I think a very fair question to ask now is: why in the world would a central bank be willing to lease gold to JP Morgan at these current lease rates: 1 mo: 0.19%,, 2 mo: 0.22%, 3 mo: 0.26%, 6 mo: 0.44%, 1 year: 0.75%. That's not nearly enough risk premium IMO.
S& P downgrade, note reference to "counterparty" risk that I spoke about repeatedly last year:
NEW YORK (CBS.MW) - J.P. Morgan Chase lost out on a market rally Thursday as the leading bank's shares got undercut by a possible downgrade from ratings agency Standard & Poor's.
S&P said it might cut the counterparty ratings for J.P. Morgan Chase as well as Merrill Lynch and Morgan Stanley (MWD: news, chart, profile) because of deterioration in the investment banking industry. The downgrade wouldn't likely be more than one notch, it said.
Shares of J.P. Morgan (JPM: news, chart, profile) fell 1.3 percent, while Morgan Stanley eased 0.2 percent. Merrill (MER: news, chart, profile) gained 1.2 percent.
The ratings agency may cut the their "AA-minus" long-term counterparty credit ratings and their "A-1-plus" short-term ratings.
"The actions are based on the deteriorating environment for the profitability of the investment banking industry," said S&P credit analyst Tom Foley.
"Although all of these firms have been profitable during the first half of this year, and should remain so, Standard & Poor's anticipates that they will be operating under conditions of sustained revenue pressure and environmental risk." |
