Saturday, May 12, 2012

SBSS 26. Who Is Running Scared?

May 11, 2012 by

Illegal mining in Peru destroying Amazon rainforest

May 10, 2012 by
Illegal gold miners in Peru are destroying thousands of hectares of the Amazon forest, home to some of the world's most important biodiversity.

But stopping the mining is presenting a tough challenge for the government.

In the second instalment of of a three-part series, Al Jazeera's Mariana Sanchez reports from Madre de Dios.

RT crew & UN observers on Syrian 'civil war' frontline

May 11, 2012 by

The UN Security Council has unanimously and strongly condemned 'terrorist blasts' that killed at least 55 people and wounded almost 400 in the Syrian capital, Damascus.

Meanwhile RT's Sara Firth is with the UN observers in Idlib, where the sound of gunfire and heavy artillery rings out in skyline. 'We'd followed the UN observers in, on the way passing through Homs and Hama - other areas where UN monitors are permanently based and areas that have seen the most destructive fighting. There's no ceasefire here...'

Follow Sara Firth on Twitter:

May 10, 2012 by

Alex Jones - Bilderberg Secret Code Name Revealed!

May 9, 2012 by

Alex continues his coverage of the upcoming Bilderberg confab in Virginia.

Capital Account - JP Morgan's "Unicorn Hedge" Fairy Tale Harpoons the London Whale!

May 11, 2012 by

SGT and Chris Martenson on Peak Oil and Currency Debasement

May 9, 2012 by

The History of Government Sponsored Terror

May 10, 2012 by

JP Morgan's $2bn loss was an 'accident waiting to happen’

By Harry Wilson, and Richard Blackden

Original source

Staff from the bank’s investment banking arm privately told the management - including chief executive Jamie Dimon - that the bank’s Chief Investment Office (CIO) was an “accident waiting to happen”.

Bill Winters, the former co-chief executive of JP Morgan’s investment banking division, is understood to have been among senior staff at the bank who made clear their concerns about the risks being taken by the CIO.

Mr Winters and other staff from the investment bank raised their worries, saying the unit did not fully understand the risks it was taking and was not properly managing its positions.

In a further blow on Friday night, JP Morgan's credit rating was cut one notch by Fitch, while S&P lowered the bank's outlook to negative from stable.

JP Morgan shocked the market on Thursday evening with its disclosure that it had made a net loss in the past six weeks of $800m as a result of $2bn of trading losses from the CIO. Mr Dimon apologised for what he described as a “grievous mistake” and said it was the result of “errors, sloppiness and bad judgment”. Shares in the bank dropped 9.3pc on Friday in the wake of the revelations, wiping $14.4bn off the company's market value.

London-based staff working the CIO business have been singled out as directly responsible for much of the loss, including French-born trader Bruno Iksil, who is known among City fund managers and peers as “Voldemort” after the villain in the Harry Potter books, as well as “the London Whale”.

Mr Iksil’s nickname is due to the size of the trades he is reputed to have placed. Since 2007 the value of the assets held by the CIO had tripled in value to more than $350bn at the end of 2011.

Ina Drew, the New York-based chief investment officer of the bank who was responsible overall for the division, received $14m in salary and bonuses last year. She is now under scrutiny, as is Achilles Macris, the London-based head of the CIO business and Mr Iksil’s direct manager.

It is understood that, as early as 2007, staff in JP Morgan raised queries with managers about the positions being taken by the CIO, which, they thought, showed the business was taking unnecessary risks.

Managers were also told of concerns about the quality of risk management in the unit, which was regarded as relatively unsophisticated compared with the systems used by JP Morgan investment banking division. Analysts at CreditSights said many of the trades placed by the CIO “could be difficult to exit”, raising the prospect of new losses for the bank.

Read more

Brother JohnF Silver Update - Jamie's Cryin

May 11, 2012 by

Fitch takes first rating shot at JP Morgan Chase

Fitch Ratings-New York-11 May 2012:


Fitch Ratings has downgraded JPMorgan Chase & Co.’s (JPM) Long-term Issuer Default Rating (IDR) to ‘A+’ from ‘AA-’ and its Short-term IDR to ‘F1′ from ‘F1+’. Fitch has placed all parent and subsidiary long-term ratings on Rating Watch Negative.

Fitch has also downgraded JPM’s viability rating (VR) to ‘a+’ from ‘aa-’ and placed it on Rating Watch Negative. In addition, Fitch affirmed JPM’s ’1′ support rating and ‘A’ support rating floor. A full list of rating actions follows at the end of this release.

The rating actions follow JPM’s disclosure yesterday of a $2 billion trading loss on its synthetic credit positions in its Chief Investment Office (CIO). The positions were intended to hedge JPM’s overall credit exposure, particularly during periods of credit stress.

Fitch views the size of loss as manageable. That said, the magnitude of the loss and ongoing nature of these positions implies a lack of liquidity. It also raises questions regarding JPM’s risk appetite, risk management framework, practices and oversight; all key credit factors. Fitch believes the potential reputational risk and risk governance issues raised at JPM are no longer consistent with an ‘AA-’ rating.

Still, at the ‘A+’ level JPM’s ratings continue to reflect its dominant domestic franchise as well as its solid and growing international franchise in investment banking and commercial banking. Capital remains sound and compares well with global peers, providing the bank with sufficient cushion to absorb a material idiosyncratic loss event. Fitch believes JPM continues to be well prepared to meet the minimum standards under Basel III.

Like other global trading and universal banks (GTUBs), the complexity of JPM’s operations makes it difficult to fully assess the risk exposure. This trading loss is precisely the kind of risk factor inherent in the GTUB business model. Fitch believes JPM, like other GTUBs, is in a highly confidence sensitive business and the longer-term implications for the firm’s reputation are not yet known. As a result, Fitch believes JPM’s ratings remain at heightened risk for downgrade until the firm’s risk governance practices, appetite, oversight and reputational impact can be further reviewed.

In addition, ongoing volatility and further losses are likely to arise from these positions as the firm unwinds them, creating some uncertainty. The firm’s Value at Risk (VaR) methodology was also changed in first-quarter 2012 (1Q’12) but subsequently reverted back to the original methodology. This resulted in a near doubling of VaR to $170 million, from 4Q’11 VaR of $88 million. The variance emanated from the CIO VaR and a negative $47 million diversification benefit. Fitch believes this also highlights some problems with modeling related to this portfolio.

Resolution of the Rating Watch Negative will conclude upon a further review of how JPM has addressed what Fitch views to be risk management and oversight deficiencies that allowed such a loss to occur. Fitch will also attempt to assess the future earnings and capital impact from these exposures. Fitch will also review the potential implications for market confidence in JPMand reputational damage as a result of this loss on both its liquidity profile and counterparty and dealings.

Fitch believes the Rating Watch resolution could result in a further downgrade of one notch if the risks are not appropriately sized and addressed. The complexity and opacity of these positions may also result in lingering concerns around the firm.

A return to a Stable Outlook will be dependent upon Fitch’s ability to gain comfort with the risk management concerns, potential ongoing nature of these synthetic credit positions and volatility they may create, as well as the reputation issues raised.