Warren Buffet’s rubber ducky who goes by the name “Dwayne the bathtub I’m dwoning in dewivatives”. Dave would even like to see executives held personally responsible for breaking the law “as if” Eric Holder and ninety year old JPM Judge Robert Patterson were actually more concerned about upholding the rule of law than skipping stones between Cambridge and the beltway in hopes of avoiding Breurian ripple effects (that’s right Dave has 8 count ‘em posts on “ripple effects” http://tradewithdave.com/?s=%22ripple+effects%22+).
So what did the New York Times have to say about the “confidential government document” it reviewed? Since when exactly does the New York Times get to review “confidential government documents?” What is this Wikileaks? Okay, back to the concept of banking on journalistic integrity as expressed by your choice of CNN’s coverage of the Boston Marathon bombings or other female executives who got hacked as a more than likely scapegoat for their overlords such as News Corp’s Rebekah Brooks for Rupert Murdoch and possibly Blythe Masters for Jamie Dimon. Clearly the New York Times “confidential” government report is not so confidential anymore, but more important is how selective the paper was in blending together the variety of complaints into the broadest possible brush stroke that sure seems to me designed for the sole purpose of making Blythe out to be the basted turkey dinner.
Regarding those energy traders in Houston and claims by the FERC investigators that they turned “money-losing power plants into powerful profit centers.”
Blythe Masters had “knowledge and approval of schemes.” I would certainly hope so. Since when is a scheme a bad thing? Not since the dictionary defined “scheme” as follows: A large-scale systematic plan or arrangement for attaining some particular object or putting a particular idea into effect. Alrighty then, at least she didn’t equate the energy trading to a teapot. What else did she do?
She “falsely denied” under oath her awareness of the problems and said that JPMorgan had made “scores of false and misleading statements and material omissions.” Alright, I’m confused. Did Blythe make “scores of false and misleading statements and material omissions” or did investigators say that JP Morgan made “scores of false and misleading statements and material omissions.” If JP Morgan made the statements then I plead Citizens United your honor. As far as Ms. Masters knowing the scheme on one hand and denying that she knew the scheme on the other hand, which answer are investigators looking for?
If she knew the scheme then she’s guilty of doing her job. If she didn’t know the scheme then she’s guilty of lying to investigators. If Dave had to guess he would say that Blythe new the scheme (she is the mother of the credit default swap so she’s no dummy) but that she didn’t get involved in the details beyond being on the receiving end of emails and powerpoint presentations. To tighten the noose, the Times is out with another vacuous biographical sketch that highlights just when the CDS was conceived, but Dave’s having a tough time determining if Blythe is the creature depicted in the movie poster or the screaming bathing beauty being carried off by the monster of moral hazard or maybe a little bit of both.
The latest from gray lady:
Derivatives seemed “creative” and also appealed to Ms. Masters because of her quantitative background, she once said. By separating certain risks from an underlying asset, derivatives seemed to offer a way for a bank to make more loans than it otherwise would be able to.
She made a breakthrough when Exxon, a longtime client, asked for a credit line, according to “Fool’s Gold.” To offload the risk without actually selling the loan, Ms. Masters arranged a deal with the European Bank for Reconstruction and Development in London, in which the bank would get fees in exchange for assuming the risk of default. The deal was known as a credit default swap.
http://dealbook.nytimes.com/2013/05/03/scrutiny-falls-on-a-pioneer-at-jpmorgan/
If you ask Dave, this smells like a set-up. I’ve said it twice before and I’ll say it again, don’t get Dave wrong. Blythe may only be guilty of doing her job, and a dirty one at that, but if you’re planning to demolish the entire global derivative complex who better to blame for spawning the unsustainability of a teetering tower of a trillion dollar babies than the baby’s metaphorical mother – Blythe Masters. But what about the father of this monster, the Federal Reserve.
Also from the gray lady:
Soon, the team at JPMorgan began talking to regulators about the new product. In 1996, the Federal Reserve essentially gave its blessing with a statement suggesting that banks could use credit derivatives to reduce their capital reserves. (yes that was a clickable link)
If the plan is, as Dave has suggested for years now, to separate liquidity from risk through a divorce of the currency system and separate wealth from the double coincidence of needs (http://tradewithdave.com/?s=%22divorced+currency%22+) then somebody has to provide the Hegelian synthesis to Solomon’s solution of simply splitting the baby in half (1 Kings Chp. 3: 16-27). Remember in Solomon’s day the corporation had not yet been born and if the New York Times is reading the “confidential government document” correctly it clearly states that prosecutors are considering holding Ms. Master’s “personally liable.” The Times goes on to mention the words financial “fine” (as contrasted with criminal prison sentence) in relation to both JP Morgan and Ms. Masters, but “death penalty” is not included as an option in the iteration.
If we’re looking for a fall guy, or fall gal, for the global economy Dave is not so sure that Blythe Masters will suffice although she seems to be the problem child of choice at the moment. What’s striking to Dave is not just that Ms. Master will be “personally liable” for collapsing the economy not to mention rolling blackouts in Boston this summer due to maxed out natural gas pipelines, but the chorus of economists, pundits and politicians all singing the same chorus. Whether coming from the left, right or middle the cacophony of Roadrunner theme song serenaders is deafening in their effort to push the “Wile E” economy off the cliff (followed by that puff of smoke, whistling sound and ultimate hard landing known as Coyote ugly).
The bigger story isn’t just that Blythe Masters may be the next fall gal in line to take the fall for Too Big To Fail. There seems to be an even bigger trend out there of people not only cancelling their plane/car/hotel reservations to Jackson Hole but an all out orchestration of a collapse of TWAWKI (the world as we know it… as in TEOTWAWKI or “the end of the world as we know it). Take Jeffrey Sachs last week and his Palinesque closed circuit version of going rouge (“rouge” as in Estee Lauder make-up rather than going rogue as in going all John Galt) for example. How about the CME Group’s Terry Duffy and his claim that no one wants paper gold anymore? Pretty strange for a paper gold salesman wouldn’t you agree? Maybe you heard former Fed governor Kevin Warsh’s proclamation that “There is no plan B.”
Along the lines of this plan, if you’re a Euro sceptic you could take Nigel Farage sharing the stage during his incitement to euro-violence with Ron Paul’s banging away at Boston’s Apple Dumplin’ Gangs and their drill testing of the repeal of posse comitatus and the convenience of warrantless house searches. Maybe you’re a birdwatcher and spotted Nassim Taleb’s black swan crusade to pull the pillars right out from under the roof at the London School of Economics currently being supported by such existential pillars as George Bernard Shaw, Pygamalion or other Rosenthal Effected fabians. Then there was one dilly of a statement the Dairy Queen convention as explained by the Operator of Omaha who claimed today that Berkshire’s 800# is the one to call “when there’s really sort of panic in markets” and you’re looking for a safe tub in which to float your boat. Looks like a pattern to me.
If you ask Dave, we’re witnessing a media takedown the head of JP Morgan’s global commodity complex just after she finished building up the platform that was capable of executing the unprecedented global takedown of precious metals, or at least an attempt at it. She was the likely enabler of the judge-approved (http://tradewithdave.com/?p=14550 & http://tradewithdave.com/?p=14862) destruction of the price of paper silver and paper gold (also known as simply paper) not to mention creating workload for the eternally underfunded CFTC and ninety year old judges (Bart’s got a nice office for an underfunded regulator: http://tradewithdave.com/?p=16315). It’s clearly not necessary at this point to enforce the rule of law because the law is secondary to the “systemically important”. From the looks of things from Dave’s perch atop this trading blog, the “scheme” is to sink the whole thing hook, line and sink-her.
Now that JP Morgan has removed most of their eligible gold from the vault and from all appearances the hot potato of “personal liability” has been passed to the one woman who wins the award for Most Likely Executive to Inspire Jamie Dimon’s Daughter to pen an article for The Daily Beast about “doing business at the office”, it would appear that the time has come to flush the evidence and the schemer along with it.
Does Dave believe that when Jamie Dimon was quote as saying “we expect we will have more” enforcement actions and issued an apology for letting “our regulators (i.e. Bart Chilton) down” that the JP Morgan Chase CEO was looking at his image in the executive washroom mirror? Probably not. It’s more likely that Mr. Dimon was admiring that “It’s why I’m richer than you Mike Mayo” movie poster and dreaming of his own Jekyll Island vacation from the complete clogged and unsanitary sewer that is Wall Street and The City of London. Dave would speculate that Jamie’s pledge to “do all the work necessary to complete the needed improvements” includes a complete rehab of the executive suite down to the global commodities kitchen sink (bathwater and baby Blythe included). That’s why the New York Times is dirtying the water so completely so you can’t tell if that thing floating in the water is animal, vegetable or mineral.
The apple doesn’t fall far from the tree and the chump rarely goes along with the change. So, before you attempt to flush the problem child and her credit default swap baby out with the toilet water, make sure that you’ve got a plunger handy, because that piping that runs from the CME Group over to LCH Clearnet is prone to getting clogged (http://tradewithdave.com/?p=9641).
Here’s the coverage as expressed by the old gray lady which explains why when you blend black and white together you get gray.
http://dealbook.nytimes.com/2013/05/02/jpmorgan-caught-in-swirl-of-regulatory-woes/
Wondering how the Chump Game Changer works? Well, yesterday’s DealBook was the JPM story, but today’s it’s all Blythe baby.
http://dealbook.nytimes.com/2013/05/03/scrutiny-falls-on-a-pioneer-at-jpmorgan/
Dave’s been on Blythe’s case since December of 2010 and she’s been a topic over twenty times here on the blog since:
http://tradewithdave.com/?s=%22blythe+masters%22
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