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This is cross-posted from my blog.

Lots of digital ink has been spilled about JP Morgan’s $2 billion trading loss. I don’t want to add too much more, except to call out one issue that I think has been downplayed through all of this: the notion that JP Morgan “lost” the money.

When most newspapers talk about the story, they use the words “loss” and “lose” (search for “2 billion loss” on Google News and you will get almost half a million results). But this is wrong. The money didn’t get “lost”. It didn’t disappear down a hole, or get shredded, or get burned in a fire. It simply went to other people making the opposite bet than JP Morgan did. It was a pure transfer of money, and a lot of people are now collectively two billion dollars richer.

This is the real issue here: this is nothing more than gambling. One set of rich gamblers lost a large sum of money to another, no more. Neither group, it should be said, is terribly interested in taking that money and creating jobs: it’s about making more bets. Had the money been “lost” such as by dropping bags of dollar bills at random in this country, allowing people to spend it, the economy would be a lot better off.

What people should be upset about is not the nominal dollar amount, but that this kind of gambling exists at all with little oversight and in a way that destabilizes our financial system.

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Comment Preferences

  •  That and the fact (2+ / 0-)
    Recommended by:
    Youffraita, The Angry Architect

    that we the people had to anti up the TBTF all for another round and they are still free to continue with their nasty economic disaster games. They get bailed out and we got sold out. Where's 'Glass Steagall' or some trust busting we need it now!  

    •  Oh, yeah (1+ / 0-)
      Recommended by:
      shaharazade

      If we still had Glass-Steagall, that two billion dollar gamble might have been illegal.  I don't know...but that's the sort of thing Glass-Steagall was enacted to prevent.

      And Jamie Dimon has been the loudest mouth among the "No Regulation!" crowd.

      He should be fired.  At the VERY least.

      To make the argument that the media has a left- or right-wing, or a liberal or a conservative bias, is like asking if the problem with Al-Qaeda is do they use too much oil in their hummus. Al Franken

      by Youffraita on Tue May 15, 2012 at 06:08:03 PM PDT

      [ Parent ]

    •  Yes, neither winners, nor losers... (2+ / 0-)
      Recommended by:
      doctorgonzo, shaharazade

      are contributing a goddamn thing to the good of the common people of the world.

      Yes, the Diarist makes a good point: Trading is a zero sum game. Somebody went home happy, while Jamie Dimon cried his crocodile tears, knowing full well that his Fed full of cronies would insulate him from the consequences of his own mistakes.

      Wealth transfer from one rich asshole to another...While Rome burns....


      The important and difficult job is never to find the right answers, it is to find the right question. For there are few things as useless–if not dangerous–as the right answer to the wrong question. -- P. Drucker

      by The Angry Architect on Tue May 15, 2012 at 06:10:30 PM PDT

      [ Parent ]

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