Big Investor, Bigger Problems

Banks are widely considered to be the safest place to keep money and even to make a little bit more of it.  The investments that banks make are thought of to be so minimal and low risk that people think of these investments as completely harmless with no chance of losing their money.

Alas, this concept of security and trust is a mere dream.  If financial safety exists, it is much less tangible than an average traditional bank.  In the beginning of Mar of 2012, JP Morgan Chase lost more than $2 billion in investments from trading.  Although their profits last year grazed the $19 billion dollar mark, they lost more than 10% of their profit.

Although the actual size of the loss is in some ways irrelevant, the psychological effects of such a blunder are extremely damaging not only to the American economy but also the economy of the rest of the world.

Much like America, the European Union also went through a financial crisis and is continuing to recover slowly.  A significant portion of Europe’s economy relies on the stability and the business of America’s economy.  A loss the magnitude of JP Morgan Chase’s is a major setback to America’s economic recovery as well as Europe’s economy.

With such an intense feeling of mistrust, no American or European wants to invest money which creates more jobs and creates more money.  JP Morgan Chase is the biggest bank in the world, and one would think that because they are so big and successful to make such egregiously detrimental mistakes.

Even if impressive size does not mean trustworthiness in business dealings internally, it does usually mean that a company makes smart decisions and is good with investors’ money.  This is especially true for banks which are traditionally trusted institutions with long histories.


Comments are closed.