‘The course of true love never did run smooth’ – especially when it is the love of money! On 10 March, the JP Morgan Chase bank announced that its Chief Investment Office had lost $2bn on trades. This is peanuts to JP Morgan, the world’s largest bank, which has total assets of $2.32 trillion – less than 0.1%. JP Morgan is widely touted by an enthralled media as an ‘exemplary’ bank. The President agrees: ‘JP Morgan is one of the best managed banks there is, Jamie Dimon, the head of it, is one of the smartest bankers we got’ – Obama even has his own bank account there. However, Dimon has been a loud and outspoken critic of bank regulation, and particularly of the Volcker Rule, which would, in theory, prevent commercial banks like JP Morgan from gambling on the exchanges.
This issue is at the centre of congressional debate, so, of course, JP Morgan’s losses gave ammunition to the proponents of regulation, who imagine that capitalism can be saved from its own contradictions if only ‘excesses’ are curbed. Dimon has had to eat humble pie and fire a few subordinates to placate his critics. His supporters just shrug their shoulders and say that nothing special has happened.
The FBI is ‘investigating’, as if that is likely to lead anywhere. The Senate Banking Committee is going to conduct its own inquiries, although that has a fat chance of changing anything, since 16 of its 22 members have received campaign contributions from JP Morgan. The bourgeois press keeps insisting that JP Morgan is a ‘well run Bank’, as if it really had some insight into the murky workings of finance capital. Even the shareholders of JP Morgan, who have lost over $2bn have expressed their confidence. Even the President, another beneficiary of JP Morgan largesse, has given his blessing to the gambling. This is hypocrisy and greed at work on Wall Street.
• On Friday 18 May the Facebook website had its Initial Public Offering (IPO), where company shares are put on public sale for the first time. At the heart of an IPO is the transformation of industrial capital into fictitious capital in order to acquire funds to expand operations and increase profitability. In the process, the bankers floating the shares make huge fees, and existing shareholders enjoy massive windfall profits.
There was tremendous hype and excitement – this was set to be the third biggest IPO ever, valuing the company at $104.2bn. Bankers in on the deal included all the big names of finance capital. Television networks set up cameras at Facebook headquarters to broadcast the ‘historic event’ live. Crowds gathered outside the NASDAQ exchange ‘to witness history being made’.
However, the NASDAQ computer system buckled under the load of buy orders, delaying trading by half an hour. The first trades came through at $45, making Mark Zuckerberg one of the richest people in the world. Then the price started to collapse, down to $38 on the first day and below $32 within a week.
What a short memory Capital has: all hype and excitement was forgotten, and the air became thick with howls of recrimination, threats of lawsuits and rumours of insider dealing! The petit bourgeoisie, capricious as ever, dreaming of making a fortune, had been whining about being locked out of the supposedly lucrative offering by big Capital, now began howling about being duped by big Capital. The ‘historic event’ had turned into a belly flop. Yet when the dust settles, the lawsuits resolved, the petit bourgeois paid off, and blame apportioned, it will leave finance capital the winner in the greed stakes.
Steve Palmer
Fight Racism! Fight Imperialism! 227 June/July 2012
