The Golden Truth: Quickly, Just For The Record On JP Morgan's "Huge" Earnings:

Wednesday, October 14, 2009

Quickly, Just For The Record On JP Morgan's "Huge" Earnings:

They are COMPLETE bullshit.

Just went thru their press release. Would need to see a 10Q to get more back-up information, but it looks like most of JPM's GAAP net income was generated from:

1) mark to fantasy of their fixed income and derivatives book

2) marking up as much as possible all of the Washington Mutual assets they had marked down to nothing and acquired with U.S. Taxpayer guarantees when they hijacked Wash Mutual's good assets. Looks like JPM is marking those assets back up to fantasy and releasing GAAP (i.e. paper gains) into their earnings account

3) mark to fantasy of their private equity portforlio

Anyone who wants to believe that JPM's huge earnings gains are legitimate also probably believes in Santa Claus.

3 comments:

EconomicDisconnectWednesday, 14 October, 2009
Dave,
Come on, you know JPM's number are legit, why do you insist on being so questioning?

Kidding aside, mayor kudos to you for your Aquiline recommendation. I checked out both Aquiline and ECU, and as I was reviewing their operations and possibilities I swear I said to myself "either of these two could get scooped by PAAS (which I own)". Would have been a good match trade for me, oh well!
Maybe I will make an ECU buy, the long term chart seems to have plenty of room to the upside and limited downside (hard floor at $0.60).
Great work!
ReplyDelete
Replies
EdwardoWednesday, 14 October, 2009
Santa Claus doesn't exist?
ReplyDelete
Replies
Dave in DenverWednesday, 14 October, 2009
@Edwardo: ROFLMAO - only after a few hits of high grade LSD...

@gyc: We're going to keep AQI in our fund and wait for the exchange and strip the warrants and sell the stock. I'm not really a big fan of PAAS management. Even though the stock has done well, I believe it has underperformed relative to the quality of its assets. For one, they actively hedge.

As for ECU, forget the chart. It's bottom is now defined by the value per ounce in the ground established by the AQI deal. In fact, given that AQI has roadblocks to production - i.e. the cyanind and open pit ban in their province - it could be argued that ECU should get a higher valuation placed on its reserves just because, if they wanted to, they could stop exploring and start mining their deposit with no operational roadblocks (just capital requirements).
ReplyDelete
Replies

Add comment

Why Gold?

Gold is the world's oldest currency. You exchange your fiat currency (dollars, euros, yen, yuan) into gold as an insurance policy against catastrophic Central Bank and Government policies which serve to destroy the value of fiat currencies and destroy democracy.

Gold can ONLY be considered an investment to the extent that it remains significantly and historically undervalued in relation to the fiat currencies against which its value is measured. Otherwise it remains the world's oldest currency and is completely free from the counterparty risk associated with currency by Government fiat (i.e. fiat currencies rely on a Government's "full faith and credit.")

Quote Of The Month Courtesy of "Jesse"

Unfortunately for Larry Summers, Ben Bernanke, and their friends at the BIS, they have not yet figured out how to print physical gold, silver, and other essential commodities, and the world is reaching the point where it might simply start ignoring the New York based markets with respect to essential commodities such as basic materials, oil, foodstuffs, and the like, as they become increasingly irrelevant, fraudulent, and Orwellian. And then where will the financial engineers be, except with no more excuses and no place to hide?

Here is the link to his entire commentary, well worth a read:

http://jessescrossroadscafe.blogspot.com/2010/07/gold-daily-chart-shock-and-awe-for.html

Great Quote From Jim Rogers On Govt CPI Reporting

JR: I mean, we have inflation now. If you go to the shop, whether it’s groceries, or education or insurance or health care, prices are going up for everything. The government lies about it in the US. Some countries lie, many countries don’t: Australia, China, India and Norway. Many countries don’t lie about it and acknowledge that we have inflation. Others lie about it, the UK and the US, but if you go shopping you know prices are up.

Q: Are you saying that the American Consumer Price Index (CPI) published by the US Bureau of Labor Statistics is a lie?

JR: In my opinion, yes, of course it is. Have you looked at it? They’ve changed their accounting several times in the past few decades. When housing was 20% to 25% of the CPI and housing was going up, they didn’t count it, saying rents weren’t going up, and then when home prices started going down, they counted it. It’s the same with many things. It’s staggering some of the tortuous reasoning that the BLS has used over the past 25 or 30 years. When the price of gasoline goes up, they say it’s not really going up because it’s better gasoline, better quality, therefore you’re getting more for your money. I mean, it’s endless, the stuff that they say and for some reason people sit there, although more and more people are catching on, and accept what the government says.

source: www.clusterstock.com

Quote of the Week

"The primary function of a Central Bank is to engage in the massive transfer of wealth from the middle class to the wealthy elite. The Federal Reserve was set up to do this with the blessing and support of Congress." - Dave in Denver

If you refuse to believe the above, please read "The Creature From Jekyll Island: A Second Look at the Federal Reserve" by G. Edward Griffin and then explain to me why the Senate voted down the Vitter Amendment and Congress refuses to pass a law requiring a full audit of the Fed, even though the Fed is using taxpayer-backed money to bailout Wall Street and Europe.