Friday, May 11, 2012
Risky Systems, Dire Consequences...
Yesterday night a somber CEO had to announce publicly that his bank had lost U$2B dollars in set of complex synthetic derivatives trade,
This CEO is no ordinary CEO but the king of Wall Street, Jamie Dimon, one of the most astute bankers around. The bank went through the financial crisis unscathed but suffered heavy losses last week when a unit of the bank took on complex derivative positions that resulted in unexpected losses:
“This portfolio has proven to be riskier, more volatile and less effective as an economic hedge than the firm previously believed,” - Jamie Dimon, CEO JP Morgan.[Link[
If Jamie Dimon and his bank can't figure the risk they were taking, how will the rest of us ever fully appreciate the risks we are exposed to? ….
The above is written by Lucky Tan in his Diary of a Singaporean Mind blog. It tells a lot about the kind of snake oil being introduced into the financial markets around the world and how the world blindly bought what the Americans sold. Singapore is one of them. China must resist all it can from being duped by the Americans. It is just not worth whatever returns there is. It can ruin financial institutions and the whole stock market. Only duds who think they know best or are gullible enough to believe the American’s sales pitch will go in with eyes wide shut.