Think about it this way. If you had a business selling cars, and the government offered to be the warranty on your cars guaranteeing any needed repairs are paid for, could you sell more cars? You’re damned right you would be selling more cars! Would you care whether or not they were in perfect condition? Hell no! Of course not because the government would cover your butt and the customer would get the car they want fixed up anyway. Everyone’s a winner, right?

Do you understand the perverse incentive system created by government incentives for home ownership? It’s no different. This is what is called an incentive trap. Many, many government programs and ideas create incentive traps. Once you learn what they are, and then begin to spot them, that’s the time when you become very skeptical of politician’s ideas to “help” people.

Guys on the left like to blame “greedy bankers”. Guys on the right like to blame government. The flat out truth is that BOTH are to blame. Government comes up with stupid ideas and tries to manipulate the free market. That ALWAYS ends badly. But the bankers should know better and maintain levels of integrity and responsibility in their lending practices, no matter what the stupid politicians tell them. But, they let their greed get the better of them and the went betting in a high stakes game in a house of cards. Funny thing is, you will NEVER hear a politician tell you that it all started with their stupid ideas of increasing home ownership.

There were a great number of banks that had no problem with the housing crisis because they never veered off the course of responsible lending. Most of them were small, local or regional banks. I hope you have your money in that type of institution.

Hope this helps.

Have a nice day!

I think the point I was trying to make was NOT that $2B is not alot of money. It is. But in the big picture of the bank, it’s really not a problem to absorb it. And by the way, the trade was not a one day event. The bank and the trader in charge of this particular bet were getting into this over a long period of time. Here is a good place for you to go learn about how this unfolded and how it works:

If you Google “JPMorgan’s Trading Loss Is Said to Rise at Least 50%” it will give you a NY Times link which takes you to a section they have called “DealBox”. It will also give you good info on the nature of the risks that the bank took, which legitimately they should not be taking if they are a depository institution unless such trading is done through separate legal entities, in my opinion. But again, in the end, they are projected to make $6B in profit this Qtr, so in the big picture, it’s not a big deal. it is a good lesson, though.

I hope you have a wonderful weekend, Joy!

1) A $2B loss in a PRIVATE company that generates $19B a year in Net Profits is not a big deal, unless you are a shareholder. Even then, it’s a blip on the radar screen of the company in the long run. It’s why your leftist hero Buffett is buying their stock now.
2) No one “PAYS” for their losses except them. What a fool like you has no idea of is that investment banks trade on THEIR OWN ACCOUNTS WITH THEIR OWN MONEY…. Unless of course your name is Jon Corzine and you’re buddies with Obozo and Eric “The Incompetent” Holder… then you can cover your bets illegally with customer money and get away with it.
3) As stated in number 1 above, JPM is NOT losing money. Only an idiot like you would make such a statement in a public forum and NOT check your facts on Google Finance or where ever before you make such an assertion.
4) There is NO SUCH THING as bonuses that are excluded from taxation. They are taxed like regular payroll checks, you dope! I can tell that an idiot like you has probably NEVER earned a bonus before in your miserable existence!
5) uhhhh… hey STUPID!!!!! Obozo has been the one running us into bankruptcy. He took office with $10T in debt and 3.5 years later we are $16T in debt. NO ONE has ever spent like Obozo spends.

Even your misspelling of the word “bankruptcy” is a clue that maybe a useful idiot like you should not be sharing your deep lack of intelligence with the public!

I am sorry to be offensive, but you need a wake up call, dude!

Have a nice day!