Friday, May 18, 2012

Chase Chasing the Pattern of MF Global

Once again, a major financial firm took a bad bet on debt and derivatives.

JPMorgan Chase took over for Washington Mutual nearly four years ago, yet the fiscal mismanagement which pushed one of the largest restructurings in United States History is still pushing out failure at length. Barely one year ago, MF Global went bankrupt following similar risky bets on European debt. Despite the dubious title of eighth largest bankruptcy in history, the United States did not collapse beneath the weight of so great a financial loss. The same calm will pervade following the immense loss reported by JPMorgan Chase.

When will the nation, the government, the powers that be learn: government cannot punish poor fiscal policies in private firms any better than the free market.

"These mistakes are self-inflicted", commented the unusually terse CEO Jamie Dimon, whose rapid response to this unnerving surge of financial fallout mocks Washington's increasing attempts to control Wall Street, which left to the chaos and troubles of the marketplace will suffer its fate justly.

The real problem with the growing global sector of money and trade is not with the looming consequences of institutional failure, but they unjustified anxiety of states and governments to shore up bad debts and misplaced investment.

"Too Big To Fail" must be stricken from the lexicon of economic policy in the United States. Any firms which have grown to big to govern themselves have gotten that way only through artificial benefits and taxpayer-funded subsidies. The county has nothing to fear, not even fear itself, from the sudden collapse of two billion dollars worth of wealth. Only panic-induced hysteria will induce the dangerous and unnecessary reaction of bank-runs and deposit failures.

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