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He defends Goldman and says this about JPMorgan: But the world would be better off if JPMorgan didn't run a gambling casino alongside a legitimate business. I
by gruseom 17y ago
He defends Goldman and says this about JPMorgan:
But the world would be better off if JPMorgan didn't run a gambling casino alongside a legitimate business. I take my hat off to Dimon, but I'd take away his derivative book in a second.
Why is it a casino in JPMorgan's case, but not Goldman's? Is there a difference between the two, other than that the speaker is invested in one and not the other?
I ask because Buffett and Munger have a mammoth interest in this subject (I was going to say "conflict of interest", but perhaps there's no conflict) and in the public statements I've seen neither has even mentioned that, let alone credibly addressed it. I find that disappointing. Like a lot of people, I've long looked to them as examples of business leaders who care about good beyond their personal profit and whose statements could therefore be trusted more than usual. But everything they've said (that I've seen) about the financial crisis is easily explained with reference to one principle, without Occam even breaking a sweat.
- tome 17y agoEqually they could have chosen to invest in GS ahead of JPM because of this view about one being a casino and the other not. However, this doesn't answer your original point: what is it about JPM that makes it a casino that doesn't apply to GS? I'd like to know the answer too. Good question.
- metaprinter 17y agoThe distinction comes from the fact that Goldman Sachs is an Investment Bank so there is inherent risks they engage in. JPMorgan is (mostly), a Deposit Bank, a place where clients store their money - there should be little risk in that.
- misterbwong 17y agoI took his comments differently; it seems like he's talking more along the lines of Glass-Steagall. I suspect that Munger doesn't have a problem with the casino (trading firm) itself but the fact that it is running alongside a traditional bank. The problem is, many people see JPM as a bank, not a trading firm, and mistakenly treat is as a bank when, in fact, it's taking more risks than a bank traditionally would.
- adulau 17y agoA small side note regarding the "gambling casino" comparison mentioned in the article, I think this is not comparable especially that casinos are much more controlled than a part of the financial activities. In the article : "Capitalism should not resemble a vast gambling hall. It shouldn't look like a casino." I don't think so. I would prefer to have clear rules like the one imposed to a casino than the never ending cycle of creating "model" in the financial activities that no one can't really understand : http://www.gov.ns.ca/just/regulations/regs/gccasino.htm http://www.gov.ns.ca/just/regulations/regs/gccasino.htm In other words, comparing casino and some financial activities is not a valid comparison. I mean sometime is better to invest in a casino business than in a financial product....