An economics, investment, trading and policy blog with a focus on Modern Monetary Theory (MMT). We seek the truth, avoid the mainstream and are virulently anti-neoliberalism.
Quite right. So called “professional” economists prefer fiddling with mathematical models to solving the problems of the real world. Tell them that the $20bn of fines that J.P.Morgan has had to pay recently shows that JPM is basically a criminal organisation, and you just get a blank stare.
So they pay 1.9B for 300B in assets and 188b in deposits: Is this a fair price? Put an industry multiple on this I'll assume it is higher than 1.9B...
if we say a bank is worth 10% of assets that is a 30B price for wamu... so they pay 1.9B.... so even if they have to pay an additional 20b in fines they STILL make like 10B on the deal...
So, even if they STILL have to pay these fines for some of the stuff WaMu was doing today, they STILL are making out like bandits on the deal...
And Dimon has the hubris to complain???? I guess it is his job to complain about the magnitude of any ex post fines, but in the board room they all have to be laughing their asses off as they still made billions on this deal for shuffling a bunch of paper around and putting on an act of complaining about it the whole time...
3 comments:
Quite right. So called “professional” economists prefer fiddling with mathematical models to solving the problems of the real world. Tell them that the $20bn of fines that J.P.Morgan has had to pay recently shows that JPM is basically a criminal organisation, and you just get a blank stare.
But Ralph perhaps look at it this way...
JPM was "forced" to buy WaMu details here:
http://money.cnn.com/2008/09/25/news/companies/JPM_WaMu/
So they pay 1.9B for 300B in assets and 188b in deposits: Is this a fair price? Put an industry multiple on this I'll assume it is higher than 1.9B...
if we say a bank is worth 10% of assets that is a 30B price for wamu... so they pay 1.9B.... so even if they have to pay an additional 20b in fines they STILL make like 10B on the deal...
So, even if they STILL have to pay these fines for some of the stuff WaMu was doing today, they STILL are making out like bandits on the deal...
And Dimon has the hubris to complain???? I guess it is his job to complain about the magnitude of any ex post fines, but in the board room they all have to be laughing their asses off as they still made billions on this deal for shuffling a bunch of paper around and putting on an act of complaining about it the whole time...
good work if you can get it!
rsp,
Of course not. That's like courtiers refusing to say aristocracy are frauds.
To adapt, we need another 1776 moment in economics, in finance, and in culture at large.
We took 2 steps forward circa 1933, and one slide-step back ever since.
Let's not slide so far that we fall over.
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