Thursday, May 17, 2012

Hedging for Dollars

 ("JP Morphing")

I hope they include "Hedging with Derivatives" in the summer lineup on the Home and Garden network.

After reading for days about the JP Morgan debacle, I have little clue as to what actually transpired. Mr. Dimon's "morphing" explanation fits in perfectly with the abstract images that accompany this exercise. "If you place your derivative in direct sunlight for extended periods of time, it can morph and overwhelm everything it touches".

The "Volcker rule" has no chance of being an effective backstop. It is like trying to cut back Audrey II  in the "Little Shop of Horrors" with a pair of scissors. Banks like JP Morgan have not only grown too big to fail, but too powerful to control. Mr. Dimon and other giants in his industry now live in their own universe. They speak a language we don't comprehend and perform tasks that defy definition or restriction.

We may eventually get regulations that "trim around the edges" but it appears a virtual certainty that "Hedging with Derivatives" will be a very long running show. You can bet on it.

1 comment:

Anonymous said...

Bravo!! So funny!

Jo Ann