Margin Call? JP Morgan Sells $25 Billion in Securities to Offset Derivatives Losses?!

• If this is true and JP Morgan is running out of money to service margin calls, the world financial system is in trouble. JP Morgue and Goldman Sucks are shareholders of the FedRes. It is a big deal when JP Morgue sells US$25B to meet margin calls. It implies that the derivatives problem is rapidly blowing up. JP Morgue has something like US$70T (understated IMO) of financial derivatives!
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  Margin Call? JP Morgan Sells $25 Billion in Securities to Offset Derivatives Losses?! 
  by http://www.silverdoctors.com/ 
  In what CNBC calls ‘a stupid decision‘, JP Morgan has reportedly sold $25 billion in profitable bonds and securities to offset trading losses from its IG9 derivatives crisis.
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  If it was merely an effort to prop up earnings for JPM’s Q2 report we would agree, but this is more likely JP Morgan LIQUIDATING CAPITAL TO MEET MASSIVE MARGIN CALLS OVER ITS ESCALATING INTEREST RATE SWAP LOSSES, which we have discussed are reportedly close to $100 Billion.   Bankers are not fools, throwing good money after bad.  If JPM sold $25 billion in profitable positions, it is because IT WAS FORCED TO.
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  JPMorgan Chase has sold an estimated $25 billion of profitable securities in an effort to prop up earnings after suffering trading losses tied to the bank’s now-infamous “London Whale,” compounding the cost of those trades.
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  Chief Executive Jamie Dimon earlier this month said the bank sold corporate bonds and other securities, pocketing $1 billion in gains that will help offset more than $2 billion in losses. As a result, the bank will not have to report as big an earnings hit for the second quarter.
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  The sales of profitable securities from elsewhere in the bank’s investment portfolio will increase its costs by triggering taxes on the gains and by eliminating future earnings from the securities.
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  Gains from the sales could provide about 16 cents a share of earnings, about one-fifth of the bank’s second-quarter profit, analysts said. But rather than creating new value for investors, the transactions merely shift gains in securities from one part of the company’s financial statements to another.
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  “They really made two stupid decisions,” said Lynn Turner, a consultant and former chief accountant of the Securities and Exchange Commission. The first was taking risks with derivatives that they did not understand, Turner said. “The second is selling assets with high income that they can’t replace,” Turner added.
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  Read more!

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