Whales in London ???
Didn’t realize that the Thames in London could hold whales – but apparently it does (really! see photo :). Jokes apart, the big news in the financial world came last Thursday when J.P. Morgan boss Jamie Dimon announced that his firm has lost $2 Billion due to a rogue trader in their London offices simply known as the “London Whale”. Apparently, the loss was incurred when the Whale put on a trade to hedge JPM’s credit risk. Now the hedge has gone awry, and the worst part is the story is not over yet. JPM is unable to get out of this trade now, as there are no counterparties to take the other side to close out this trade. Everyone knows this is toxic crap, and nobody wants to touch it with a bargepole. JPM expects further losses in the coming quarter from this trade. And as usual, nobody knows exactly what this trade is – because these derivatives are unregulated in an opaque market. Unless you’re on the other side of this trade, there is no way to know what the Whale did. Boy, do these guys give derivatives a bad name…
