Ross Saunders
The financial sector is back in the news as it emerged that cowboy investors at JP Morgan’s London office have lost $2 billion (£1.2 billion), leading to a run on shares which swept $19 billion off the bank’s market value in just two days.
JP Morgan had attempted to insulate itself from the economic crisis still contaminating the world economy by making “hedge” bets to try and offset losses on other investments, but the strategy backfired spectacularly on the bank.
There is no hiding from crisis-ridden capitalism, which has shown it has learnt nothing from the last five years of debt-fuelled disaster. Bankers who could do no wrong just a few weeks ago are now being asked to fall on their swords.
Ina Drew, the bank’s chief investment officer, has resigned, and three other high-profile traders could go, including Bruno Iksil, nicknamed “the whale” because of the huge gambles he made. Even chief executive Jamie Dimon is in the firing line, with investors demanding he step down as chairman.
Shed no tears for Dimon, Drew, Iksil and the others, though. They have been well paid for their incompetence: pay at JP Morgan increased by a grotesque 21% last year – in the middle of a recession! Drew will collect a £32 million payoff – more than two years’ salary – as she exits.
JP Morgan is attempting to write off the calamity as the result of the mistakes of a few individuals, but the record shows a different picture.
In 2010 JP Morgan was given a record-breaking £33.3 million fine by the Financial Services Authority for risking clients’ money on its own investments. JP Morgan is one of 16 banks under investigation for having engaged in speculative activity that pushed Greece into bankruptcy.
With these crimes in the spotlight, it’s not surprising that calls are growing for these banksters to be reined in, but reforms like the Volcker rule and the Dodd-Frank Act in the US, and the reccommendations of the Vickers Report in Britain, won’t remove these people from their positions of power and won’t solve the fundamental problems in capitalism.
£360 trillion of Europe’s wealth is pumped into derivatives – money which doesn’t satisfy any real human needs.
The only way to stop irresponsible cowboys from damaging our economy further is to take the running of it out of their hands, nationalise the banks and the financial system and for workers to run them as part of a democratically-planned economy.
