JP Morgan--my take--read the fine print:
In JPMorgan Chase Trading Bet, Its Confidence Yields to Loss - NYTimes.com: " . . . In the case of the trade that generated the huge loss, the insurance on the contract does not come due until 2017, so JPMorgan could potentially hold off any actual losses until then. If the economy improves, the cost of insuring American companies could drop again. But now that the London Whale’s trade is public, hedge funds could force the cost of this specific insurance contract up, and with it JPMorgan’s paper losses. This is what appears to be happening now.
On Friday, the insurance index spiked sharply, bringing it up 32 percent from its low in March.
“There are no buyers or sellers in the market right now. Because of that, it is impossible for JPMorgan to get out of this trade,” said Gennaro Pucci, who oversees the PVE Macro Credit Fund in London. “These positions, which made sense for them to put on, just become impossible to manage when liquidity dries up.”
A senior Wall Street executive said on Friday: “JPMorgan violated the cardinal rule of risk: Don’t become the market.”"
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