Ever since JPMorgan Chase disclosed a multibillion-dollar trading loss this month, the central mystery has been how a bank known for its skill at risk management could err so badly.

As early as 2010, the senior banker who has been blamed for the debacle, Ina Drew, began to lose her grip on the bank’s chief investment office, according to current and former traders. She had guided the bank through some of the most rugged moments of the 2008 financial crisis, earning the trust of Jamie Dimon, JPMorgan’s chief executive, in the process.

But after contracting Lyme disease in 2010, she was frequently out of the office for a critical period, when her unit was making riskier bets, and her absences allowed long-simmering internal divisions and clashing egos to come to the fore, the traders said.

This story was posted on The New York Times website on Saturday...and I thank Phil Barlett for sending it. It's an interesting read...and the link is here.

JPMorgan reported its first-quarter earnings on April 13. That’s when Mr. Dimon and Mr. Braunstein played down the problem, including with Mr. Dimon’s now-infamous remark that reports about the trades were a “complete tempest in a teapot.”

JPMorgan was clearly executing a strategy. The bank didn’t want its trader to become a wounded zebra on the savanna, attracting predators. Had the bank owned up to the problem right away, the losses could have ballooned as other investors piled in on the other side to force JPMorgan to let go of its positions at fire-sale prices.

JPMorgan executives spread the word, whispering in the ears of reporters and analysts, that hedge funds on the opposite side of the trade were in trouble. JPMorgan signaled that it wasn’t going anywhere. It had a big balance sheet behind these trades and could hold for a very long time. Its message: Hedge funds, you’re in trouble. Sell now.

“As they started to get some scrutiny, the last thing that they wanted was to admit that the journalists had been right,” said David Murphy, a risk management specialist at Rivast Consulting.

Now we realize the bank was bluffing. And it didn’t work.

This very interesting read was posted over at the propublic.org website late last week...and I borrowed it from yesterday's edition of the King Report...and the link is here.

Chief executive Jamie Dimon told investors that the bank was suspending its share buyback programme but would continue its dividend.

The decision came despite Mr Dimon reassuring investors just 10 days ago that it saw no reason to change its capital programme in the wake of the trading problems. Asked about share buybacks in a conference call he said they would not change.

On Monday, he tried to calm investor fears by stating he saw no “disaster scenario” for the bank coming from the trading controversy and was not “worried about the ultimate size of the loss”.

The statement came despite reports suggested the losses could top £4.4bn, more than twice the sum the bank had released.

One has to wonder just how big JPM's losses are going to add up to. Obviously they are going to get lots higher. This story was posted in The Telegraph during the New York lunch hour yesterday...and I thank Roy Stephens for his first offering of the day. The link is here.

JPMorgan Chase & Co. may face even bigger losses on faulty bets in credit markets if Europe’s debt crisis worsens, according to one of the hedge funds that took the other side of the trades.

“They’re not out of those positions,” Michael Platt, co-founder and chief executive officer of BlueCrest Capital Management LLP, said today in an interview on Bloomberg Television’s “Inside Track.” “If we end up with a catastrophe in Europe in the short run, they’re probably not positions that anyone would want to have.”

The bank’s positions were built by Bruno Iksil, a JPMorgan trader nicknamed the “London whale” because his bets had become so large, Bloomberg News reported on April 5. Traders on the other side, known as counterparties, say the market has since moved even further against JPMorgan.

It couldn't happen to a nicer bunch of crooks. This Bloomberg story was posted on their Internet site yesterday morning...and I thank West Virginia reader Elliot Simon for bringing it to our attention. The link is here.

China, which holds $1.17 trillion in U.S. Treasuries, still buys some Treasuries through primary dealers, but since June 2011, that route hasn't been necessary.

The documents viewed by Reuters show the U.S. Treasury Department has given the People's Bank of China a direct computer link to its auction system, which the Chinese first used to buy two-year notes in late June 2011.

China can now participate in auctions without placing bids through primary dealers. If it wants to sell, however, it still has to go through the market.

The change was not announced publicly or in any message to primary dealers.

While there is been no prohibition on foreign government entities bidding directly, the Treasury's accommodation of China is unique.

This longish Reuters story was posted on their website late yesterday evening. Washington state reader S.A. was the first one through the door with it...and I borrowed the headline from a GATA release. The link is here.

For once Russian President Vladimir Putin got it right; it wasn't worth turning up at Camp David for the G8 summit.

On the most urgent issue of the day, one that has already cost global stock markets $4 trillion and which threatens a recession that could make 2008 look like a bump in the road, they simply agreed to differ. Their bland communiqué concluded with pious hopes that Greece should remain within the euro and an agreement "that the right measures are not the same for each of us"...which is diplomat-speak for German Chancellor Angela Merkel digging in her heels.

Even the combined pressure of the other Western leaders at the G8 summit didn't move her. U.S. President Barack Obama stressed that the eurozone crisis was "of extraordinary importance." Italian Prime Minister Mario Monti, the only trained economist among them and who was asked to lead the discussion Saturday morning on the global economy, stressed the need to restore demand, saying, "I think we should regard it more positively than the most conservative European authorities do."

Grexit, the vogue term for a Greek exit from the euro, is slowly but surely becoming inevitable. The implications, for Europe and the global economy, are deeply alarming.

I consider this UPI story a must read...and it's Roy Stephens second offering of the day. The link is here.

Those readers who have been berating me for years for even considering the possibility of a country leaving the euro have recently fallen silent. (You know who you are.)

This week I want to move on from trying to forecast what even the most purblind of euro-fanatics now recognise as, to put it mildly, a very distinct possibility, to considering the consequences.

You may think this is premature. Personally, I have always thought that if you are going to be a forecaster you should specialise in being early.

So what would happen if Greece were to leave the euro? The short answer is that I don’t know. What’s more, neither does anyone else. Moreover, you should beware anyone who tells you otherwise.

This story appeared in The Telegraph on Sunday evening...and is Roy's third contribution to today's column. The link is here.

Financiers are becoming increasingly concerned that many taxpayer-backed borrowers are losing their ability to access private funding markets. The development raises the prospect of already heavily indebted eurozone national governments being forced to take on hundreds of billions of euros of additional debts.

“Cracks are appearing in the funding markets for these institutions. If you don’t like the sovereign risk, why would you take the risk of buying the debt of the institutions they support,” said one credit banker.

In France, the authorities are racing to avoid having to rescue Caisse Centrale du Crédit Immobilier (3CIF) after Moody’s downgraded the mortgage lender last week, warning it could become totally reliant on taxpayer support within months.

But the troubles at 3CIF are seen as evidence of far wider problems that are likely to face a range of quasi-government borrowers across Europe, as investors become more nervous about exposing themselves to the risk of a break-up of the euro area.

This story was posted over at The Telegraph on Sunday evening...and is another item courtesy of Roy Stephens. The link is here.

When the head of Greece's central bank, George Provopoulos, recently met with his European counterparts, the session turned into a confession. His fellow Greeks had just withdrawn €800 million ($1.022 billion) from their bank accounts, within just a few days. Consequently, at a meeting of the Governing Council of the European Central Bank (ECB) last Tuesday, Provopoulos had to ask for money -- once again.

Most Greek banks are currently cut off from the usual ECB lines of credit. They no longer have sufficient collateral. A number of banks are even currently operating without sufficient capital as a risk buffer for their activities. Indeed, Provopoulos had to accept last week that yet another crop of Greek banks were branded as unfit for ECB refinancing.

These zombie banks are being kept alive with help from the so-called Emergency Liquidity Assistance (ELA) -- a rescue aid program managed by Provopoulos. At every session of the Governing Council, he has to have these special allocations approved.

This story showed up on the German website spiegel.de yesterday...and once again I thank Roy Stephens for bringing it to our attention. The link is here.

Alexis Tsipras, the man who will very likely emerge again as the winner of the upcoming Greek parliamentary election, is campaigning throughout the country primarily under one slogan: "We won't pay any more."

He doesn't say what would replace the "barbarism of the austerity dictates," which he maintains that the European Union partners, above all German Chancellor Angela Merkel, have forced upon his country. He argues that the Europeans are only bluffing -- and he promises that they will continue to help, even if the Greeks no longer service their debts. He says: Elect me and all this misery will come to an end.

Stavros Lygeros, 59, is sitting in a café in the posh Athens neighborhood Neo Psychiko. Lygeros is a political commentator and a bourgeois intellectual. He's endeavoring to explain why the Greeks are following Tsipras in droves, although this young politician is clearly a seductive new star and his successful radical left-wing Radical Left Coalition (Syriza) cannot explain who will pay the future salaries of civil servants, doctors and nurses. Lygeros says that many Syriza voters don't even believe that this party has a solution.

If this isn't a train wreck in the making, I don't know what is. It's another Roy Stephens offering from yesterday's spiegel.de website...and the link is here.

Despite official claims to the contrary, the governments of the euro zone are threatening to kick Greece out of the currency union. At a meeting of euro-zone finance ministers last Monday in Brussels, it was made clear to Greek Finance Minister Filippos Sachinidis just how serious the situation had become.

"If we now held a secret vote about Greece staying in the euro zone," Euro Group Chairman Jean-Claude Juncker warned his Greek colleague, "there would be an overwhelming majority against it." Other participants in the meeting also had harsh words for Sachinidis, with particularly strong criticism towards Athens coming from Portugal and Ireland, countries that have also accepted bailouts in the crisis.

The countries say it is unacceptable that they have made serious efforts to fulfill the European Union's guidelines for consolidating their budgets while Greece incessantly breaks its reform agreements. It was the Greeks, they noted, who poured oil on the flames and repeatedly caused the whole euro zone to catch fire with their repeated negligence, other ministers added.

This story was posted on the spiegel.de website yesterday as well...and is Roy's final offering in today's column. The link is here.

A slowdown in China poses the biggest threat to the global economy and not a Greek exit from the eurozone, says economist and investor Marc Faber, publisher of the Gloom, Boom and Doom Report.

Greece is teetering on abandoning the eurozone, which could roil global markets.

Big deal, Faber says.

"I think the biggest risk is actually China because if you look at Greece, it's an insignificant economy," Faber tells CNBC Asia's "Capital Connection."

"Yes, they owe money, but the market knows that it's bankrupt."

This story was posted over at the moneynews.com website on Friday...and I thank reader 'Chris' for bringing it to my attention. The link is here.

The U.S. Commodity Futures Trading Commission proposed easing part of Dodd-Frank Act regulations limiting speculation in oil, natural gas, wheat and other commodities after industry groups said the original rules were onerous.

The CFTC’s five commissioners voted 5-0 in private to propose changing how companies aggregate trading positions when they have ownership stakes in other firms, the agency said in a statement today. The agency proposed raising to 50 percent from 10 percent the threshold for when a company is considered to have an ownership or equity stake in another firm and must add trading positions.

The proposal, which is open to public comment, would affect so-called position limits that were completed by the CFTC in October as part of an effort to reduce excessive speculation in commodities. The limits, which cap the number of contracts a trader can have in a market, prompted a lawsuit by the International Swaps and Derivatives Association Inc. and the Securities Industry and Financial Markets Association.

“I support the commission’s proposed rules that, among other things, expand the exemptions relating to information sharing restrictions, expand the circumstances under which market participants will not be required to aggregate positions,” Jill E. Sommers, a Republican commissioner, said in a statement today.

Quite a number of people weren't happy when this Bloomberg story showed up late on Friday afternoon...and I was one of them. I ran it past Ted Butler...and he says he's rather disturbed by it as well, but he said that it all depends on who has "trading control" of all these futures contracts that will fall under this revised regulation. We'll find out soon enough. I thank Dr. Dave Janda for being the first through the door with story. It's worth reading...and the link is here.

As the Missouri General Assembly pushes toward adjournment, a bill that originally aimed at exempting gold investors from capital gains taxes has now transformed into the Missouri Sound Money Act of 2012, which would make gold and silver legal tender within the state.

The legislation would also eliminate several state taxes on gold and silver, including capital gains and sales taxes.

House Bill 1637 would allow the establishment of sound-money depositories that would allow citizens to deposit precious metals and use debit cards to pay bills out of those accounts. The depositories would be regulated by Missouri's Secretary of State.

This story was posted over at the mineweb.com yesterday...and I thank reader 'David in California' for sending it along. The link is here.

The first is with Egon von Greyerz. It's headlined "Customer Shocked "Allocated" Gold Not in Swiss Bank". The second blog is with Stephen Leeb. It bears the title "Israel Prepping for War, Junior Gold Shares Set to Soar". And lastly is this interview with Agnico Eagle CEO Sean Boyd. It's headlined "Agnico CEO Calls for $3,000+ Gold for the First Time Ever".

I've read articles from more than one analyst claiming that gold stocks are down on low volume, implying there's a lack of interest in precious metals. While on the surface that seems like an obvious statement, their point is that most of the recent volume has been coming from sellers and thus exaggerating the recent decline.

I decided to test this hypothesis, because if correct, it has investment implications, starting with the fact that at some point you run out of sellers; and if and when buyers return, the ensuing rise could be spectacular.

Senior precious metals analyst, Jeff Clark, has this must read piece posted in yesterday's edition of Casey's Daily Dispatch...and the link is here.

MineWeb's Lawrence Williams reports on Sprott Asset Management CEO Eric Sprott's address to the New York Hard Assets Investment Conference last week, which stressed market manipulation by governments and credited GATA for helping to expose it in gold.

I borrowed the headline and the introductory paragraph above from Chris Powell's GATA release yesterday. Williams' report is headlined "Sprott Sees Great Things for Gold and Silver" and it's posted at MineWeb's Internet site here. Anything that Eric has to say is a must read in my opinion...and this piece is no exception.

Gold bushwhacked the bears last week. It's even got gold bugs talking about gold stocks ... again.

After breaking gold bugs' hearts by plunging to a new low for the year on Thursday, gold violently reversed. Measured by the CME floor close, the benchmark gold contract gained $38.30 on the day. It followed up on Friday by adding another $17, for a two-day gain of 3.31%.

The NYSE Arca Gold Bugs Index (HUI) jumped 5.29% in these two days.

Gold stocks' outperforming the metal is significant, because they have been atrocious this year. As of Friday's close, the HUI was down 20.5% on the year, while gold was actually up 1.4% on the year. Just a restoration of late 2011's multiples could produce serious gains.

If gold's reversal sticks, it will be a triumph for the contrary opinion sentiment indicators. Nothing else had been offering any comfort.

This story showed up at the marketwatch.com website yesterday...and is well worth reading. It's another story I pulled from a GATA release...and the link is here.

Interviewed by GoldMoney founder James Turk, Sprott Asset Management's John Embry remarks that "if you're negative on gold, you must be bullish on currency, and I don't see how anyone can make that argument."

The comment is part of a conversation about how the bull market in gold is far from over. Video of the interview is 33 minutes long...and needless to say, I consider it a must watch. It's posted over at the GoldMoney Internet site here.