It appears that a large mass of blubber has created a cephalopodic clot in the soul sucking sinkhole named JPM. Star trader Bruno Iksil aka The London Whale “owned the spread” in a highly leveraged sovereign bond bet that failed to follow his gut, which soon became tripe tossed into the sea as shark chum. In these sorts of hedge fund feeding frenzies, the chum usually loses, and so it was for the London Whale.
THE LONDON WHALE
Last weekend, The New York Times published an investigation into the chain of command that would lead to this sort of wild gambling inside a bank that once upon a time was widely admired for its rigorous risk management. As if we needed further proof that reality will eventually humble all attempts at satire, the chain includes an Achilles (the Whale’s nominal supervisor) and a tick who bit the hand (or more likely the armpit) that fed all of them: chief investment office Ina Drew. We note that Ms. Drew has since announced her resignation, a departure that will be softened by a severance payment of $14.7 million.
The NYT report makes for entertaining reading, but begs the essential question: why was there ever such a creature as the London Whale swimming around inside a publicly subsidized commercial bank? James Rickards is the author of an extremely important book titled Currency Wars: The Making of the Next Global Crisis, and a highly respected analyst of high finance sewage and those who produce it. In a recent commentary in U.S. News, Rickards writes:
As of this writing, Mr. Dimon has not resigned. Also as of this writing, his “known associate” Mr. Jon Corzine remains at large, floating like a jellyfish among the seaweed. PBS recently released an excellent report on what appears to be fraudulent malfeasance at the black hole formerly known as MF Global, under Corzine’s spectacularly inept and potentially criminal leadership:
We note a statistically significant overlay between the residential preferences of financial titans and the epidemiological hot zone for Lyme disease. Perhaps we shall see a variation on the “junk food” defense in future criminal investigations wherein those under indictment for the most outrageous financial fraud in history will contend that their judgement was severely impaired by Lyme disease, thus they are not responsible for their actions. Ladies and gentlemen of the jury: the tick did it.
WHERE’S MY BONUS BITE?
These scandals are not isolated events, no more than the perverse scenarios that unfolded inside Abu Ghraib were the handiwork of a few “bad apples”. As Charles Ferguson puts it in this excerpt from his book Inside Job:
LONDON WHALE EATING BOAT FULL OF MUPPETS
“These articles have actually been in my family’s possession since 03/30/1981, the day that President Reagan was shot in Washington D.C. Back in the 70’s and 80’s, my mother worked for Bio Science Laboratories in Columbia, Maryland. Her laboratory was the laboratory contracted by Walter Reed Army Medical Center as well as the George Washington University Hospital to handle blood testing as well as other types of testing. Her lab did the blood work and testing for President Reagan. The test tube and the lab slip that I have are for his blood work to be tested for lead on [Monday] 03/30/1981. The testing was completed and the test tube was sitting on my mother’s desk. At the end of the week, she asked the director of her laboratory if she could keep the paper work and the test tube. The director of the lab told her no problem and really never gave it a second thought. It has been in my family ever since. My mother passed away back in November last year [2010] and my father passed away in January 2009. Prior to their passing, they knew that it was the only thing that I wanted with regards to their personal property or money that they accumulated over the years.”
Returning to Into That Darkness, we discover that Sereny expresses her assessment of this incident slightly differently, writing that this story offered the starkest example of a corrupted personality that she had ever encountered. She goes on to write:
Corrupt suggests not just rotten but also somehow broken (latin, rumpere); and Sereny means personality in the classical sense of that quality which must distinguishes an individual. So in this brief recollection we find Stangl’s personality – his voice, self and sounding; his pneuma, spirit and breath – manifesting the evidence of a collapsed moral consciousness, in which the most injurious and cruel twists of the knife are construed by the actor as gestures of kindness and mercy.
In his remarkably prescient book 
Law professor 
Reviel Netz’s idea of history as a
