How Hedge Funds Won The JP Morgan Bet

This article describes how hedge funds spotted a weakness in the position held by JP Morgan's "London Whale" and ganged up on him. Most of the article is about the hedge fund manager that spotted the weakness and bet against the "London Whale". The best title for the article would be a description of the Whale that beat the London Whale. I suppose that this is the kind of story that many like to read. I posted the article, however, because it describes the trading game as it is played by Wall Street Bankers, and by hedge funds. It is played for big stakes by making heavily leveraged bets, with borrowed money, on minor changes in the value of credit derivatives. It is a sum zero game, in which one trader's loss is another traders gain. Nothing of value is added to the economy in the process. Money that could have been used to fund business investment, is being used to fund the bets being placed by the gamblers. The successful gamblers join the ranks of America's super-rich, and they can use their wealth to influence government policies on taxation and the regulation of the casino in which they play. JP Morgan's deposits are insured by the FDIC, and it is too big to fail. Taxpayers are enabling JP Morgan to have a seat at the biggest casino in the world.