ie: "London Whale"
JP Morgan Chase for as solid a bank as it is expects everyone to accept the fact they had this huge loss and 'they cover it' so it's time to move on. That was a lot of money. It wasn't simply the stockholders that lost a great deal of money.
I remember a House hearing on banking finance and the run away train it had become and the Republicans fawned all over Jamie Dimon. A question came up about the banks future plans and Dimon stated they were moving their main office to London. Some of the members on the committee were obviously surprised and others wanted to know why and the reasons Dimon gave were primarily aesthetic. I am quite sure Dimon was looking to be a part of LIBOR. In my opinion, that would be a stabilizing effect simply because Dimon has been pragmatic enough to build the only bank that actually survived the 2008 global economic collapse. To some extent LIBOR is a worry to him and he wants to get involved 'enough' to protect his assets. The thing is if Morgan was the only well managed bank in the world then what is everyone else about? And even with Dimon's steady hand on the bank, the London Whale still occurred.
By David Sirota
On May 5, 2014
When you think of the term “public pension fund,” (click here) you probably imagine hyper-cautious investment strategies kept in check by no-nonsense fiduciary laws.
But you probably shouldn’t.
An increasing number of those pension funds are being stealthily diverted into high-fee, high-risk “alternative investments” that deliver spectacular rewards for the Wall Street firms paid to manage them – but not such great returns for pensioners and taxpayers....
Those that manage pension funds have fewer choices that are trustworthy. The example of Morgan and the 2008 banking failure proves there are dearly few investment banks/firms trustworthy enough. So where are pension managers suppose to turn as the theory is 'diversity is safer.' Who is to say that Dimon won't really screw up and next time the London Whale will be the LIBOR Black Hole?
I guess the financial markets today are more like a cartel than an investment. There are fewer and fewer diverse interests in the world. I sincerely believe that is by design. So far the USA Dollar is still the safest investment and it's treasury bonds, but, the winds can change. They rarely do, but, there is the potential. China would love to see the US Currency disappear as the global bench mark. There are plenty in the financial markets that would like that too.
I always come back to 'local economies' and 'local investment.' It is where the growth is and isn't that what pension fund managers are looking for. They are managers. They ought to be doing their job and not handing over their funds to huge banks that have treated the American Dream as a toy. It takes 40 hours a week and getting out from behind the desk to 'walk the territory' and find out where there is potential and where potential is failing. That is what pension managers should be doing, but, they aren't. The best example of an excellent public pension is still New York City.
Besides Dimon, Spitzer is still the best sheriff the public has to date. Of course no one will give him traction again because he has no problem taking care of the 'Little Guy.' He recently divorced and his wife's settlement was generous. He probably would continue to accept any opportunity to help and/or even take care of pension funds as an independent adviser. The public managers would find better success if they had a skeptic to their portfolios rather than simply a cheerleader.
Elliot Spitzer is very correct actually. Taking care of the Little Guy is where growth happens. Now as a huge financial manager viewing growth the Little Guy is so microscopic the cascade of events leading to catastrophe isn't even within their purview. They are about investors and their own interests. Ego. Where do you want your investment manager's ego? Fighting the progress, through government strings, of industries like "Tesla Motors" or do you want Tesla to actually grow and increase it's market to bring Upper Middle Class on board? There has to be a vision for growth otherwise it is dependent on wars, the petroleum industry and Dick Cheney.
Get for real. At least Elliot Spitzer had the best focus. Protect the Little Guy and the rest mostly takes care of itself. Sort of.
The entire global market is dependent on the marketing to the American Little Guy. There is no investment abroad that has lifted China or India out of poverty. Cheap wages and the Chinese and Indians are lucky to have it. The investment idiots have over 2 billion Little Guys in China and India and what do they do? They pay them less than poverty wages and focus on growth in the USA as population increase. Talk about stupid. That is not a dynamic market. Even Nixon didn't expect USA companies to outsource jobs to realize profits. That came from dolt CEOs. The idea behind the relationship with China was to give them a leg up to start their own growth. That didn't happen. The CEO dolts simply wanted their ego driven bonuses without caring about the implosion of the USA markets at the cost of good paying jobs.
Now, China realizes it needs a Middle Class. China has ambitions and it cannot rely on American markets to fill those ambitions. China finally 'got it.' But, it didn't come until it realized how important growth was within it's own borders to insure it's future and bring quality of life to citizens. But, it takes time to grow a billion people into a sustainable economy with sovereign growth as it's goal.
China still is addressing 'product quality' and that is a huge issue because the burgeoning Middle Class rather devote their entire income to purchasing safe baby formula and spend their money on imports than have a good quality domestic product. Until there are high quality Chinese products for the Chinese themselves the Middle Class growth will falter. China has a lot to do before they are exploding in economic growth, but, it will happen. In the meantime, the financial markets are 'on the hunt' for any and all big wads of money no matter where they can find it and they are still devouring companies rather than repairing them. That is growth? In what definition? For whom is that growth?
I am telling you these bozos are dolts. I have to wonder what the real standards at Harvard are. If Benazir Bhutto hadn't come out of Harvard Law, I'd have no faith in them at all. If the truth be known, Benazir Bhutto obtained her academic focus from Radcliffe. After Radcliffe, Harvard Law was a walk in the park. I hate it that she is dead. You talk about waste. She was great. Her first thoughts in her final political campaign were for the people of the Tribal Areas. She loved them. She knew they were oppressed and control by very evil people. But, she didn't long for wealth, she longer for peace.
