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Non-Tech : Derivatives: Darth Vader's Revenge

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From: Worswick4/6/2012 8:55:50 AM
of 2522
 
One way or another they are going to eat the golden goose.....

http://www.bloomberg.com/news/2012-04-05/jpmorgan-trader-iksil-s-heft-is-said-to-distort-credit-indexes.html

From Bloomberg:

The trader is London-based Bruno Iksil, according to five counterparts at hedge funds and rival banks who requested anonymity because they’re not authorized to discuss the transactions. He specializes in credit-derivative indexes, an off-exchange market that during the past decade has overtaken corporate bonds to become the biggest forum for investors betting on the likelihood of company defaults.

Investors complain that Iksil’s trades may be distorting prices, affecting bondholders who use the instruments to hedge hundreds of billionsof dollars of fixed-income holdings. Analysts and economists also use the indexes to help gauge interest rates that companies must pay for new credit.

Though Iksil reveals little to other traders about his own positions, they say they’ve taken the opposite side of transactions and that his orders are the biggest they’ve encountered. Two hedge-fund traders said they have seen unusually large price swings when they were told by dealers that Iksil was in the market.

So how long until Bruno Iksil, and his massive one way bet, becomes the next Glenn Hadden, or the next Howie Hubler, or the next B oaz Weinsten? And how long until US taxpayer have to bail him out, either with direct rescue money, or with commingleddeposits used to plug trading losses? Because MFGlobal was just an appetizer as to how JPM operates with "segregated" money.

Repeating the punchline again, because it bears repeating.

In some cases, Iksil is believed to have “broken” the index -- Wall Street lingo for the market dysfunction that occurs when a price gap opens up between the index and its underlying constituents, the people said. The persistence of price dislocations has frustrated some hedge funds that were betting on the gap to close over time, the people said.

And that, for those confused, is how JPMorgan operates: they lie about everything, fully aware they have perpetual immunity because they are more powerful than the Fed (just recall Jamie Dimon's symbolic spitting in the face of Ben Bernanke), they are a tri-party repo dealer thus in the center of the entire shadow banking system, and have the biggest single-bank derivative exposure in the world, at $70 trillion as of December 31.

JPMorgan ismodern finance.

And because of they they can and will get away with everything, lying on prime time TV most certainly included.

Yet while JPMorgan may manipulate the gold, silver, or any other market, for its or the Fed's agenda, there is a silver lining: it allows everyone to buy physical assets at artificially deflated paper spot prices. And for that, JPM should be thanked. Because until the grand reset takes place, JPMorgan will never be held accountable for any of its actions in the current status quo regime. Period.

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