We really need to keep talking about "too big to fail" because beasts like JPMorgan are having too much of an impact on the US markets. Interestingly enough, their massive bets are also part of the reason why their initial $2 billion loss is not $3 billion and counting. Because the bets were so large, everyone knew that it was them so others can now pounce on those positions and add to the loss.
In no way does it make any sense for a single bank to hold so much sway over the market. It's not safe for America (though we know that Jamie Dimon has no interest in what is helpful or hurtful for America) and from a structural perspective, it has to change.
If Washington cares so much about national security, why are they allowing one company to be so disruptive and potentially destructive? It's seriously a matter of national security. Break up the damned banks and do it now.
JPMorgan Chase & Co's disastrous bets on corporate debt may have caused unexpected collateral damage: erratic behavior in a barometer that measures the financial health of blue-chip U.S. companies.You need to click through and read the examples of how JPMorgan disrupted the financial system. Maybe we made it through OK this time but who knows about the next time? We could have very serious problems in the future if this is not addressed. Is Washington listening?
Those bets used Wall Street derivatives called credit default swaps. They are supposed to act like homeowners insurance, allowing bondholders, banks and hedge funds to buy protection against declines in the value of corporate debt, and ultimately protection against a default.
In this case, though, they became more like the pawns in a battle between JPMorgan and hedge funds on the other side of its bet. This struggle so dominated a corner of the market that it sent false negative signals about the credit quality of some major companies whose underlying finances were largely unchanged, market experts said.
