Category: Oil

Oil

  • Israel involved in secret meetings about Syria truce

    An Israeli newspaper has revealed that Israel, Russia and the US held a series of secret meetings last month to discuss the truce agreement in southern Syria, New Khalij has reported. According to Haaretz, Israeli officials and Western diplomats, all of whom requested anonymity, said that the meetings were held in Amman and a European capital before the announcement of the establishment of de-escalation zones in southern Syria. Senior diplomats and security officials from the three countries participated in those meetings. Furthermore, said Haaretz, the meetings were held in the presence of the US special envoy to Syria, Michael Ratney, and the White House envoy for the Global Coalition, Brett McGurk, as well as officials from Israel’s Ministry of Foreign […]

  • Israel involved in secret meetings about Syria truce

    An Israeli newspaper has revealed that Israel, Russia and the US held a series of secret meetings last month to discuss the truce agreement in southern Syria, New Khalij has reported. According to Haaretz, Israeli officials and Western diplomats, all of whom requested anonymity, said that the meetings were held in Amman and a European capital before the announcement of the establishment of de-escalation zones in southern Syria. Senior diplomats and security officials from the three countries participated in those meetings. Furthermore, said Haaretz, the meetings were held in the presence of the US special envoy to Syria, Michael Ratney, and the White House envoy for the Global Coalition, Brett McGurk, as well as officials from Israel’s Ministry of Foreign […]

  • 4 troops shot dead in Egypt’s Sinai

    A military officer and three policemen were gunned down in Egypt’s rSinai Peninsula on Wednesday, according to a local security source. Gunmen stopped a private car in the North Sinai city of Beer al-Abd and opened fire on its occupants, killing them on the spot, the source said on condition of anonymity because he was unauthorised to speak to media. #Sinai No group has yet claimed responsibility for the attack and Egyptian authorities have yet to comment. The Sinai Peninsula has remained the epicentre of a deadly militant insurgency since mid-2013, when the military deposed Mohamed Morsi, Egypt’s first freely-elected president, in a military coup. Read: Egyptian security forces kill prominent Daesh militant in North Sinai Hundreds of Egyptian security personnel […]

  • ‘Daesh looted $835m from Iraqi banks’

    The Iraqi Central Bank revealed on Tuesday that Daesh has looted around $835 million from the government and private sector banking systems, Anadolu has reported. More than 120 branches of state and private banks have been seized by the extremist group in the Nineveh, Saladin, Diyala and Anbar provinces since 15 June 2014. In addition to the looted money, said the Central Bank, Daesh has been making up to $2million per day through its illegal sale of oil. According to Anadolu, this is the first time that Iraq has revealed the amount of money seized and collected by Daesh. In 2014, Daesh occupied many cities and areas in western and northern Iraq, including the second largest city of Mosul. Only […]

  • Anti-terror investigators probe Paris attack as minister condemns ‘cowardly act’

    Author: 
    Sean Cronin | Arab News Staff
    Wed, 2017-08-09 16:52
    ID: 
    1502276037883212200

    LONDON: French Defense Minister Florence Parly condemned an attack that injured six soldiers in a Paris suburb as a cowardly act as anti-terrorist investigators launched a manhunt.
    Police are searching for a BMW car that rammed into a group of soldiers in the northwestern Paris suburb of Levallois-Perret. Two of the soldiers sustained serious injuries.
    The attack happened at about 8 a.m. local time when the car emerged from an alley and plowed into the group as they emerged from a building.
    Levallois-Perret Mayor Patrick Balkany told broadcaster BFM TV that the attack was without “any doubt” premeditated.
    “It all happened very quickly,” he said. “It hurtled at them.”
    More than 230 people have been killed in terror attacks in France over the past two years with the capital on maximum alert.
    The anti-terrorism unit of the Paris prosecutors’ office has launched a probe into the car-ramming, AFP reported, citing a statement from Paris prosecutors.
    Levallois-Perret is about 5 kilometers from the center of Paris.
    Business owners who spoke to Arab News early Wednesday reported a massive police presence on the streets.
    The area around Place de Verdun where the attack took place was cordoned off after the incident.

    Main category: 
    related_nodes: 
    Car rams into soldiers outside Paris, six injured
    France marks one year since Paris attacks

  • Fake companies in Jordan buy land in occupied West Bank for Jewish settlers

    A local official revealed on Tuesday that a network of fake companies based in Jordan has been established in order to buy Palestinian land in the occupied West Bank for Jewish settlers, Al-Araby Al-Jadeed has reported. The settlers, it is claimed, are from the settlement of Amona, which Israel also regarded as illegal; and evacuated earlier this year. According to the neighbourhood head in Silwad, located to the east of Ramallah, a Jordanian MP is involved. Abdul-Rahman Saleh added that these companies pay high prices for the land, up to 60,000 Jordanian Dinars for each dunam (quarter of an acre), whereas the market rate would be around 2,000 Dinars. Saleh said that some of the Palestinians travelled to Jordan to […]

  • Gold Sees Safe Haven Gains On Trump “Fire and Fury” Threat

    Gold Sees Safe Haven Gains On Trump “Fire and Fury” Threat

    - Gold climbs amid rising risk on US and North Korea
    - Trump threatened North Korea with ‘fire and fury like the world has never seen’ 
    - North Korea says prepared to strike the US territory of Guam
    - North Korea said US exercise 'proves that the U.S. imperialists are nuclear war maniacs'
    - Heated rhetoric likely to support gold for rest of the week
    - Russia and China poised to take advantage 
    - Situation adds to uncertainty in an already uncertain world

    Gold provides certainty as US and North Korea go head-to-head

    Just a few months ago President Trump offered an olive branch of sorts to North Korean dictator Kim Jong Un. In a series of interviews Trump referred to Kim as a ‘pretty smart cookie’ and one who he would be ‘honoured’ to meet.

    Shortly after Kim Jong Un seemingly batted the olive branch away when he issued the following statement through state media, ‘… the most perfect weapon systems in the world will never become the eternal exclusive property of the U.S. … the U.S. should not … disregard or misjudge the reality that its mainland and Pacific operation region are in (North Korea’s) sighting range for strike.”

    Now, less than two months later, we sit here with our morning coffees wondering if the world is on the brink of nuclear war.

    Trump’s olive branch is now a massive red hot poker which continues to poke the proverbial bear.

    "North Korea best not make any more threats to the United States.  They will be met with fire and fury like the world has never seen."

    "He has been very threatening beyond a normal statement.  And, as I said, they will be met with fire, fury, and frankly power, the likes of which this world has never seen before."

    Technologically advanced

    The latest war of words comes on the back of a heated few days between the two countries.

    On Saturday the UN announced fresh sanctions on North Korea. On Monday the US released pictures of a bilateral strategic exercise around Guam.

    North Korea’s state media said North Korea would retaliate and make "the US pay a price" for drafting the new measures.

    In the past the world has been reassured that North Korea’s bark is far worse than its bite due to the lack of technology which allowed the regime to build dangerous missiles.

    This is unfortunately no longer the case.

    A report by the Washington Post, which cited US intelligence officials, suggested North Korea is developing nuclear weapons capable of hitting the US at a much faster rate than expected.

    North Korea seems keen to prove this as soon as possible:

    ‘The KPA Strategic Force is now carefully examining the operational plan for making an enveloping fire at the areas around Guam with medium-to-long-range strategic ballistic rocket Hwasong-12 in order to contain the U.S. major military bases on Guam including the Anderson Air Force Base in which the U.S. strategic bombers, which get on the nerves of the DPRK and threaten and blackmail it through their frequent visits to the sky above south Korea, are stationed and to send a serious warning signal to the U.S.

    It should immediately stop its reckless military provocation against the state of the DPRK so that the latter would not be forced to make an unavoidable military choice.’

    Time for Russia and China to step up?

    In the run up to this situation all eyes have been on Russia and China who ultimately hold the most responsibility for handling relations with North Korea. Both countries are economically tied to the dictatorship and could have influence over Kim JI.

    The problem here is that the United States does not want to be seen to be too reliant on the wannabe super-powers of the East, despite this being their only (peaceful) option. There are many things to be gained here by both Putin and Xi Jinping.

    Both leaders have recently come together to call on both North Korea and the US to lay down their weapons and cool their rhetoric.

    Whilst both have supported the latest round of sanctions, it  seems at the moment their calls for calm are falling on deaf ears as all sides work to show off their strengths.

    This is something worth paying attention to. Regardless of how North Korea vs Trump unfolds, the other side of this scenario will no doubt present a very different set of new world powers as countries set to take advantage of a distracted, divided and bankrupt United States.

    See what’s important

    This is unfortunately likely to be the beginning of yet another war of words, we expect this to affect gold prices positively as we move towards the end of the week.

    Gold prices benefit from such situations partly because of the precious metal’s historical role during times such as these but also because it thrives when there is uncertainty. No one can argue there is no uncertainty when two countries are turning their nuclear weapons towards one another.

    Unsurprisingly the heating up of the situation with North Korea has pushed ‘issues’ such as US labour data and inflation data to the bottom of the agenda.

    This should serve as a timely reminder that it is the bigger picture which is important when it comes to economics and finance. Whilst economic data such as employment figures are important, it is what the global picture and geo-politics looks like over the long-term which will drive safe haven assets such as gold and silver.

    Situations such as these can be game changers alas. Both Trump and Kim appear to be determined to keep escalating until the other gives in.

    Unfortunately some form of military conflict looks increasingly inevitable and is unlikely to have a happy ending. Savers and investors should take note of this increasingly unstable situation and place their wealth into assets that perform well in times of uncertainty and indeed war, safe haven assets such as gold and silver.

     

    News and Commentary

    Gold up on rising U.S.-North Korea tensions (Reuters.com)

    Gold, Yen Gain on North Korea Tension; Stocks Drop (Bloomberg.com)

    Top Gold Producer Says Mining Needs More Activist Investors (Bloomberg.com)

    BOE warns "stability threats" to financial system from ‘cliff-edge’ Brexit (FT.com)

    House prices fall for fourth quarter running (CityAM.com)

    SWOT Analysis: What’s Next for the Yellow Metal? (GoldSeek.com)

    Now, a Trade War — Is a Shooting War Next? (DailyReckoning.com)

    Russia To Cut Dependence On U.S. Dollar, Payment Systems (ZeroHedge.com)

    New research: the Great Recession is still with us (TrueEconomics)

    The Debt-Ceiling Crisis Is Real (NYTimes.com)

    Gold Prices (LBMA AM)

    08 Aug: USD 1,261.45, GBP 967.78 & EUR 1,068.20 per ounce
    07 Aug: USD 1,257.55, GBP 963.41 & EUR 1,065.90 per ounce
    04 Aug: USD 1,269.30, GBP 964.92 & EUR 1,068.37 per ounce
    03 Aug: USD 1,261.80, GBP 952.41 & EUR 1,064.96 per ounce
    02 Aug: USD 1,266.65, GBP 956.83 & EUR 1,069.56 per ounce
    01 Aug: USD 1,267.05, GBP 957.76 & EUR 1,072.30 per ounce
    31 Jul: USD 1,266.35, GBP 965.59 & EUR 1,079.06 per ounce

    Silver Prices (LBMA)

    08 Aug: USD 16.39, GBP 12.57 & EUR 13.87 per ounce
    07 Aug: USD 16.13, GBP 12.35 & EUR 13.67 per ounce
    04 Aug: USD 16.70, GBP 12.71 & EUR 14.07 per ounce
    03 Aug: USD 16.47, GBP 12.50 & EUR 13.91 per ounce
    02 Aug: USD 16.67, GBP 12.60 & EUR 14.09 per ounce
    01 Aug: USD 16.74, GBP 12.67 & EUR 14.17 per ounce
    31 Jul: USD 16.76, GBP 12.77 & EUR 14.29 per ounce


    Recent Market Updates

    - Silver Mining Production Plummets 27% At Top Four Silver Miners
    - Gold Consolidates On 2.5% Gain In July After Dollar Has 5th Monthly Decline
    - Gold Coins and Bars See Demand Rise of 11% in H2, 2017
    - Greenspan Warns Stagflation Like 1970s “Not Good For Asset Prices”
    - What Investors Can Learn From the Japanese Art of Kintsukuroi
    - Bitcoin, ICO Risk Versus Immutable Gold and Silver
    - This Is Why Shrinkflation Is Making You Poor
    - Gold A Good Store Of Value – Protect From $217 Trillion Global Debt Bubble
    - Why Surging UK Household Debt Will Cause The Next Crisis
    - Gold Seasonal Sweet Spot – August and September – Coming
    - Commercial Property Market In Dublin Is Inflated and May Burst Again
    - Gold Hedges Against Currency Devaluation and Cost Of Fuel, Food, Beer and Housing
    - Millennials Can Punt On Bitcoin, Own Gold and Silver For Long Term

    Important Guides

    For your perusal, below are our most popular guides in 2017:

    Essential Guide To Storing Gold In Switzerland

    Essential Guide To Storing Gold In Singapore

    Essential Guide to Tax Free Gold Sovereigns (UK)

    Please share our research with family, friends and colleagues who you think would benefit from being informed by it.

    The post Gold Sees Safe Haven Gains On Trump “Fire and Fury” Threat appeared first on crude-oil.news.

  • Why One Trader Thinks The “S&P 500 Just Topped Out For The Summer”

    Following days of vocal and in some cases quite vivid warnings and predictions that the resent record ascent in the S&P is unsustainable and is set for a sharp correction from some of the most prominent names in finance including Howard Marks, Paul Singer and most recently Jeff Gundlach, here is Bloomberg's Mark Cudmore who has now also cast aside his recent bullishness, and in his overnight Macro View piece warns that we may have seen the highs of the S&P for the summer, if not the year.

    S&P 500 May Have Just Topped Out for the Summer

     

    Summer market dynamics lend weight to the theory that the S&P 500 may have put in a multi-week high on Tuesday. 

     

    The index’s price-to-book ratio is at its highest level since 2003. Yes, it’s been up here since June and it was way more elevated from 1996 to 2002, but it now matters because the mood has suddenly turned.

     

    The catalyst for the sentiment shift has been North Korea, but that’s rather beside the point. What’s important is that it’s the height of the American summer and nobody is going to be phoning in from their vacation to hastily buy the dip in U.S. stocks. Not when valuations are so stretched.

     

    Many punters don’t have more capital to put to work anyway, with retail cash piles at their lowest level since 2000, according to survey data from AAII. The implication therefore is that many market participants are away from their screens and the majority of marginal standing orders must be stops to reduce exposure, rather than add.

     

    Into that environment, the S&P 500 on Tuesday finally broke through its July 27 record high on the eighth day of trying. That caused a spike that will have stopped out a chunk of speculative shorts. And then the market promptly reversed before the end of day. Those bears will be forced to now chase the market lower when they check in.

     

    Not to overplay the value of seasonal patterns, but there’s an intuitive reason why August is by far the worst month for the S&P 500 over the last 20 years -- people don’t like fighting the market from the Hamptons.

     

    As a marginal extra negative, the Nasdaq and bellwether tech stocks failed to validate the latest leg higher in the S&P 500, which will disproportionately increase the number of bearish analyst notes, further fueling a negative spiral.

    The post Why One Trader Thinks The “S&P 500 Just Topped Out For The Summer” appeared first on crude-oil.news.

  • North Korea Responds To Trump Threat, Says It Is “Seriously Considering” Pre-Emptive Nuclear Strike On Guam

    Challenge accepted.

    If Trump thought that his bluff would be sufficient to finally shut up North Korea, and put an end to Kim's provocative behavior, well... bluff called because North Korea's state-run KCNA news agency reported moments ago that not only did N.Korea escalate the tensions up another notch, but explicitly warned that it could carry out a "pre-emptive operation once the US shows signs of provocation", and that it is "seriously considering a strategy to strike Guam with mid-to-long range missiles."

    Story highlights from Reuters:

    • N. KOREA WARNS OF OPERATION ON SIGNS OF U.S. PROVOCATION: KCNA
    • N. KOREA SAYS U.S. WAR HYSTERIA TO BRING MISERABLE END: KCNA
    • N. KOREA CAN STRIKE BEFORE ANY U.S. PRE-EMPTIVE ATTACK: KCNA
    • N.KOREA SAYS IT COULD CARRY OUT PRE-EMPTIVE OPERATION ONCE U.S. SHOWS SIGNS OF PROVOCATION -KCNA CITING MILITARY SPOKESMAN
    • N.KOREA SAYS IT IS SERIOUSLY CONSIDERING STRATEGY TO STRIKE GUAM WITH MID-TO-LONG RANGE MISSILES -KCNA
    • N.KOREA SAYS STRIKE ON GUAM WILL BE CARRIED OUT IN A CONSECUTIVE, SUCCESSIVE WAY ONCE LEADER KIM JONG UN GIVES ORDER

    And the full report:

    U.S Should be Prudent under Present Acute Situation: Spokesman For KPA Strategic Force

     

    Pyongyang, August 9 (KCNA) -- A spokesman for the Strategic Force of the Korean People's Army (KPA) released the following statement on August 8:

     

    Recently, the U.S. test-fired ICBM Minuteman-3 at its Vandenberg Air Force Base in Califrnia State targeting the DPRK, the fourth one this year, openly staged an actual nuclear strike drill targeting the strategic objects of the DPRK by mobilizing its nuclear strategic bombers formation stationed at its Anderson Air Force Base on Guam in the Pacific. It is driving the regional situation to an extreme pitch by bringing various kinds of nuclear strategic hardware before the very eyes of the DPRK. The Strategic Force of the KPA has taken special note of such maneuvers.

     

    Such military maneuvers of the U.S. may provoke a dangerous conflict under the present extremely acute situation prevailing on the Korean peninsula.

     

    Typically, the nuclear strategic bombers from Guam frequent the sky above south Korea to openly stage actual war drills and muscle-flexing in a bid to strike the strategic bases of the DPRK. This grave situation requires the KPA to closely watch Guam, the outpost and beachhead for invading the DPRK, and necessarily take practical actions of significance to neutralize it.

     

    In the morning of August 8 the air pirates of Guam again appeared in the sky above south Korea to stage a mad-cap drill simulating an actual war.

     

    Supreme Commander of the revolutionary forces of the DPRK Kim Jong Un, estimating the nature of the military action taken by the U.S. forces in the Asia-Pacific region, once recommended examination of a powerful and effective action plan for containing the U.S. imperialists' aggression hardware as the U.S. forces are resorting to inappropriate and reckless military actions in the sensitive area, while going on the rampage in the waters off the Korean peninsula and the Pacific waters.

     

    The KPA Strategic Force is now carefully examining the operational plan for making an enveloping fire at the areas around Guam with medium-to-long-range strategic ballistic rocket Hwasong-12 in order to contain the U.S. major military bases on Guam including the Anderson Air Force Base in which the U.S. strategic bombers, which get on the nerves of the DPRK and threaten and blackmail it through their frequent visits to the sky above south Korea, are stationed and to send a serious warning signal to the U.S.

     

    It should immediately stop its reckless military provocation against the state of the DPRK so that the latter would not be forced to make an unavoidable military choice.

     

    The plan is to be soon reported to the Supreme Command soon after going through full examination and completion and will be put into practice in a multi-concurrent and consecutive way any moment once Kim Jong Un, supreme commander of the nuclear force of the DPRK, makes a decision.

     

    The execution of this plan will offer an occasion for the Yankees to be the first to experience the might of the strategic weapons of the DPRK closest. 

     

    Explicitly speaking again, the strategic weapons which the DPRK manufactured at the cost of blood and sweat, risking everything, are not a bargaining  thing for getting acknowledgement from others and for bartering for anything, but they serve as substantial military means for resolutely countering the  U.S. political and economic pressure and military threat as what has been observed now.

     

    Will only the U.S. have option called "preventive war" as is claimed by it?

     

    It is a daydream for the U.S. to think that its mainland is an invulnerable Heavenly kingdom.

     

    The U.S. should clearly face up to the fact that the ballistic rockets of the Strategic Force of the KPA are now on constant standby, facing the Pacific Ocean and pay deep attention to their azimuth angle for launch.

     

    It should make a proper option so as not to regret today in the future.

    Incidentally, here is a 1999 interview courtesy of @NorthmanTrader, laying out Donald Trump's thoughts on launching a pre-emptive strike on North Korea.

    Tim Russert interviewing @realDonaldTrump in 1999 about launching a pre-emptive strike against North Korea.
    Could be key to his thinking. pic.twitter.com/PRbDA9r6Jp

    — Sven Henrich (@NorthmanTrader) June 20, 2017

    Needless to say, with both leaders determined to keep escalating until the adversary folds, this seemingly inevitable military conflict will not have a happy ending.

    The good news for Guam, is that the US has had a THAAD anti-ballistic missile battery on the Pacific island since 2015; in fact it was the first permanent deployment of THAAD outside continental United States.

    On the American Territory of Guam in the western Pacific, is Task Force Talon, the world’s only deployed and active THAAD battery site. This is the world’s newest missile defense capability that can intercept missiles in lower space and in the upper atmosphere with its extremely powerful, long range X-Band radar that defends U.S. soil and American citizens in Guam against North Korean ballistic missiles. Equally important, Task Force Talon projects U.S. strategic air power into Asia through B-52 bombers deployed at Anderson Air Force Base and a U.S. submarine navy port as well as the largest American fuel and munitions depot in the Pacific. Last month, the B-52 squadron from Guam was used in power projecting flights over the internationally disputed artificial Chinese islands in the South China Sea. This squadron has also  flown over the DMZ in warning to North Korea in the past. Task Force Talon in Guam remains indispensable not only for American power projection, but also delivering extended deterrence for U.S. allies in the Asia Pacific region.

    Finally, here is the statement issued moments ago by Madeline Z. Bordallo, Guam rep.

    After #DPRK threat to attack #Guam, the delegate in Congress from the US territory issues a statement. pic.twitter.com/sd7uLRZgT4

    — Steve Herman (@W7VOA) August 8, 2017

    The post North Korea Responds To Trump Threat, Says It Is “Seriously Considering” Pre-Emptive Nuclear Strike On Guam appeared first on crude-oil.news.

  • The Volcker Rule & The London Whale: “Dear Big Media, Get A Clue”

    Authored by Chris Whalen via The Institutional Risk Analyst,

    "It is not down in any map; true places never are."

     

    "Moby Dick"

    Herman Melville

    News reports that prosecutors have dropped their case against Bruno Iksil, the former JPMorgan (NYSE:JPM) trader many know as the “London Whale,” comes as no surprise to readers of The IRA Iksil, who resurfaced earlier this year, has been living in relative seclusion in France for the past few years.

    In previous comments posted on Zero Hedge, we dispensed with the notion that the investment activities of Iksil and the office of the JPM Chief Investment Officer were either illegal or concealed from the bank’s senior management.  The fact is that Iksil and his colleagues at JPM were doing their jobs, namely generating investment gains for the bank.

    The outsized bets made by the “whale” in credit derivatives contracts resulted in a loss in 2012, but the operation generated significant profits for JPM in earlier years.  As veteran risk manager Nom de Plumber told us in Zero Hedge in 2012:

    “This JPM loss, whether $2BLN or even $5BLN, is modest in both absolute and relative terms, versus its overall profitability and capital base, and especially against the far greater losses at other institutions. In practical current terms, the hit resembles a rounding error, not a stomach punch.  As either taxpayers or long-term JPM investors, we should be more grateful than sorry about the JPM CIO Ina Drew.   If only other institutions could also do so ‘poorly’………”

    When JPM and other large banks began to implement the Volcker Rule after the passage of the 2010 Dodd-Frank law, the activities of Iksil and his colleagues in New York began to come to light. Principal trading, which is now outlawed by the Volcker Rule, creates enormous opportunities – and conflicts -- for banks that act both as traders and lenders.  We wrote in ZH in 2012:

    “[D]ear friends in the Big Media, it is time to get a collective clue.  The real problem with CDS trading by large banks such as JPM is not the speculative positions taken by traders like Bruno Iksil, but instead the vast conflict of interest between the lending side of the house and the trading side, whether the trader is on the arb desk or, in the case of Iksil, working for the CIO trading for the bank’s treasury.”

    When caught in the act, the bank naturally cast Iksil’s activities as being somehow illicit and against company policy.  But in fact his trading activities had been understood, blessed and even directed by the JPM’s senior management going back years. Far from being a hedge for other exposures of the bank, in fact the strategy of the CIO’s office was to generate returns as the bank’s internal hedge fund.

    When as early as 2010 discussions reportedly occurred about “hedging” Iksil’s illiquid credit derivative positions, presumably those involved understood that this was a risk position taken as part of a deliberate investment strategy. That Iksil apparently believed that he could not be bullied by other counterparties because of the fact of trading for JPM speaks to how he viewed his activities, which were entirely visible to other market participants.

    The JPM CIO’s office under Ina Drew ran an active trading strategy, making markets around positions on a continuous basis to provide live valuations and generate short-term returns.  The fact that big banks no longer trade their investment books illustrates the diminution of liquidity that has occurred since the adoption of the Volcker Rule. But for the banks, the legacy of the London Whale and the larger implementation of Dodd-Frank has left a deep mark on risk managers and those concerned with maintaining internal systems and controls at large banks.

    But now Iksil has accused JPM's Chief Executive James Dimon of laying the ground for what was eventually a $6.2 billion loss, Reuters reports.  In an account on his website, Iksil also blames senior executives at the bank for the investment strategies that led to those losses.  Iksil’s account now sounds an awful lot like what we heard from his former colleagues in New York some six years ago.

    At the time, JPM’s counsel had already mandated the elimination of the managers and traders in the CIO’s area as part of implementing the Volcker Rule, leading to a number of redundancies in New York.  We know about the Whale because of the implementation of the Volcker Rule.  But the key event that broke the scandal open was the public statement by Dimon, this in response to persistent press queries from The Wall Street Journal and Bloomberg News, that the rumors of losses in the CIO’s office were “a tempest in a teapot.”

    But for the public statement by Dimon, which required additional clarification and disclosure, the activities of the CIO that might otherwise have been dealt with in the fine print of JPM’s earnings release.  Instead, JPM was forced to not only enhance disclosure of the CIO’s trading results, but then went through a firestorm of congressional hearings, regulatory questions and litigation that continues to this day.  We recall sitting in the analyst presentation at JPM’s HQ dealing with the London Whale as Ken Langone glared at the assembled audience of Sell Side analysts.

    In his congressional testimony, Dimon attributes the bank’s loss to a modeling error, but in fact the exposure was simply ignored.  Notice that at no point has the financial media or regulators questioned the company line about what actually happened and when. Iksil’s statements seem to take us back down that road and, specifically, to suggest that senior management at JPM was actively aware of the strategies taken by the CIOs office years before the big losses occurred.  Our old pal Nom de Plumber commented over the weekend:

    “In the end, the London Whale disaster reflected the mis-marking of generic Index CDS trades, which then-CFO Doug Braunstein ignored.   The problem was not complex risk modeling or market risk measurement.   The quants tried to re-jigger VaR measurement of the trades, to avoid breaching risk limits-----for CIO trades which Jamie specifically demanded of Ina Drew......regardless of preceding protests from risk managers like John Hogan and Robert Rupp.”

    Nom de Plumber tells The IRA that Ina Drew was essentially running a hedge fund directed by Dimon and other senior managers, a fund that was largely kept outside of the bank’s risk management and reporting procedures. Consider the bizarre situation in 2011-2012 when counterparties of Iksil facing the JPM commercial bank were unable to make margin calls, but the JPM investment bank was making margin calls on these same counterparties for positions in the very same indexed credit derivatives.

    Bruno Iksil has waited for the proverbial concrete to harden over the past few years before coming forward with his latest accusations. This makes it difficult or impossible for Dimon and his lieutenants to change their story now.  It will be very interesting indeed to see if anyone from the financial media or even the regulatory community picks up the new trail illuminated by Iksil’s statements.

    The episode involving the London Whale illustrates how difficult it is to learn the truth about the inner working of large banks.  Big banks profit by exploiting information and conflicts found between the world of credit and the world of securities.  Indeed, the CIO's office generated big returns for JPM over the decade or so that Iksil was with the bank. 

    But the London Whale episode also shows in graphic terms why the Volcker Rule prohibitions against banks trading for their own account need to be preserved and strengthened.  There is a fundamental conflict between a bank acting as a lender and trading credit derivatives. 

    More, if the CEO of a bank – any bank – can short circuit the internal controls of his institution in order to enhance returns with a bet at the credit derivative roulette table, then by definition that bank cannot be safe and sound.

    The post The Volcker Rule & The London Whale: “Dear Big Media, Get A Clue” appeared first on crude-oil.news.