Don't worry about interpreting the charts, friends. Just read through them slowly, let the data sink in and realize the situation occurring then and the one now. (Oh yes, you might want to hold off on the cool drink until the second essay.)
By Pam Martens and Russ Martens
July 23, 2015
JPMorgan Chase’s Stock Chart, July 16, 2008 through August 11, 2008
From the looks of JPMorgan’s share price, one would think the financial world is bathing in a sea of tranquility rather than experiencing crashing commodity prices, tremors in the Eurozone, Canada acknowledging two quarters of contraction, ruptures in China’s stock markets, and energy and mining junk bonds losing 20 to 30 percent in a month.
JPMorgan’s share price hit an all-time closing high of $70.08 yesterday. The scary thing is, JPMorgan’s stock had a run from $32 to $42 just one month before Lehman Brothers blew up in 2008, marking the beginning of the biggest financial crash since the Great Depression; and there had been a year of financial warnings prior to that. (So much for global bank share prices being a bellwether on global financial stability.) Once the 2008 crash was clearly underway, JPMorgan shareholders saw 70 percent of their share price evaporate in a six-month stretch ending in March 2009.
JPMorgan is not some folksy community bank in New England with no counterparty exposure to other global banks or debt-ridden corporations. JPMorgan Chase is a global bank with over $2 trillion in assets “serving corporations and individuals in over 100 countries,” according to its web site.
Graph from Office of Financial Research Report on Systemic Risks in U.S. Banking System (Symbols JPM and C denote JPMorgan and Citigroup, respectively.)
In February, the U.S. Treasury’s Office of Financial Research released a report showing staggering levels of interconnected risk among global banks. JPMorgan Chase had the highest overall score for systemic and interconnected risk.
The report was written by Meraj Allahrakha, Paul Glasserman, and H. Peyton Young and found that five U.S. banks had high contagion index values —JPMorgan, Citigroup, Morgan Stanley, Bank of America, and Goldman Sachs.
The authors write:
“…the default of a bank with a higher connectivity index would have a greater impact on the rest of the banking system because its shortfall would spill over onto other financial institutions, creating a cascade that could lead to further defaults. High leverage, measured as the ratio of total assets to Tier 1 capital, tends to be associated with high financial connectivity and many of the largest institutions are high on both dimensions…The larger the bank, the greater the potential spillover if it defaults; the higher its leverage, the more prone it is to default under stress; and the greater its connectivity index, the greater is the share of the default that cascades onto the banking system. The product of these three factors provides an overall measure of the contagion risk that the bank poses for the financial system.”
Just this past Monday, the Federal Reserve announced that JPMorgan Chase faces a $12.5 billion shortfall in meeting the Fed’s 4.5 capital surcharge imposed on it because of its sprawling size and interconnectedness. That doesn’t seem like news that should send the bank’s stock to an all time high.
Things are now getting so tense on Wall Street that two investing icons, Carl Icahn and Larry Fink, had a war of words on stage at an investment conference last week. Here’s how the Wall Street Journal’s David Benoit tells what happened:
“ ‘BlackRock is an extremely dangerous company,’ Mr. Icahn proclaimed at CNBC’s Delivering Alpha conference in New York…Mr. Icahn steered the bulk of the conversation away from activism—the billing of the event—to his growing fears about a bubble in high-yield bonds and what he called dangers of exchange-traded funds [ETFs] run by firms like Mr. Fink’s.
“Mr. Icahn blamed the increasing prices for such relatively risky debt partly on Mr. Fink’s sprawling, $4 trillion asset manager and its exchange-traded funds, which Mr. Icahn said were causing a liquidity problem because they have snapped up so many assets…”
The fear is that there will be no buyers if investors in junk bond ETFs panic and stampede for the exits. Icahn is not the only person worrying about this scenario. In June, Richard Berner, Director of the Office of Financial Research, appeared at the Brookings Institution to discuss recent bouts of bond market illiquidity. Berner quoted SEC Commissioner Michael Piwowar on the issue of ETFs, who has said:
“The growth of bond mutual funds and exchange-traded funds in recent years means that these funds now hold a much higher fraction of the available stock of relatively less liquid assets than they did before the financial crisis…their growth heightens the potential for a forced sale in the underlying markets if some event were to trigger large volumes of redemptions.”
We may be closer to that trigger than many investors realize. Bloomberg Business is reporting this morning that “SandRidge Energy Inc. bonds have lost almost 30 percent since June, while notes of miner Cliffs Natural Resources Inc. are down more than 27 percent.” The article also notes that bonds of distressed debt issuers “are on pace to lose more than 20 percent for the second straight year, the worst performance since 2008.”
- JPMorgan Chase Closes at All-Time High – As Financial Crises Sprout Like ‘08
- Today’s Strangled, Muzzled, Darkened and Halted “Free” Markets
- What the Crash in Commodity Prices Is Saying About Global Growth Prospects
- Elizabeth Warren’s Glass-Steagall Legislation Has Two Fatal Flaws
- China and Greece Wobble, Canada Dips Into Recession, Yellen Unfazed
- Janet Yellen Heads to the House Today: Fireworks Expected
- China Is Where the US Was Prior to the 2008 Crash: In Denial
- What’s Really Behind Goldman Sach’s Bullish Stance on China Stocks?
- China Stocks and the New York Stock Exchange Shutdown: The Untold Story
- Banks Closed in Greece, China Stock Market Effectively Shuttered, Commodities Plunging: Is the 2008 Crisis Back With a Vengeance?
- A Quarter of Chinese Stocks Aren’t Trading: Shades of 1929 and 1987 Markets
- Global Banks Tank: What Part of Financial Stability Doesn’t Germany Understand?
- The Perfect Storm: Greece and the Euro in Crisis and Chinese Stocks Crumbling
- Thanks to Wall Street, America Has Growing Greek-Like Debt Bombs
- Goldman Sachs Doesn’t Have Clean Hands in Greece Crisis
- Greece: Why Is a Nation of 11 Million Causing Stock Market Losses Around the World Today?
- Treasury Now Has Color-Coded Financial Terror Alerts
- Big Bank Moral Hazard: A Look at Paul Volcker’s Fed and June 30, 1982
- Study: Biggest U.S. Banks All Have One Thing in Common; They’re Ancient
- Chasing Down a Fed Leak: Is Jeb Hensarling Fiddling While Rome Burns?
- As Fraud Metastasizes on Wall Street, Regulators Ponder the Culture
- Please Mr. President, No More Northeast Defense Lawyers on the SEC
- Wall Street Front Group Pleads for Government Help in New York Times OpEd
- If Elizabeth Warren Is Already Angry at Mary Jo White, Wait Until She Hears About This
- Treasury Reveals What JPMorgan Was Really Doing With London Whale Trades
- Clinton Cash Goes Missing for a Controversial 2014 NYU Speech
- Here Is What’s Fraying Nerves Among the Financial Stability Folks at Treasury
- Yesterday’s Federal Court Decision: Constitutional Tyranny at the SEC
- Hillary’s Presidential Prospects Are Tanking: Will Democrats Wake Up in Time?
- A Closer Look at Goldman Sachs’ Stance on Share Buybacks
- Jamie Dimon’s Legacy: GAO — Americans Face Stark Retirement Prospects
- Wall Street Banker Deaths Continue; Where Are the Serious Investigations?
- JPMorgan Tech Workers Have New Conspiracy Theories
- Margaret Heffernan Exposes Wall Street’s Big Lie on CEO Pay
- These Two Women Are Rattling Wall Street With Common Sense Values
- JPMorgan Chase Writes Arrogant Letter to Its Swindled Forex Customers
- Debating Hillary for President: Robert Reich v. Nomi Prins
- DOJ Calls Out UBS Rap Sheet; Ignores Homegrown Citigroup’s Rap Sheet
- JPMorgan’s Jamie Dimon Deals With His Bank’s Felony Charge – Badly
- Banking Fraternity Felons
- Wall Street’s Fatal Flaw: Confusing “Disruptors” With “Corruptors”
- Wall Street Is Corrupting Everything – Even University Commencements
- Forex Guilty Pleas and the New York Fed’s Blinders
- Global Bond Rout: What’s Really Behind It
- Shelby’s Fed Reform Bill Is Just Moving Deck Chairs on the Titanic
- Does Wall Street Call the Shots at the FBI?
- Brooksley Born: Still Telling the Uncomfortable Truths About Wall Street
- Elizabeth Warren Steps Into the F.I.R.E. of Wall Street Corruption
- Former Citi Trader Posts Nude Photos of Hungry Woman He Just Fed; Financial Times Thinks It’s a Calling
- Corporate Media Blacks Out Coverage of Bill to Overturn Corporate Personhood
17 Jul, 2015
The crash of Malaysian Airlines Flight 17 has been used to enforce sanctions against Russia and is fundamental to Washington’s efforts to break the Russia-Europe relationship, Paul Craig Roberts, former assistant secretary of the US Treasury, tells RT.
RT: It's been a year since the downing of Malaysia Airlines flight MH17 in eastern Ukraine, which claimed the lives of all 298 people onboard. Eastern Ukraine was a war zone at the time - yet the Ukrainian authorities haven't closed the airspace, allowing civil flights over the area. What was behind their inaction?
Paul Craig Roberts: I think they intended for the airliner to be shot down. The latest evidence is that it was shot down by air, by a Ukrainian jet fighter using a missile. This is the best evidence we have at this time. What is suspicious about this is that the instant that the airliner was reported to have been shot down, the entirety of the Western media was already programmed to blame Russia. Before there was any evidence, before there was any explanation, we had all of the Western media blaming Russia - even the BBC, which used to be a respectable news organization. So this suggests the whole thing was preplanned.
And if you look at the development of this we see that Ukraine has not released any information about its contacts with the airliner. And we see that Washington, which had a spy satellite directly over the area at the time, refuses to release its information. So the only information we have comes from the Russians, and the Russians say that if this had happened on a ground-to-air missile, this Buk system, that their radar in Rostov would have picked it up and yet it shows no such happening.
So I think the reason that we can’t get to the bottom of this is that it’s been used against Russia by Washington in order to break off Russia’s relationships with Europe. It’s the foundation of the sanctions and it’s part of Washington trying to break up the political and economic relationships between Russia and Europe. In my opinion, all the evidence we have, as of this time, supports no other conclusion.
RT: A year on after the tragedy, there is still no conclusive proof as to what brought down the plane. However the US continues to point the finger at anti-government forces. Why is that?
PCR: The US is based on the Wolfowitz Doctrine, and this doctrine says that with the collapse of the
Soviet Union there are no longer any constraints on Washington’s ability to act unilaterally anywhere in the world. And yet Putin has brought Russia back as a formidable country, a country with economic and military power and so Russia can now be an obstacle to - for example - Obama’s planned invasion of Syria, or Washington’s planned attack on Iran over alleged nuclear weapon that doesn’t exist.
And it was Russia’s ability to prevent war from Washington to Syria, to Iran that caused Washington to say “Hey look, we’ve got to do something about the Russians” and moreover “Look, for heaven’s sake, Europe is now dependent on Russian energy, the Russian gas. We are going to lose our vassal states and if we lose our vassal states in Europe we lose NATO and we lose the ability to bring conflict to Russia and we can’t have Russia rising as a power, so what can we do? Oh, we’ll overthrow Ukraine! And if we overthrow Ukraine we can use this in many ways to cause problems for Russia; it can cause problems with Russian national security, with Russia’s relations to Europe, and so on.”
So that’s really what it’s all about and shooting down an airliner for Washington this doesn’t mean anything; they kill more people than that while we are talking in Yemen, Pakistan, Iraq, in wherever. For 14 years the US has been killing people all over the Middle East and Africa and why are they so worried about a couple of hundred on an airliner, they kill that many every hour.
So the whole thing is directed to demonize Russia in order to force Europe to comply with Washington’s will, which is: “We have to stop the rise of Russia, we can’t have another independent power, we are the uni-power, we have hegemony over the world, we must not permit other countries to be able to block us in any way.” That’s what it’s all about.
RT: Just a couple of days ago, CNN broadcast the leaked results of the report, putting the blame on separatists. However the Dutch investigators say there are not ready to make any conclusions. How much do such accusations influence public opinion?
PCR: Very much, because there is no longer a Western media. In the US, in the last years of the Clinton administration, what had been an independent and dispersed media was concentrated in six mega-companies. So the US media now consists of six big companies whose broadcast licenses are dependent on Washington and whose revenues are dependent on corporate advertising, primarily the military-security complex.
So the media in the US no longer exists, it’s a propaganda ministry. And in Europe we have the former editor of [Frankfurter Allgemeine] Zeitung, the big German newspaper, who said there is no journalist anywhere in Europe of any significance who is not on the CIA payroll. This book is published in Germany, it’s a bestseller, it’s called Bought Journalists. You see, they follow whatever line the CIA gives them. That’s how you can see what Russia is up against – a massive propaganda machine and facts don’t matter.
Why is it that the US hasn’t released its satellite photos? The satellite was right over the incident of the Malaysian airliner when it happened. They won’t release it. Why doesn’t Kiev release its communications with the airliner? They won’t release them. It’s because they don’t support the argument that Russia was responsible, or Russian-supported separatists are responsible.
This is the situation. The Russian people, media, government have to understand that this is not a question of fact, it’s a question of demonization, and the problem with Russia from the stand point of the US, is that it has come back, it’s again a powerful country, it can constrain what Washington does just as could the Soviet Union. The Soviet Union could tell the US “No,” that’s what Russia did in Syria, in Iraq: it said “No.” Washington will not accept “No,” that’s what it’s all about. It’s not about facts or evidence. Russia, China and Iran are in Washington’s way. Washington’s committed to world hegemony, this is what the issue is, there is no other issue.