Friday, May 11, 2012

JP Morgan loses US$2 billion bet as risky trades unwind

The Wall Street banking giant JP Morgan Chase has revealed a shock US$2 billion dollar loss caused by a financially disastrous hedging strategy.

Listen to my analysis broadcast on The World Today.

The surprise losses have been linked to risky bets made by a trader in London that, according to insiders, became too big to unwind without rocking financial markets.

In a humiliating admission, JP Morgan chief executive Jamie Dimon has described the errors as "egregious" and "self-inflicted".

The scandal comes as US banks rebuild their shattered reputations after speculative bets on the US housing market sparked the global financial crisis.

As recently as last month, JPMorgan executives told investors they were "very comfortable" with positions held by the bank, raising questions about how much was known by senior management - and when.

The revelations are also likely to fuel debate about president Barack Obama's sweeping reforms of Wall Street.

From the news blooper vault - a recovery that deserves a gold medal

Wednesday, May 9, 2012

Business slams scrapping of company tax cut

The Government's decision to scrap the one percentage point cut to the company tax rate has not surprisingly angered business groups.

The anticipated relief for 700,000 businesses was flagged in the Henry Tax Review and was an original trade-off for the mining tax.

But the Treasurer has told the business lobby to blame the Coalition and the Greens for threatening to block the lower 29 percent.

Here's my initial assessment from ABC News 24's budget night coverage.

This morning, I interviewed Peter Anderson, the chief executive of the Australian Chamber of Commerce & Industry, about the company tax backdown and asked whether he blamed the Coalition for threatening to block the legislation.