These guys don’t have any real knowledge, that’s why they’re journalists and not hedge fund managers.
The JPM trade was designed to hedge exposure to corporate bonds. Sure enough, while their derivative position went down, their bond portfolio went up. But they took too large a derivative position, and distorted the market, so they overshot their hedge. However, the total loss is likely to be less than $2 billion, not more.
Furthermore, JPM has shareholder capital of $190 billion, and earns $5 billion a quarter from operations. They can easily afford to absorb this loss, and hopefully they will reform and cut back on risk-taking.
If JPM knows what it is doing and can absorb their losses on their own, then why do they need government provisions to cover them?
I have no interest in what JMP does or how it handles their business ... I only care that taxpayers are not on the hook for any losses.