The Doc will be spending Mother’s day with his Mom, his Grandmother, and Mrs. Doc prior to making the road trip back home, so posting will be sparse today.  Feel free to use this as an Open Tread regarding any topic- particularly the JP Morgan derivatives crisis, which appears to be worsening by the hour.
Rob Kirby stated yesterday that JPM’s losses are actually $18 billion, just a little higher than the $2 billion admitted by Mr. Dimon on Thursday’s conference call.
Today, The Doc’s sources have informed him that the total losses already sustained by JP Morgan are in fact in the range of $100 Billion, and that JPM is toast within two months.

OPEN THREAD

  1. 2oz & Mammoth 

    Happy mothers day.
    We are all in the same boat with this being our first year without our mothers. It’s hard not planning the things we would do for them, but there always on our minds. Nothing can ever take that away.
  2. Happy Mother’s day to all of you with Moms, who are Mom and are celebrating this special day.  And especially to silberbullion’s wife with their new baby. 

    JPM? Who know’s   What is hitting JPM is going to hit several other of our large banks. JPM is in a unique position of being the financing arm of the Fed and indirectly the USG.  They probably won’t be allowed to fail in the traditional sense, like Bear, Lehman or Merrill; sold off in parts or allowed to go under.  They are too important. But perhaps the imfamous silver book that’s killed the last 3 days might be allowed to expire or taken over by the government.  If the UST takes it over that will probably be good for us since the government can’t govern seem to effectively govern any part of its units as have been made clear by the GSA, Secret Service and TSA, DHS and Justice Department. When it involves money, the mice will pay and invariably make the situation worse.  If the government was in charge of deserts, we would have a shortage of sand in 3 years. 

    If the silver book was transferred to another bank, the incompetence would extend to that institution and who knows what would happen   Everyone who handles silver trading gets burned.  Stack it.

  3. 4oz did I miss that story?  Can you post a link.  I don’t remember reading anything from the Doc on that one….maybe his small stacker week at 2.69 eagles and 3.99 shipping put a dent into the sales

  4. ”last 3 days’  was supposed to be ‘last 3 banks’   On why 300 Silver AE not sold.  People who don’t have money arent buying  People who do have money follow the prices and are seeing the price drop like a rock  Wait until a spike in price and those eagles will fly off the shelves.  Same thing is happening at the mint. Sales are off even with prices down. No one wants to catch falling knives

  5. AGXIIK

    Your right on in that point. The ? is who will take it over if JPM needs to pull it’s self from doing it. Maybe the Fed them selves will have to, this way our government will have clean hands. (Sort Of)
  6. SilverOne - Doc stated open thread so I’m telling everyone that I watched 300+ silver eagles and 300+ maples sit on the shelf for sale in an Austin, TX coin shop for over a week about three – four weeks ago. I was away so I couldn’t buy but watched the inventory online. They update at least once a day. Surely I’m not the only stacker in a million+ population that would buy whatever I can afford at any price. Take San Angelo, TX on the other hand for example. It’s a much smaller city with obviously more stackers per capita because not even one ounce of any bullion sits on the shelf over night EVER. It comes in. It goes out.

    So again I ask. Is it possible there are really that few of us?

  7. DOC…. when you get a chance, can you describe the SOURCES that have informed you of the $100 billion in loses.  I realize you not be able to actually give their names, but what is their rank and position?

    Do they really believe JP MORGUE is toast in 2 months?  I heard the same sort of thing in the interview TURD gave with JIM WILLIE on Friday.

     

  8. Happy Mothers Day to all you mom’s.

    Thank you 427 for the wonderful thought. Like you and Mammoth and all the others who have lost their mom’s, we will never forget. Our love for them will always be.

  9. Great post AGX. Great question SRSrocco. I’d like to know about the $100 Billion too. Will the banks fail by June or July as predicted by Sinclair? (Or was it BIX, I forgot and can’t keep all the info. in my little pea brain).

  10. First, Happy Mother’s Day to all.

     

    ~40oz… maybe there are that few stackers.  I dunno.  I’m a relative newb, just starting this year… finally “woke up” to reality and setting in SOMETHING for when SHTF.  I know I’m behind, but I’m still probably ahead of 98% of the folks out there, so when SHTF… those of us with 400, or 40, or even 4 0z… are going to be much father ahead than those who have so much fiat (if that) and nothing else of actual value.  I guess they’ll be set for toilet paper if nothing else.

     

  11. Sat 12 May 2012

    Fallout from JP Morgan trading losses, which led to rater Fitch downgrading their debt yesterday, aren’t the only financial worries the banking behemoth is facing. Nestled in that shocking 10-Q filed Thursday is an admission that their regulator, the Securities and Exchange Commission, thinks some of the details that lead to the explosive Ambac mortgage security fraud suit against the naughty stepchild of JPM, Bear Stearns/EMC, are worthy of an enforcement action. Yep- the SEC is giving or finally gave them a Wells Notice, which means according to their 10-Q (and their 10-K) in January 2012 the SEC’s investigation into the sins of Bear’s Mortgage team run by Tom Morano, Jeff Verschleiser, Mike Nierenberg and the subsequent cover up by JPM was worthy of a civil suit along with some penalties.

    JPM’s 10-Q states “In January 2012, the Firm was advised by SEC staff that they are considering recommending to the Commission that civil or administrative actions be pursued arising out of two separate investigations they have been conducting… In both investigations, the Firm has submitted responses to the proposed actions.”

    It’s black letter law that Wells submissions to the SEC are discoverable in civil litigation. So lawyers in the monoline suits against JPM/BEAR will surely be trying to get a copy of the wells notice via discovery.

    I first reported the SEC started an investigation into these alleged securities violations (and possible criminal actions) after I saw the securities regulator approach the lawyers and whistleblowers in my Bear Stearns investigative report at The Atlantic the day after the story came out. Now a year later it appears all the ‘shitty deal’ emails, internal Bear Stearns documents, and over thirty whistleblowers who’ve come forward in the monoline suits lead by the New York office of law firm PBWT was enough to get the SEC to stand up to JPM and we think say ‘what you did violated securities laws and harmed investors’. Talk about another wave that could lead to tsunami style damage to Jamie Dimon’s ‘fortress balance sheet’.

    How many billions in damages JP Morgan will have to pay out is not yet determined but inside their Mortgage-Backed Securities and Repurchase Litigation note on the 10-Q the bank tells us “There are currently pending and tolled investor and monoline claims involving approximately $120 billion of such securities.”

    WOW that means investors think there was a heck of a lot of very bad mortgage securities that were packaged and sold and they want their money back along with some fines and are willing to spend a few million to pay expensive lawyers to sue for it. When I first reported on the Ambac case and went on RT’s The Keiser Report to explain what kind of financial trouble JPM could be in the damages in the monoline suits against Bear were only around $1.2bn. I told Max Keiser if fraud claims survived the suit that means punitive damages get lobbed on and who knows many billions JPM will have to pay out because allegedly emails showed Bear mortgage traders stole billions from their own damn clients. I threw out a number, $10bn, that JPM could be looking to pay. Now according to JPM’s latest SEC filings there are now “seven pending actions commenced by bond insurers that guaranteed payments of principal and interest on approximately $5 billion of certain classes of 21 different MBS offerings.”

    The face value amount of securities tied to the monoline suits against JPM are significant because there was a recent ruling in a Countrywide RMBS suit that ruled if plaintiffs can prove there were miss-representations in the bonds then the entire amount of the bond has to be bought back…not just the amount that defaulted or caused a loss. Reuters legal columnist Alison Frankel explains the judge’s decision and impact here. It has a lot to do with the way insurance laws are structured in New York State, which is where all the monolines suing have headquarters.

    So far we haven’t seen JPM settle any of these mortgage putback suits including the government’s housing regulator’s whopper of a suit filed this winter against a bunch of banks including JPM. The government’s outside counsel who filed the FHFA suit literally copied the fraud and breach of contract claims Ambac had laid out against JPM and since then we’ve seen a multiple of big boy institutional investors file similar suits. Thus the alarming $120bn number of possible rmbs repurchase litigation damages JPM was forced to detail in their recent 10-Q. A number which accompanies a series of motions their expensive lawyers at Sullivan & Cromwell and Greenberg Traurig have filed to slow down discovery and deny, deny, deny these aggressive fraud claims in the triple digit billions.

    And now that the SEC is about to come out and stamp a ton of merit to these civil investor lawsuits via an enforcement action that hopefully says – you guys broke the law, abused free markets, and seriously broke investor trust — then it’s looking harder and harder for JPM not to settle these investor lawsuits in the mega billions. Just think if Ambac actually got to trial and a main street jury who’s pissed very few bankers have gone to jail for the financial crisis heard some of the whistleblower testimony about senior Bear executives telling underlings to make up mortgage info for the raters. Or the third-party due diligence reports Bear got them to fudge – reports investors relied on as due diligence rubber stamping the quality of the rmbs securities. I’d image punitive damages up the yin-yang would be awarded.

    But the most telling sign JPM will have to payout big time is that HUGE jump in litigation reserves they snuck in this week. In the bank’s first quarter earnings press release, filed on April 13th, JPM told investors they were adding $2.5bn to existing litigation reserves for mortgage-related suits. And then three weeks later while all my jurno peers are focused on writing stories about what JPM’s trading screw up means to their reputation, their master public relations spin machine figures lets thrown in all the bad news we can cause we know the market will punish our stock. So they added on another $1.7bn in litigation reserves for a total hit to income of $4.2bn. That’s more than 4 times the net amount ($800 million) they claim they lost on their bad corporate bond trade.

    On top of that I’ve seen top housing analyst Mark Hanson tell hedges funds they might want look at how JPM repurchase risk will affect net income and thus the stock price. Francine McKenna, former Big 4 auditor and influential columnist for American Banker told me this is just the first phase. Accounting rules allow JPM to slowly add each quarter to litigation reserves and take smaller hits to net income than waiting for a big money suit to finalize and wipe-out a whole year’s earnings. Some financial editors like Joe Weisenthal at Business Insider allowed his team to write the $4.2bn addition to litigation reserves was due to trading loss but that’s not what the 10-Q explains. Number one these are reserve additions for events up to March 31st and JPM worrisome trading loss began in April. Number two the bank has to explain all the litigation that gets to that reserve number and there is not a word about suits from trading losses in their 10-Q litigation notes. Nope this big jump was from progress being made by rmbs plaintiffs and a looming SEC action which you see if you know how to read the litigation notes.

    McKenna, founder of http://www.retheauditors.com says, “Banks tend to account in one lump litigation reserve number what they think they will have to payout from a suit but that’s really a disguise so that no one across the table from the litigation can see what they might be willing to settle for.”

    There is another dirty accounting trick JPM is possibly playing with here. McKenna told me in an interview this week reserves are like a cookie jar, banks can increase and decrease this balance sheet number each quarter which shows up as a loss or earning to net income. So let’s say Jamie Dimon thinks the mark-to-market loss of $800 million he just took for the trading screw up is going to be a lot more when they are done unwinding the trade. The bank they could lower their litigation reserves and boom that trading loss doesn’t look so bad on next quarter’s net income. Then going into Q3, when say maybe they settle with the SEC and the rest of the Street wakes up to how many billions they will have to pay out for the sins of Bear Stearns RMBS fraud, JPM can just re-up the litigation reserves. Now of course their Big 4 auditor has to allow them do this by signing off on the SEC financial filings but part of the Abmac suit filed last January showed PricewaterhouseCoopers tried to stand up to JPM/Bear accounting tricks before and the bank just ignored it. A detail the lawyers at PBWT discovered for us. In that case it would be up to the SEC to say ‘Hey JPM your RMBS repurchase risk is more than you are accounting for and you’d better represent a more realistic number.” This in turn hurts JPM’s income and also can lead to additional downgrades by the raters, so an accounting scolding by the SEC on top of an enforcement action might not be something they’ll man up to. But clever analyst and hedge funds will see it and the result could be free market participants take a club to the CEO, who the financial press once hailed America’s angle banker, all on their own.

    Editors Note: When the Bloomberg/ Wall Street Journal editors figure out I’ve beat them to this story and reported JPM got a Wells Notice for mortgage securities no-no’s I’d like to remind them jurno standards mean you need to credit Teri Buhl for reporting this first. Thanks in advance to Matt Taibbi at Rolling Stone and Max Keiser at RT who always link and mention the Bear RMBS fraud cheating their own clients news created a whopper of a problem for JPM, was a result of my original reporting at The Atlantic. Here is a shout out thanks from me to Daniel Indiviglio, my editor at The Atlantic, who understood the importantence of impact to the market in this story back in May 2010 and made sure it got published. And most important I’d like to recognize Nick Verbitsky, doc film maker of Confidence Game, a move now playing about the greed and fraud that lead to the downfall of Bear Stearns, for finding the first whistleblowers to speak out against the Bear Mortgage executives. Awareness of how these Wall Street titans cheated and stole damaging free markets was a result of investigative journalism and the PBWT attorneys not our regulators figuring it out first.

  12. Dead on Aragornsos. A lot of people will have to sell their wife’s and their own jewelry when SHTF just to get by. This will be sad as a lot of family heirlooms and memories will be lost to survival. Hopefully we, on the other hand, may be able to get by with our stacks. It’s never too late to stack and I’m glad you started. For you new people here, accumulations adds up. I try to get no less than 2 OZ. per week and when I get a little extra fiat I stack a little heavier. 2 oz. per week adds up to 112 oz. per year. I started in 2010 so I building slowly but steadily. Keep stacking.

  13. God Bless all the MOTHER’S out there. God Bless DOC, BULL, & Crew, & All of Us surrounding the Doc Family. I’m thankful to have found such a great community of people. I’m also proud & honored to be apart of this. Thanks everybody, GODSPEED 

  14. Who dares to take over jp Morgan.. Hmm. Maybe nationalize is the only choice. They have to square their books aka cover their shorts before being taken over. Like they took over bear sterns. Bear covered they shorts half way when jpm took over and slam silver price back to single digit.

    With the east waking up they are going to use this dollar strength to liquidate some of their dollars, dxy seems to be stuck at 80 max maybe 82. I have a feeling next week might be down to at least $27.80 before it might bottom. IMO 
    Bear in mind, all main stream media at smashing precious metals, changing it from heaven buying to risk off trade? And down goes gold together with silver, especially streaming news service the news I see can only be negative about gold. When gold is raising there seems to have no news how absurd. Totally. when gold is smack 0.5% silver got smack 1%. Have seen this for awhile for the last 6 weeks or so. 
    Remember like mike Maloney said, do not leverage to buy gold or silver. He has not seen anyone made money when you use leverage to buy precious metals. Keep your books unleverage or leverage 10% for the fun if it when dealing with precious metals.
  15. @ 40 oz.  Never underestimate the stupidity of the brainwashed American sheeple.  They will get a lesson in sound money soon.  Chinese, Indian, Turkish, and other sheeple around the world understand crooked banks and stacking.  Someday we will too, after we get burned enough.  I’ll bet not one American in 1000 is a stacker. 

  16. The truth is yes, we are a small, small minority.  We are way less than 1%.  That’s why when the clowns come out with there bull markets over crap, it’s ridiculous.  Just imagine if 3% of the population woke up.  Those coins have your name on them 40oz.  My local dealers premium’s way to high but all he pretty much does is buy gold and sell stamps.  He’s got a ton of eagles.  

    I’m real grateful my mom is alive today.  She had sudden cardiac arrest a couple years ago and has a bit of brain damage today but I love her a lot.  It felt good giving her a nice card and not being a screw up anymore.  Me and my dad got her a kindle too.  Happy mothers day everyone.
    P.S. I just listened to turd interview Jim Willie and Willie says the east is bleeding the bankers dry of metal and are making the price go lower and lower and buying hand over fist.  The gld and slv will have no metal.  Why does the gld and slv premiums go down?  If they were backing it with metal the premiums would go up like we’ve seen with Sprott’s funds.  Later everyone have a good day.
  17. 40OZ – In response to your question about how many PM bugs there are, here’s something to think about. I’d say that typical PM buyers are pretty in touch with world news/events, either because they’re paranoid about losing their shirts or paranoid about world events/conspiracies, or a bit of both. Paranoid people seek information, and I think that Zerohedge is arguably the biggest place for alternative economic news. If you look at the Reads for ZH articles, it varies on the juiciness/nitty gritty of the story, but in the newest 10 pages of posts the largest read count I found was 40,853. Let’s round that up to 50,000, and assume that a third of all PM bugs are too afraid of big brother to be on the internet, and the other third are old-timers who don’t use the internet, which makes 150,000 people. Let’s further assume that all those are in the US. And look at other PM sites – SD, TF, etc – all very small. I realize that this is just a bunch of assumptions, and I could be way off-base, but I think the answer to your question is not that many.

  18. NYT obit today for Truong Dinh Tran, Vietnamese immigrant who started a real estate empire with the purchase of the Hotel Opera on 76th St. in 1975 “with the gold the family was carrying on their backs”.  Sounds like he did pretty well for an “uncivilized” person, huh Charlie??

  19. That coin  shop with the 300 eagles  If the prices have dropped in the last few weeks it makes you wonder what their buy price is.    If they are following prices down, without an adjustment to markup over spot,  then their original buy price must have been really low.  The size of the sale at $10,000 or so is large for most people.  I expect that those in the know might be waiting for those AE’s to go down further before snagging them  A dollar here, a dollar there and pretty soon that adds up.

     PM buyers acquiring AEs in that quantity are probably pretty rare, like monster box buyers.  But people/sheeple are probably selling lots of coins and silver too, just to get some cash to survive.  Maybe those AE are display items, with sales of a few allowing the store owner to rotate their stock with newly acquired customer sales of AEs,retaining that $3 mark up.    Who knows.  That is a good price nonetheless. 

  20. Happy Mothers Day Moms – Cheers!

    40OZ – No, your not the only one. I look at the price in dollar terms, but I don’t really care that much about the dollar price. Talking about the dollar price just makes for a little something interesting in the small part of ‘what is money?’ conversation I might have with others. I look at the dollar as being worthless, lol. So I can say I am someone who accumulates whenever I can.

    There are still to many Keynesians out there, even as we come to the closing chapter of what has been the great Keynesian experiment. You might be interested in reading this latest article by Alasdair Macleod

    Gold bugs will be vindicated

  21. Happy Mothers Day All. If your Mum is alive enjoy her company every day off the year as it’s hard when your mum is know longer here but in a better place. I for one miss my Mum and I can still see her face clear as day. I sure miss all those backhands across the back of the head but I also remember those cute cuddles on a rainy day Lol. God I Miss my Mum. Happy Mothers Day Mum.

  22. 2Oz – amen to that.  I buy each week now, at least a couple ounces but more if I can (or when the price drops).  Wish I could afford to just buy a decently large bag of 90% all at once, but now that I have a fair amount of rounds and a few eagles, I’m going to start laying in some “junk” silver since it ought to help with buying regular necessities and sundries when/if SHTF.  Easier to give a couple dimes or a quarter than break change from a large bar or even rounds.  We’ll see… now that I have a basic understanding of the fundamentals, it’s easy to just buy no matter what the price is doing, ’cause I’m looking at it in terms of ounces not dollars. 

  23. I saw Jamie Dimon on Meet the Press this morning.  I think David Gregory must have complimented him 4 or 5 times in one 8 minute interview.  It felt like some peasant trying to talk to a ruthless dictator.  That Gregory guy is a massive shill.  I was waiting for a question about how in the hell all that MF Global money and silver ended up in Dimon’s company’s pocket, and when the rightful owners would get it all back.  Then I looked out the window and didn’t see pigs flying.  Oh, well.

  24. Thank you T,

    I’ve been thinking of my mom today but all is well.

    I think you have the right idea Aragornsos. Be careful with the junk bags as sometimes a number of the coins my be worn to the point of being unrecognizable. Looking at the number of ounces rather than in Fiat dollars is very important.

  25. UPDATE ON COMPLETE COST OF MINING SILVER

    In a previous post someone had asked me if I would do an update for my COMPLETE COSTS for mining silver in 2011.  I have just finished the calculations, and will send it to DOC tomorrow.  It should be out some time late morning or lunch.

    Here is the 2010 COMPLETE COST CHART from last years article:

  26. I think CPR’s assumptions are very enlightening so let’s run with 150,000 gold bugs for a minute. Roughly 1/20th of one percent of the American population (150,000 of 300,000,000 = 0.0005) is a very small number indeed. But then again, if there were over 500 stackers in Austin (0.0005 x 1,000,000+) buying bullion in person these days… well let’s just say there must be a whole lot less of us than 1/20th of one percent. Perhaps there are way more people talking smack than stackin’ it. No wonder they say if only 1% of the people were to wake up.

  27. JPM executives let go   Ina Drew She ran the risk management unit since 2005.  Achilles Macric, ran London desk responsible for trades. Javier Martin-Artajo, managing director for Macris team.   Does Doc’s mole at JPM know more about these people?  We should be hearing from that side of the s treet too.

      Whether this was Thinning the herd or sacraficial lambs?  we will know more monday or so.  But on Organ and ZH the consensus is that 2  billion is 1% of the value of JPM so why such a fuss and bother? The speculation is these losses are part of a $200 billion hedging portfolio with almost unlimited losses. That’s the London Whale’s prop trades. 

    With lots of blood in the water I bet there will be lots of Sunday  late night working the phones for trading this crap fiesta to Asia when their market opens.  Supposedly this stuff is unsellable but from the storyline Margin Call with Kevin Spacey, there will be sellers working the phones.   From the little I can understand about these exotic synthetic investments, there will be few buyers Monday.   JPM could be stuck badly in a few days.  Canning 3 top executives is a sign that  Dimon takes this whole thing really seriously, his job is on the line and there is a large hole to fill. 

     Greece may go toes up next week as well since they don’t have the Euros to  pay their two senior debt obligations due through May 15 and that includes the London law bonds that were not given a haircut.

      Oopsie.  JPM has some big exposures to Greek derivatives and CDS  so this should add to Jamie’s sleepless nights and hectic days.  Hubris is a Greek term?  Right?   HAHAHAHAHA.

  28. Thanks for the update reflector. I wonder though, were they just fall guys? I’ve got to believe Dimon wouldn’t sacrifice his money makers (or would he). I’m sure we’ll never know.

  29. 1 in 2000? croc I’m starting to think 1 in 2000 may be aware/becoming aware but less than 1 in 10,000 have a stack. 1/100 of one percent would be 100 people in Austin vying for a 2003 $50 MS 69 1oz Gold Eagle Coin PCGS American Heroes signed by General Tommy Franks for only spot plus 5% ($1631 + 5%). Yes it was $1712 that day, and sat on the shelf for two days before I could get there. TWO DAYS! So it seems to me there’s no way 100 stackers exist in this city of 1,000,000+.

  30. There are not very many of us in the US . . . total contrast to Turkey where nobody trusts banks and savers have squirreled away 5,000 tons of gold . . . they have learned over the centuries to NEVER trust the banksters when they say trust us, give us your money.  It is just common sense to save by buying gold and silver. 

  31. SRS, I am not at liberty to give out any info about the source stating JPM has lost $100 Billion unfortunately. He is completely convinced this will take down JPM, and I was told these are not potential losses, these losses have already occurred.
    I’ll keep everyone updated of any more info when I have the ability to share it.

    -Doc

  32. Hi All,

    Been lurking on here for a while, reading and learning.  I would like to thank Doc and all of you regulars for sharing the knowledge.  Most of the highly technical stuff goes over my head (well, actually it doesn’t, but the argument for phyzz is so well made already you would have to be a fool or in denial to disagree…..and I am busy).
    The other day I went into a dealers over here, paid a silly price (inc. tax)…..handed over a wad of paper, …..and came out with a pile of mint silver coin (all nicely plastic wrapped thank you)….and a smile.  I will be going back regularly to do the same.  Whatever the price I will keep on stacking.
    The stench and corruption grow worse and each week we are brought fresh news of even greater outrages, but the mob are befuddled by stupid entertainments and lead by the nose.  I fear for your once great nation, but perhaps the time will soon come for a Maximus Decimus Meridius to appear….There once was a dream that was America, it shall be realised.
    Happy Mothers Day!!

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