Wednesday, August 14, 2013


Just a remarkable day in the Fly-Over Zone.  Middle of August and the temperature never rose above 70F under a cloudless sky.  True football weather which, thank goodness, is just around the corner.  A glorious day...but not for Jamie Dimon who was called out--though not by name--by the U.S. Attorney in New York as he announced indictments of two J.P. Morgan employees in the "London Whale" imbroglio.

Jamie has gotten himself trashed by one of many applications of the Law of Large Numbers.  The loss suffered by his bank was a VERY LARGE number to all but perhaps the Warren Buffetts of this world and people take notice.  The larger the number, the higher up goes the blame game and $6 billion gets you pretty much to the top.  Jamie also made the killer mistake of under-stating and under-playing the loss, perhaps even finding a bit of humor in the entire affair before he was in full possession of all the facts and that is a real no-no, completely unappreciated by the regulators and the cops on the beat.  Is he going to recover?  No, not completely.  Once the myth of invincibility is gone, it never comes back.  Jamie is now an ordinary, very bright and very capable guy if there is such a thing, but the minute you start to believe the hype the Gods have a funny way of adjusting reality.  I actually feel a bit sorry for the guy and I never thought I'd be saying that.  I wonder who is next in the blame game environment in which we live?

The other guy I'm beginning to feel sorry for is Larry Summers.  Now as we all know, Larry is not God's first Nice Guy creation, but the manner in which he got trashed today by NYT columnist Maureen Dowd had to be a classic.  Mo must be going through another bad relationship or something because this was most vicious I Hate Men rant in quite a while, focusing on Summers but involving Bob Rubin and even Bill Clinton as well, as the responsible parties in the Crash of '08.    Of course she doesn't know what she's talking about but I must say it was a kick to have that mob attacked by Mo in the Times.  The girls are really pulling out all the stops to get Janet Yellen the Chairgirlship,  and speaking of Janet, her guys at her bank in San Francisco didn't, IMHO, help her a lot in releasing a study which concluded the all the QEs and balance sheet build-up don't have an effect one way or the other.  Their boss is a BIG supporter of the program you see, and that and being a nice person are the two most quoted reason for the support she receives from the street.  The study also states that there is a kind of direct linkage between Fed directional other-speak and market reaction, which of course isn't the case and which hobbles the entire argument, but Fed studies and the Real World are generally not found in space occupied by Real People.  Nevertheless, it wasn't helpful but then again neither is the battle royal going on over who is the next person to occupy what is now the most influencial financial position around.  I say now because with a continued effort to infuse even higher levels of stupidity into the selection process, this administration seems bound and determined to belittle the Fed and present it as just another political component run by a political hack.  Only thing I can compair this to is a day in the 60ies in August in the Mid West.  Weird.

No comments:

Post a Comment