Monthly Archives: May 2012

Fed give’s clue how big JPM’s CIO loss is: $31.5 Billion

Tyler Durden's picture

Submitted by Tyler Durden on 05/21/2012 23:59 -0400

Earlier today we mocked Jamie Dimon for announcing the cancellation of his firm’s stock buyback program, just two shorts months after March 13, when none other than JP Morgan forced the Fed to scramble and release the full stress test ahead of schedule, after Jamie Dimon decided to frontrun the full FRBNY stress test release (whose sole purpose was to determine under what worst case scenario the Fed was ok with allowing JPM and various other Bank Holding Companies to proceed with dividend raises/stock buybacks) and announce just that – a dividend increase and a stock buyback. Well, in addition to some well justified egg in Dimon’s face, today’s results actually have some far more troubling implications. Because while we now know that the buyback is over, what we still don’t know, because Jamie Dimon refuses to tell us, is just how big the CIO P&L loss as of close today. Yes, there are many speculations but nobody knows for sure. Zero Hedge was the first to suggestbased on reverse engineering of what the potential loss drivers may well have been, and subsequently the slower media corroborated, that the total loss would be orders of magnitude greater than the $2 billion announced on May 10. But how many orders? Well, for what may be a critical clue, we go to the Fed’s stress test itself. Presenting Exhibit A – page 73 of 82:

This is from the “Comprehensive Capital Analysis and Review 2012” for JP Morgan, conducted by the NY Fed. Specifically, these are, among others, the permissive gating conditions, which if met, would still enable JP Morgan to proceed with the then announced buyback. The highlighted section above speaks for itself:

  • the cumulative “realized losses/gains securities (AFS/HTM) and Trading and Counterparty Losses” amount to $31.5 billion for the pendency of the stress test.
  • In other words $31.5 billion is how much pain JPM is allowed, in the NY Fed’s view, to sufferbefore losses and dividends/buyback would jeopardize the capital structure, and the buyback process should be halted
  • Once again, as a reminder, the buyback process was halted today.

While we do not know the combined loss on these two line items, what we do know as of this morning is that the prohibitive threshold for buybacks was passed just two months after it had been permitted.

Does this imply that the CIO losses, as conferred by JPM to the Fed in privatehave a statutory loss potential of over $31.5 billion through Q4 2013? Or is the hit to just this quarter so substantial, that spreading the loss over a period of time has become meaningless, and the Fed has barred JP Morgan from any other future buybacks, i.e., capital outflows, until such time as the trading/realized loss has been offset and the hit to the balance sheet has been undone?

Something tells us that we won’t be the only ones asking these questions.


UPDATEThe Independent is noting this morning Europe-time, that the losses at JPMorgan could have grown to $7bn:

Rival traders reckon that the losses could be as high $7bn. “The markets know pretty much what JP Morgan has and in what sizes,” said one trader.


The main index on which Mr Iksil’s credit default swaps trades were based has calmed down in recent days, which suggests that JP Morgan has decided to trade out of its positions gradually rather than take one massive hit.



According to JP Morgan traders, in [Ina Drew’s] absence there were regular shouting matches between her subordinates in New York and London. “The strife distracted everyone because no one could push back,” one trader told The New York Times.


[ZH: We suspect the apparent ‘calmness’ is simply a reflection of the moderation in the skew in HY9 and IG9 – but does not reflect the noise that we are seeing in various other credit indices such as HYG, JNK, IG18, and HY18 all of which have traded a long way from ‘fair-value’ recently as JPM reached for any and every liquid hedge (and at the same time caused the NYFed to postpone the MLIII auction) and also the fact that it is highly unlikely that JPM was actually able to trade out of the now super-illiquid tranche positions that were the cause of these market technicals – leaving basis risk even larger on this hedge of a hedge]

IG9 10Y skew almost normalized…


as is IG9 5Y


but this has caused ‘problems’ in the on-the-run indices…


Link to original article:


[video] Nigel Farage On Europe’s Economic Suicide



Dismissing the propaganda-like vision of growth and jobs that is now at the forefront of any and every word from the status-quo seekers that are the European Elite, England’s Nigel Farage notes the hypocrisy of the forthcoming summit’s agenda. The Euro itself was supposed to create growth and jobs and yet it is actively destroying both of those things – more of the same – as themedicine is killing the patient. He attacks the idea that the world will end if Greece were to exit the Euro – “European leaders say if Greece leaves the sky will fall in – it won’t!” – though notes that there will indeed be a difficult few weeks – and when challenged by a Greek politician (who questions what will happen when gas prices for Greeks rise on Farage’s suspected 50% devaluation in the Drachma), Nigel, offering the other side of the coin related to real growth, investment, and innovation to compete with expensive imports pointedly remarks: “Give Greece a chance because stuck inside the Euro, you are going to be literally destroyed”.


US Citizens Now One Step Closer To Becoming Permanent Tax Slaves

Poster’s note: Maybe Ron Paul was right… the Wall they want to build on the southern boarder is to keep the citizens IN the country, rather than keeping illegals out…..

Submitted by Simon Black of Sovereign Man

US Citizens Now One Step Closer To Becoming Permanent Tax Slaves

This week, the universally stupid brainchild of US Senators Chuck Schumer and Bob Casey known as the Ex-PATRIOT Act inched a bit closer towards becoming law.

‘Ex-PATRIOT’ is an absurd acronym that stands for “Expatriation Prevention by Abolishing Tax-Related Incentives for Offshore Tenancy”. I call it the Tax Slave Act… and it proposes three key provisions:

1) Individuals who are deemed, in the sole discretion of the US government, to have renounced US citizenship in order to avoid US taxes, will be permanently barred from re-entering the United States.

2) Such individuals will also be required to pay a 30% capital gains tax to the United States government on ALL future investment gains derived from the US. Currently, non-citizens who do not reside in the US pay no US capital gains tax.

3) These proposals are RETROACTIVE, and, if passed, would apply to anyone who renounced his/her citizenship within the last 10-years.

During a Sunday interview with ABC News, House Speaker John Boehner threw his support behind the bill… certainly a big step towards its eventual passage.

Let’s pause briefly for a little history lesson–

Dart Container Corporation was founded in 1960 by William F. Dart, the man who first perfected the design of styrofoam. Dart Container is today a multi-billion dollar family-owned company with thousands of employees and operations around the world.

In the early 1990s, brothers Kenneth and Robert Dart, heirs to the family fortune, renounced their US citizenship and became citizens of Belize and Ireland, and set up residency in the Cayman Islands.

Around the same time, several other wealthy Americans renounced citizenship, including Carnival Cruise Lines founder Ted Arison (who obtained Israeli citizenship), Campbell Soup heir John Dorrance (Irish citizenship), and fund manager Mark Mobius (German citizenship).

President Clinton was furious, and in 1996, he pushed Congress to pass a series of financial penalties for people who renounce citizenship. At the time, a ‘renunciant’ had to continue filing US tax returns for 10-years after renouncing.

Effectively, though, this penalty was a tax on worldwide income, not an exit tax on assets.

Fast forward to the mid-2000s, a time when the asset bubble was at its peak; the stock market was at its all-time high and real estate prices kept going up.

The Bush regime passed a series of changes to expatriation rules, dropping the income tax filing requirements in lieu of charging a one-time exit tax on assets.

In this way, the government was able to derive a much larger payment up front based on total assets rather than chasing around a former citizen for a piece of annual income.

In the years since the exit tax on assets was established, two things have happened:

1) The number of Americans renouncing US citizenship has risen steadily, from 235 people in 2008 to 1,780 last year (according to Schumer’s office).

2) The asset bubble has burst, and assets are worth much less than just a few years ago. As such, the government isn’t collecting as much revenue from the exit tax.

My sense is that the government has been watching the number of expatriates rise over the years, and simultaneously watching the value of the exit tax fall… and they’ve been looking for an excuse to make sweeping (i.e. retroactive) changes.

Eduardo Saverin is the perfect excuse. The Facebook co-founder’s recent renunciation of US citizenship has become a rallying cry for politicians to go back in time and steal money from former citizens retroactively…plus establish a larger base for future tax revenues.

This is a truly despicable thing to do considering that these former citizens followed the appropriate rules at the time, paid the tax, and moved on with their lives. Now Uncle Sam wants to go back in time to unilaterally change the deal, and expect everyone to abide even though they’re not even citizens anymore. The arrogance is overwhelming.

More importantly, this bill is also a major deterrent for people who are thinking about renouncing US citizenship today.

The passage of this law will undoubtedly cause many people who were considering expatriation to abandon the idea altogether as the thought of being permanently barred from entry is too much to bear.

It’s truly extraordinary that the Land of the Free has deteriorated to the point that the government must now resort to threats, coercion, and intimidation in order to keep its most productive citizens inside.

Link to original article at sovereign man:

Total number of jobs lost since Obama took over is still over 3 MILLION

I’ve read a lot of spin recently on how thet gain / loss of employment has actually completely recovered in private sector jobs since Obama has taken office.

Here’s an example of such an article:

While this is great spin for trying to get Obama re-elected, it doesn’t represent reality. The problem with pulling statistics like this (net jobs) is it doesn’t measure the unemployed that fall off the statistics. If you are unemployed, there are two ways the government stops counting you as unemployed. The first is to get a job. The second is to stop getting unemployment insurance. Millions of american’s have run through their unemployment insurance without finding a job, but the “change in employment” data will only see unemployment decrease, not jobs increase.

The MOST ACCURATE way to measure the status of the employed in this country is to use the department of labor statistics measurement of total employed.

You can find this data here:

under “employed”, just look at the number, and add three zero’s to the end to get the total number of employed.

What you will find is in 2008, the last year of statistics before Obama, over 145 million people were employed in this country. As of April of this year, that number is down to 141,865,000, a LOSS of more than three million jobs.

Here’s what the real graph looks like for total American’s with jobs:

What’s worse is the the tail of this graph is starting to head the wrong way again – the total number of employed Americans has GONE DOWN for three straight months.

This implies that “shadow” unemployment is hovering  around 16% which is somewhere between Portugal (on the brink of insolvency) and Greece (insolvent) – neither country removes unemployed from their statistics.

Sheriff’s Deputy orders inmates to dance to Usher. Ordered dances included the robot and the worm.

Inmates dance, deputy fired


By Phil Trexler
Beacon Journal staff writer

Published: May 2, 2012 – 04:55 PM | Updated: May 3, 2012 – 07:47 AM


Attorney Robert Meeker (left) listens to defendant Dominic Martucci as hearing for the five Summit County Deputies accused in the death of inmate Mark McCullaugh before visiting Judge H.F. Inderlied Jr. in this Feb. 4, 2008 file photo. (Lew Stamp/Akron Beacon Journal)

Some inmates did the worm, others chose the old school robot. Each dance was performed to the beat of hip-hop artist Usher on command from a now-fired Summit County deputy.

The inmate prize: use of a jail microwave.

The charges are revealed in an internal affairs report released Wednesday. Deputy Dominic Martucci, 35, was fired for violating the department’s policies, including a mandate that inmates be treated humanely.

Martucci is accused of ordering five inmates dance to Usher’s Yeah! song and then inviting other deputies to watch during an early evening shift on April 11. The inmates danced their way to regaining use of a microwave that they had lost earlier that day.

Another inmate won the right to use the phone and commissary items for his old-school robot dance routine. Martucci blared the music from a smartphone, the report said.

“I did what I had to do so I could use the phone,” the inmate told investigators. A family member had died and he needed to contact relatives, he said.

At one point, Martucci signaled a fellow deputy to watch the dance.

“Stop and watch this, it’s going to be funny,” he said, according to the report.

One inmate said as many as five deputies looked on during the dance. They were also looking to make sure a supervisor was not nearby, investigators said. The inmate said some dancers were rewarded with commissary items, but not him.

The inmate was told he “messed up” and faced a trip to the hole. The inmate alleged Martucci demanded he dance “one minute to my liking.” The inmate was eventually let out of lock down, the report shows.

The allegations came out through an inmate’s memo to a sergeant sent days later.

“[Martucci] told the inmates that if they wanted out of lock up and the microwave back, that they would have to dance for him,” an internal affair report noted. “He let out the [five inmates] and told them to entertain him by dancing…”

Martucci was suspended April 23. This week, Sheriff Drew Alexander fired the deputy on departmental charges of mistreating the inmates, misconduct and having a cell phone in the jail.

An appeal is expected, but neither Martucci nor a union official could be reached for comment Wednesday. Alexander was not available for comment.

“The community needs to be assured that all inmates that come the doors of the Summit County Jail will be treated humanely and with respect,” said sheriff’s spokesman Bill Holland. “All allegations to the contrary are thoroughly investigated. Any member of our agency that does not share this philosophy will be disciplined accordingly.”

In his defense, Martucci told investigators he forced the inmates to dance in order to regain day room privileges lost earlier in the shift. The inmates did not touch each other.

During the internal investigation, investigators said Martucci admitted his actions were wrong, but that he intended only to “lighten the tension” in the jail pod.

Another deputy who saw the dancing said the inmates were laughing during the song.

Martucci tenure with the department has been marked by controversy. In 2006, he was accused with four other deputies in the 2006 death of jail inmate Mark D. McCullaugh Jr. After one deputy was acquitted of murder, charges against Martucci and three other deputies were dismissed in September 2008.

Martucci’s father, Frank Martucci, is a retired Akron police officer and ran unsuccessfully in March as a Democratic candidate for sheriff.

Phil Trexler can be reached at 330-996-3717


More can be found at original article:



“Harmless” TSA Milimeter wave body scanner destroy’s diabetics insulin pump

Diabetic teen upset with TSA screeners at Salt Lake City Airport

Updated: 5/07 10:23 pm | Published: 5/07 8:03 pm
Reported by: Don Hudson
  • SALT L AKE CITY (ABC 4 News) – A Colorado teen is upset with screeners at Salt Lake City International Airport. The type one diabetic says TSA agents were abrupt, rude and were responsible for breaking her $10,000 insulin pump. A pump she has to have to survive.

Savannah Barry is mad and on a mission. She wants travelers to be warned before they walk through TSA security. “They need to get with the program and have some education across the board for TSA.” After participating in a DECA conference in Salt Lake City with several classmates last week, Savannah, who is a type one diabetic and wears an insulin pump 24 hours a day, says she ran into TSA agents who were not prepared to deal with her medical situation. “I went up to the lady and I said, I am a type one diabetic. I wear an insulin pump. I showed her the pump. I said, what do you want me to do? I usually do a pat down – what would you recommend?”

Savannah then showed agents a doctor’s note explaining that the sensitive insulin pump should not go through the body scanner. She says she was told to go through it anyway. “When someone in a position of authority tells you it is – you think that its right. So, I said, Are you sure I can go through with the pump? It’s not going to hurt the pump? And she said no, no you’re fine.”

The 16-year-old walked into the scanner with some serious reservations “My life is pretty much in their hands when I go through a body scan with my insulin pump on.” She was right to be worried. She says the pump stopped working correctly. “Coming off an insulin pump is rough. You never know what is going to happen when you are not on the insulin pump.”

She says TSA agents then made the situation worse when they didn’t know what to do about her juice and insulin. “She said, because we don’t have the machines to scan the juice to make sure this is not an explosive we do have to do a full body pat down and search your through your bags.” Of course, that’s what she wanted in the first place, but it was too late.

Savannah believes TSA screeners need more training. And she says, until that happens – people with medical conditions need to be warned. “It’s unacceptable. And I don’t want other people to feel the way I felt.”

We asked TSA about the incident. We received an email that says “TSA is reviewing the passenger’s screening experience and will respond directly to the family. TSA works regularly with a broad coalition of disability and medical condition advocacy groups to help understand their needs and adapt screening procedures accordingly.”
TSA also has a tollfree hotline for passengers with medical conditions. They can call it before hand to find out about policies and procedures. 1-855-787-2227.

Savannah (see picture) already has a new insulin pump. A company that heard her story quickly got it to her when she got back to Colorado.

More info and video at the original article:

At least your Mom wasn’t this bad…

In honor of Mother’s day, I present to you the 2012 finalists on our Mother of the Year awards…


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Rand Paul has a quick fix for TSA: Pull the plug

By BURGESS EVERETT | 5/3/12 6:32 PM EDT Updated: 5/5/12 11:33 AM EDT

Rand Paul has a reform plan for the Transportation Security Administration: Scrap the whole thing.

A personal message from Paul (R-Ky.) came atop emails this week from the Campaign for Liberty Vice President Matt Hawes, asking for readers to sign a petition in support of Paul’s “End the TSA” bill. A Paul spokeswoman said that legislation is being finalized next week.

Paul was stopped by the TSA before a flight from Nashville earlier this year,  causing him to miss a flight — and a big speech at the March for Life in Washington. Paul referred to the incident in his fundraising email.“Every inch of our person has become fair game for government thugs posing as ‘security’ as we travel around the country. Senator Rand Paul has a plan to do away with the TSA for good, but he needs our help,” reads the petition, which also asks signers to “chip in a contribution to help C4L mobilize liberty activists across America to turn the heat up on Congress and end the TSA’s abuse of our rights.”

“The American people shouldn’t be subjected to harassment, groping, and other public humiliation simply to board an airplane. As you may have heard, I have some personal experience with this, and I’ve vowed to lead the charge to fight back,” Paul wrote at the top of a C4L fundraising pitch, according to blogs that received the email. “Campaign for Liberty is leading the fight to pressure Congress to act now and restore our liberty. It’s time to END the TSA and get the government’s hands back to only stealing our wallets instead of groping toddlers and grandmothers.”

“In 2011 alone, the Transportation Security Administration’s 50,000 Transportation Security Officers screened more than 603 million passengers at 450 airports across the country and stopped more than 125,000 prohibited items at airport checkpoint, including over 1,300  firearms,” the TSA said in a statement provided to POLITICO. “Eliminating the agency charged with protecting the very system that continues to be a target for potential attack by our adversaries would directly undermine security. While TSA does not comment on pending legislation, it looks forward to working with Senator Paul on sensible proposals for enhancing security and improving the screening experience for passengers.”

Paul’s spokeswoman said in an email that in addition to the “End the TSA” legislation, Paul is working on “multiple” TSA bills, including one to privatize the service as well as a passenger bill of rights. Ending the TSA has been a presidential campaign plank of Rand Paul’s father, Rep. Ron Paul (R-Texas), who started the political organization C4L. And last week, Rep. Paul Broun (R-Ga.) called on TSA Administrator John Pistole to step down.

More at the original story:


Climate model predictions are wrong, so their hypothesis are wrong.

Climate Science Not Settled Nor Rock Solid: Quicksand Is Better Analogy

by DR. TIM BALL on APRIL 29, 2012


Danielle Smith, leader of Alberta’s Wildrose Party possibly contributed to her election defeat when she said about climate change,

“We have always said the science isn’t settled and we need to continue to monitor the debate.”

It’s an accurate and reasonable statement, but triggered inaccurate and unreasonable responses, which fall into some of the categories identified by Christopher Moncton. Here are four of them.

1. “The Greek philosopher Aristotle, 2300 years ago, listed the dozen commonest logical fallacies in human discourse in his book Sophistical Refutations. Not the least of these invalid arguments is what the mediaeval schoolmen would later call the argumentum ad populum – the consensus or headcount fallacy.”

2. “Ah,” say the believers, “but there is a consensus of scientists and learned societies.” That is the argumentum ad verecundiam, the reputation or appeal-to-authority fallacy.”

3. “But it’s only if we include a strong warming effect from Man’s CO2 emissions that we can reproduce the observed warming of the past 60 years. We cannot think of any other reason for the warming.” That argument from the UN’s climate panel, the IPCC, is the argumentum ad ignorantiam, the fallacy of arguing from ignorance. We do not know why the warming has occurred. Arbitrarily to blame Man is impermissible.”

4. “We tell the computer models that there will be strong warming if we add CO2 to the air. The models show there will be a strong warming. Therefore the warming is our fault.” This is the argumentum ad petitionem principii, the circular-argument fallacy, where a premise is also the conclusion.”

Andrew Weaver, one of Canada’s top climate modelers, recently said about climate science,

“It’s more than firm, it’s as solid as a rock,” “The scientific community has used the word unequivocal.”

“There are thousands of scientists working on this problem and if there was an Achilles heel to it, one person would find it. This is lowest common-denominator rhetoric.”

These are classic argumentum ad verecundiam (2) or consensus arguments, which I wrote about here. Thousands of scientists are working on the problem and they’ve found a multitude of Achilles heels. Here’s recent commentary on one of the most egregious, the omission practice of leaving out variables or data.

If Weaver is referring to the Intergovernmental Panel on Climate Change (IPCC) people they have a vested interest in perpetuating the IPCC version of climate science, best illustrated by Joanne Nova’s telling cartoon.

But there’s a more telling scientific reason why IPCC science isn’t rock solid and quicksand is a better analogy. A basic definition of science is the ability to predict. IPCC began making predictions but quickly switched to projections based on different scenarios. Regardless of terminology the public understand they’re predictions, as they’re supposedly scientifically derived prognostications. Regardless of terminology they’re all produced by computer models and are all wrong.

There’s much literature, including peer reviewed articles, analyzing what’s wrong with the models and others identify failure of the models. Dr Clive Best’s projections compare actual temperature records with the 1990 predictions and show even the lowest is wrong. A second graph adds CO2 change and how it separates from temperature in 2000; the point at which global warming became climate change.

Two problems guarantee failure of the IPCC work. The anthropogenic global warming (AGW) hypothesis is based on incorrect assumptions, which are built into the computer models. For example, a CO2 increase causes a temperature increase, when the opposite happens in every record. IPCC projections continue to follow the CO2 record after 2000 that indicate it’s integral to their calculations. It’s a classic argumentum ad petitionem principii, or circular argument (4). It also fits the common observation about computer models – garbage in, garbage out (GIGO). I prefer with IPCC models it means, garbage in, gospel out.

Professor Richard Feynman, Nobel Laureate in Physics said,

“It does not matter who you are, or how smart you are, or what title you have, or how many of you there are, and certainly not how many papers your side has published, if your prediction is wrong then your hypothesis is wrong. Period.”

Climate predictions are consistently wrong, so the hypothesis is wrong and the computer models built on it are wrong and produce meaingless results. Failed predictions indicate climate science remains unsettled. Corollary of the settled, solid rock arguments are that we can eliminate IPCC, or is that a reductio ad absurdum argument?


Original article here:

Global Warming predictions on plants off by a factor of 8 – what else is wrong?

Scientific models are failing to accurately predict the impact of global warming on plants, says a new report.

Researchers found in long-term studies that some are flowering up to eight times faster than models anticipate.

The authors say that poor study design and a lack of investment in experiments partly account for the difference.

They suggest that spring flowering and leafing will continue to advance at the rate of 5 to 6 days per year for every degree celsius of warming.

The results were published in the journal Nature.

For more than 20 years, scientists have been carrying out experiments to mimic the impacts of rising temperatures on the first leafing and flowering of plant species around the world.

Continue reading the main story

“Start Quote

The bottom line is that the impacts might be bigger than we have believed until now”

This RutishauserOeschager centre for Climate Change Research

Researchers had assumed that plants would respond in essentially the same way to experimental warming with lamps and open top chambers as they would to changes in temperatures in the real world.

Very little has been done to test the assumption until this study lead by Dr Elizabeth Wolkovich, who is now at the University of British Columbia in Vancouver.

With her colleagues she studied the timing of the flowering and leafing of plants in observational studies and warming experiments spanning four continents and 1,634 plant species.

According to Dr Wolkovich, the results were a surprise.

“What we found is that the experiments don’t line up with the long term data, and in fact they greatly underestimate how much plants change their leafing and flowering with warming,” she said.

“So for models based on experimental data, then we would expect that plants are leafing four times faster and flowering eight times faster in the long term historical record than what we’re using in some of the models.”


more at the original article: