This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

JPMorgan Is in a No-Win Situation of Its Own Creation

 

NEW YORK ( TheStreet) -- JPMorgan Chase reports second-quarter earnings before the opening bell on Friday, and I can tell you right now that no matter what kind of numbers it reports, it is going to be dumped on.

If JPMorgan's $9-billion-and-counting trading loss is a drag on earnings, it is going to be dumped on. If it isn't, it is going to be dumped on.

As a matter of fact, you might say that JPMorgan -- and all the major banks, for that matter -- are in a pretty much no-win situation during earnings-reporting season. If they make a ton of money, it calls attention to the fact that the banking sector is thriving while the rest of the economy is suffering because of a recession that they helped create. If they don't make money, they are criticized for being inept or inattentive, just as JPMorgan has been for that credit-derivatives trading loss that keeps getting bigger.

JPMorgan CEO Jamie Dimon is the first to decry the bad rap that the banks are getting, and on the face of it, it doesn't seem especially fair or even rational. After all, it is argued, shouldn't we be happy that at least one sector of the economy is doing well -- so well that even a $9-billion-and-counting trading loss isn't likely to do the bank very much damage?

The answer is "no." We shouldn't be happy. We should be furious. The public has every reason to be resentful about how the banking sector and Wall Street are flourishing when the rest of the economy is suffering and unemployment is still stubbornly hovering above 8%. There are two reasons for this:

1. JPMorgan is a government-subsidized institution, and;

2. It treats its customers like dirt.

According to a study by the International Monetary Fund and some numbers-crunching by Bloomberg, JPMorgan gets a $14 billion-a-year subsidy from the U.S. taxpayer.

In recent decades, you see, the government has stepped in to be sure that all bank creditors are paid in full. See, that's one of the unseen advantages of being too big to fail. The system is so interconnected that international banking becomes like one big game of dominoes, so that the collapse of one can cause the entire banking system to go "pfffft," as the Eli Wallach character pointed out in Oliver Stone's Wall Street sequel, Money Never Sleeps.
1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
JPM $64.13 0.00%
AAPL $113.29 0.00%
FB $91.01 0.00%
GOOG $630.38 0.00%
TSLA $248.48 0.00%

Markets

Chart of I:DJI
DOW 16,643.01 -11.76 -0.07%
S&P 500 1,988.87 +1.21 0.06%
NASDAQ 4,828.3250 +15.6170 0.32%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs