By MICHAEL GRAY
JPMorgan’s Jamie Dimon comes out this week and says his firm will bail out California with a $1.5B loan. The other terms of the loan were not mentioned.
California was paying 3.75% on the IOUs it issued. I believe the rate is lower but have no way of knowing. JPMorgan is using its trading profits to boost its municipal funding business with this loan.
There was a trading arbitrage there with scammers paying 90% on face to people and then cashing in with the state.
Dimon says the firm has a “social responsible” to help California. I guess if Wall St. didn’t make California the poster state for subprime loans and the housing crisis, then Dimon’s magnanimous gesture would not be needed.
Why stocks moved higher this week shows that the “trading bubble” is moving to its extreme and will probably begin its slow leak after Labor Day.
The move up was despite China’s huge 5 percent market correction and higher than expected weekly jobless claims and a higher revision to two weeks ago.
The Fed’s policy of stepping out the 10-year rate at 3.5 percent is keeping equities buoyant and on par for the same return. This cannot continue for a length of time.
AIG CEO Robert Benmosche promises to pay back Uncle Sam with interest only three days in office.
The former CE of MetLife said from his Croatian vacation destination.
The stock popped 21 percent on the news. Not sure what Benmosche was smoking in Eastern Europe, but this labyrinth of a balance sheet chuck full of exotic derivatives, with the total impact of this toxic paper is truly unknowable.
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