edsbett

JP Morgan Puts on a Brave Face

The black hole in JPM has always been and will continue to be their derivatives book. Take a look at published material and you will find it incomprehensible but growing exponentially. The next mess to come apart is credit default swaps. These things are usually written for 5 years and will begin to have a nightmare as the recession progresses in 2009. They have always had an enormous gold book on the wrong side and haven't yet probably fully hedged. Lastly, the BancOne acquisition will start to show bigger consumer losses, again as we move further into recession. Mark to market is a mysteery. The Bear deal is a total enigma. Nevertheless, Dimon is the one chosen to stand with Paulson and Bernanke as the bailouts/rescues are announced and bad mouths the skeptics.More than one savant on the Street has voiced the opinion Paulson had to stick Bear into JPM to save JPM not get Bear to an undertaker. I remain a skeptic