Big Banks Prized Deal With The Devil

In case you're not aware, JP Morgan announced they had lost two Bills (billion) last week, sending the stock, and that of other banks spiraling downwards. JP Morgan, and their CEO Jamie Dimon, were the fiercest critics of the Volcker Rule, designed to prevent commercial banks which citizens entrust with their hard earned money, to use these deposits for trading and hedges, and with the staggering sums bet, asking us for another bailout. 
------------------------------------------------------------------
Piles of money surround you, fast cars, hot women in miniskirts display their long legs, mansions, all the things Madison Avenue convinces you are necessary to be happy. 
"All this can be yours," says your silver haired host in the dashing red cape with the small horns sticking out of his skull. 
"What's the catch? My soul?"
He tilts his head back and let's loose a mighty roar of a laugh. 
"We think here in much larger terms my friend, I don't want your soul. I want the whole nation's. Come."
He throws his arm around over your shoulder, escorting you into the casino. "You'll have an advantage over the house," he states, "We let you cheat."
"How?" you ask dubiously.
"High frequency trading, front running, inside information." You look up and notice the signpost reads Wall Street. "Just sit back, make conservative bets, and in a ten years, you can go off and retire on some tropical island," he explains. 
"I'm not signing anything in blood."
"I told you there's no need," he replies, his tone still easy going but his eyes narrowing. You look out behind you, there's a million man line of 20 and 30 somethings dying just to get a glimpse of what's before you. 
"Where do I start?"
"Trading desk," he replies, walking away and letting his underlings take your coat and get you situated. It feels like heaven, but it's not. 

Video: Big Banks Deal With The Devil Explained

A year later you are doing well. Very well in fact. You take little risk and via the fabulous method called "cheating" you have become a real earner, but you're not at "Big Pimp" level yet, though your ego craves it.
You do however have an enormous amount of chips at your command, the number entrusted to you has grown with your success. It would, however, be nice to speed things up. 
"So, let me get this straight, supposing we bet all this money and lost, what would happen to me?"
"You'd get thrown out of here, have to leave the game. That's about it."
"Not killed? Long prison sentence?"
"Nope."
"Would our company go under? I'd hate to see you out of a job my friend."
"Nope, that's the really cool thing, Luci in the Sky with Dimon (the big bosses long nick-name) set it up in such a way that if we crash, we take everyone down with us."
"The entire nation?" 
"Maybe the world." He let's it linger, then continues, "So of course, everybody is going to chip in their hard earned money to keep us afloat."
"Get out of here! There's no chance in hell we'd do it for them." You pause to enjoy the irony of your statement. 
"Yeah, it's amazing. Luci convinced Congress with the help of his good pals at Fox News, that it was it was Communistic to tell big banks what they could do with depositors money."
"Bunch of communists!" you yell, pounding down your fist on the table, imitating Big Luci  Dimon's sworn Congressional testimony, earning a big guffaw from your cohort.
Your affable, confident boss. 
"What's amazing is that he made that testimony after the first banking crisis, after all those horrific greedy bets that came of so close to sending the country into a depression."
"How did all this take place?"
"Well, after the market crash of 1929, during which people were also leveraged to the hilt, the Glass–Steagall Act was passed, which created the FDIC and separated commercial banking from investment banking, so that in a fit of gambling and greed, employees of the big banks couldn't bet customer deposits and lose them."
"Fricking Communists."
"I know right! I mean, shouldn't the free market dictate what works and what doesn't?"
"Totally. So then what happened?"
"Well, banking stayed boring til 1998, when Bill Clinton repealed the law. Then of course we came really close a few years ago to causing systemic financial failure, and good old Congress opened up taxpayer pockets, and sent out huge sums of money to nurse the banks back to health."
"And then what?"
"Then there is this big battle over bank regulation, where some asshole named Paul Volcker said that speculative activity by the big banks and investment houses played a big role in the financial crisis."
"He's kind of right though."
"But that doesn't give him the right to say it!!" He pauses, takes a swig of his bottle, containing a red liquid, the label, "Taxpayer Blood," then continues. "So Volker tries to get this idiotic rule passed that banks shouldn't be able to trade with customer deposits."
"It makes me so mad, don't they realize that we don't lose?! All we're doing is adding to our profits, then spending them. We are helping the economy! We're heroes!"
"Absolutely."
"I mean, I haven't missed on one bet I have placed."
"Yup."
"And the idea that government should provide guard rails so that our train doesn't derail. It's absurd, it slows us down."
"Yup."
"Screw this. I'm the top earner over the last six months. I know for sure that roulette wheel's going to come up red. Hell, I'll hedge a little on black. 2 billion on red please."
Dealer: "Green, zero."
He wipes up the chips, you sit there there shell shocked. Luci Dimon comes over and nods his head. 
"Well, you're going to have to leave the game. That was pretty stupid." 
"Oh my God, I can't believe that just happened. There's no way, I mean statistically ..."
Luci Dimon nods his head. "Relax, it's nothing the taxpayer can't handle."
He speaks into his IPhone. “Get The Chumps on the line Siri.” 
Siri: “Calling Washington.”



If you don't know what front running is/ high frequency trading is- this video explains

Comments

Popular posts from this blog

How Google's Driverless Car Technology Will Affect Real Estate Prices in Los Angeles

Seeking Alpha Sucks to Write For- They Are Morally Corrupt

Why Doug Kass is Wrong About Apple