President Obama has apparently recorded an interview with “The View” which is due to air tomorrow . In the interview, the President discusses the recent loss of $2.3 billion due to poor bets on derivatives by JPMorgan Chase the other day . While the rest of the media will willfully gloss over the important underlying problem the President so cluelessly brings into focus, let’s let Barack Obama speak for himself :
JPMorgan is one of the best managed banks there is. Jamie Dimon, the head of it, is one of the smartest bankers we got and they still lost $2 billion and counting… We don’t know all the details. It’s going to be investigated, but this is why we passed Wall Street reform. This is the best, or one of the best managed banks. You could have a bank that isn’t as strong, isn’t as profitable making those same bets and we (the government) might have had to step in.
JP Morgan’s market capitalization (the total value of all tradable shares of a public corporation) is approximately $136.7 billion . The recent loss of $2.3 billion, which sent the markets into “shock,” represents approximately 1.68% of the company’s value, leaving it 98.32% intact (and this value was determined after the market shock and corresponding share drop).
But, according to the President, for any bank that wasn’t as strong as JP Morgan who suffered such a loss, the federal government “might have had to step in.” Why? Failure is an option, Mr. President, and perhaps one you should become more acquainted with before November arrives.
The lack of attention the media has paid to this comment is darn near criminal – it assumes that the government has a legitimate role to play in propping up banks that take large risks on derivatives and lose. Isn’t that the very definition of corporate welfare? This is the core problem with socialism – when you aren’t allowed to fail because you know the U.S. Treasury will be there to stop your fall  (since the President just said so), you’re more inclined to take riskier bets since it won’t be your money that must be coughed up to cover the losses – it will be the money of the American taxpayer.
Neither losses nor profits should be socialized. Period.
Crony capitalism is currently a massive and foundational problem in the United States, and if we don’t allow failure nothing will ever improve.
In love of liberty,
The Bulletproof Patriot