Economics & The Economny

  • Social Security is not going broke | David Cay Johnston
  • Double trouble at JP Morgan: trader’s losses could exceed $7bn – Americas – World – The Independent 

    The crisis at JP Morgan escalated yesterday as it emerged its trading losses in London could rise to as much as $7bn… as JP Morgan struggles to unwind the massive bets made by the so-called “London Whale” trader Bruno Iksil.

    In a further blow, chairman and chief executive Jamie Dimon has suspended plans to use the US bank’s own funds to buy back $15bn worth of shares. Buybacks are a popular way for firms to use up cash sitting on the balance sheet and prop up the share price.

    JP Morgan shares tumbled 82 cents or 2.45 percent to a new six month-low of $32.67. The bank’s value has fallen by a quarter in a year.

  • The Simplicity Solution – NYTimes.com

    …Will the law prevent another bank bailout if we have a repeat of September 2008? Will it bring transparency to the trading ofderivatives? Will the Volcker Ruletruly eliminate the ability of banks to make risky trades for their own account? Are all the new regulations burying small and medium-size banks in excessive costs? Or are they ensuring their safety and soundness? No one can say for sure.

    The crucial difference between the Glass Steagall Act, the landmark banking reform law that was passed during the Great Depression, and Dodd-Frank, is that the former had an appealing simplicity that Dodd-Frank lacks. Glass-Steagall did one basic thing. It forced banks to get rid of their investment banking arms. Dodd-Frank, by contrast, accepts the complexity of modern banking — and then adds to that complexity with its thousands of pages of regulations. That complexity is something to worry about. (read the complete article…)

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