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JP Morgan will ultimately hit the wall on its enormous derivatives book and become technically insolvent. But because JPM is the primary bank doing the Fed's manipulative bidding, the Fed will monetize it behind the scenes because otherwise JPM's catastrophic, fraudulent predicament will bring down the entire system.
Speaking Fed liquidity, we will likely never see any sign of it other than a big move of gold and silver, but based on some extensive reading and conversations about the JP Morgan situation, I believe the "tempest in a teapot" bad hedge loss at JP Morgan is running into the $10's of billions on a true market to market and collateral call basis and that it extends to many areas of JPM's derivatives positions. Again, this is something that we will never know unless the Government forces JPM to open its books - something that will NEVER happen. There are a lot of theories on how, what and why with regard to JPM's massive derivatives-related losses on a $100 billion portfolio of supposedly hedged positions. Since it is likely that taxpayer insured money has been employed, there is no reason for there to be any speculation on what is going on. JPM should be required to provide full disclosure and transparency in order to protect the interests of the taxpayers.
"Supply (in the money markets) is down considerably from the
peak in 2008 so sterilized QE3 that would bring more supply into
the money markets would be very helpful," Sylvester said.