law. and unequivocally last year, a set of trades that were done by a group of jpmorgan traders in london that used derivatives and mortgage instruments, the same stuff in 2008, lost $6 billion for jpmorgan. people are still trying to get their heads around it. this was internal bank trading. this wasn t trading customer money explicitly. it was trading the bank s money to increase or decrease their capital and they blew it. and jamie diamond, the ceo of jpmorgan has been very explicit of, we blew it. we made mistakes. and one of the folks in the banking business that s generally held up as a finance leader that everyone else should emulate in the industry. why should the average person care? there are two things going on. one problematic and one even more problematic. the problematic for my perspective is judge jpmorgan is a privately held bank that lost
is it took taxpayer money, but, it became one of the most profitable of the wall street banks. and, basically, what they were doing was, they were taking these things called cdos and, you can call them xyz, abcs, but as you said, they were the riskiest of the mortgage instruments. they were designed to fail, and they were designed by a hedge fund guy who made a killing on the whole gregg: treep 3.7 billion dollars, and he knew they d go down and they were the worst of the worst subprimes and the clients buying the bonds would only make a profit if the value gained, right? exactly. if they were sold as basically your this is a steady, perhaps a little bit risky way of betting on the housing market. the boom would continue.
but the question i have is was this clearly illegal, or was this such uncharted terrain because these are new exotic products that there weren t even laws written to cover this yet? no, no. fraud is fraud. clearly they lied to their clients. they sthed is a good thing to buy at the same time they were selling it short and helping mere paulson sell it short. so they obviously knew it was not a good thing to buy. they had the guy selling it short pick the mortgage instruments to put into this particular thing, abacus so, he knew which ones were the worst ones. he picked the worst ones, knowing it was going to fail. at least the allegations say it was. it s like selling somebody a house with a defective furnace that you know it s going to explode and then buying fire insurance on the house that pays off for yourself, maybe buying life insurance with yourself as the beneficiary. this just stinks to high heaven and is really shameful. the s.e.c. i m sorry, goldman says the accusatio
higher taxes for healthcare, higher taxes on the state and local levels and not only that, you re going to have rate hikes. think about it right now. interest rates. interest rates. the fed fund rates at essentially zero. banks borrowing for nothing but think about which a that does to treasury. 3%, almost nothing. why put your money in a fixed income investment, a cd, bond, treasury bill? you have to put it in the stock market. that has to change at some point. it s unprecedented. two years of zero percent fed funds. how can that happen? a ten-year loan, which is a lot of mortgage instruments that, moves up and you have 5 plus percent mortgages. you remember when mortgages were more but a lot of folks have gotten used to that. then what? that has an impact on the