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How can a bank lose $2 billion in six weeks?

That’s just one of the mysteries surrounding the news that JPMorgan Chase, widely thought one of the safest U.S. banks, is gushing red ink from bad trading bets. As details slowly emerged Friday, the shares of the nation’s largest bank fell hard, as did those of several rivals.

The story behind the loss is complex, and rich in irony. How it’s viewed could influence regulators implement a major financial overhaul law called Dodd-Frank. How hard regulators crack down on bank could have a big impact on the stability of the financial system.

Here are answers to some questions about the loss:

Q: How exactly did the bank lose so much so fast?

A: First, start with the irony. JPMorgan says the losses came from a trading portfolio designed to offset losses in the bank’s lending business. Instead of offsetting losses, these so-called “hedges” added to them.

JPMorgan extends money to companies through loans and by buying bonds. The bank was worried that it might not get all its money back, so it bought protection. Though it didn’t detail how it did this, banks typically buy credit default swaps, essentially insurance contracts that pay out when companies stiff their lenders.

It gets more complex. In the often dizzying, Alice-in-Wonderland world of banking, these hedges are themselves sometimes hedged, and that’s exactly what JPMorgan did. The bank apparently thought it had bought too much protection, so it hedged its hedge.

It’s that second hedge, basically a bet that companies would pay back their loans, that led to the losses.

Q: How does the “London Whale” figure into the story?

A: News reports before the bank announced its loss said that a trader at the bank dubbed the “London Whale” had invested heavily in an index of credit-default swaps, and that the bets were producing losses. But in a conference call Thursday, Jamie Dimon, the CEO of JPMorgan, said the news reports about London trades were only “somewhat related” to the losses. He provided no other details.

Q: Why are other bank stocks falling on the news?

A: It’s not just the size of the bet that’s scaring investors, but its complexity. The fact is, not even experts know how precisely big banks make money, and occasionally lose it. Their wagers are largely hidden. The opaqueness, which investors normally shrug off, is spooking them now.

Investors are uneasy also because JPMorgan has a reputation of managing risks better than almost anyone in the business. Investors seem to be asking: If this bank can lose $2 billion in six weeks, maybe others can, too?

Finally, there’s the regulatory threat. The loss comes amid heated debate in Washington over just how tightly to regulate banks. “The timing of the JPMorgan announcement couldn’t be worse,” said Whitney Tilson, head of hedge fund T2 Partners, speaking at an industry gathering in Las Vegas.

Investors fear that bank profits could be pinched by the so-called Volcker Rule restricting trading that banks do with their own money, as opposed to clients’ funds. Dimon has been an outspoken critic of the rule, and an impactful one given his skill at navigating his bank in recent years. JPMorgan was the only bank to remain profitable during the 2008 financial crisis.

Now that Dimon has been pushed off his pedestal, investors are worried that regulators will be tougher in enforcing the new rule.

Q: Isn’t the trading that led to the loss banned already?

A: No. The rule doesn’t take effect until July, and even then regulators are suggesting banks will have another two years to comply.

In any case, it’s not clear that the trade in question were subject to the rule. In the conference call Thursday, Dimon said the trades that backfired were hedges, not bets for profit, so they wouldn’t have fallen under the rule.

But some experts have doubts.

Nancy Bush, a banking analyst at NAB Research, says it’s not always clear what is hedging and what is gambling. The size of JPMorgan’s loss makes her suspicious.

“So they made money on hedges and then they hedged some more,” she said. “At some point it goes from being a hedge to being a money maker. They crossed the line here somewhere and it’s going to cost them.”

Sen. Carl Levin from Michigan, the chair of a subcommittee that investigated the crisis, put it more bluntly. “This is not a hedge,” he said. He called the loss a “stark warning” about the danger of “risky bets” at banks.

Q: How much will the trading loss hurt JPMorgan?

A: Likely not much at all, putting aside the impact of tougher regulation. JPMorgan is a big money maker. The $2 billion loss, which is before accounting for taxes, compares with $19 billion in net income last year and $16 billion the year before that.

What’s more, Dimon said that $2 billion loss will be offset by $1 billion trading bets that have already paid off. Dimon said there are $7 billion more paper gains from trades that he can tap in case losses grow.

Q: Are more losses possible?

A: Dimon said he is trying to unwind the bad bets in a “responsible” manner to minimize losses, but prices can move against him. That would mean more losses. Dimon has said the $2 billion could become $3 billion depending on how markets react.

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Hundreds of Japanese are marching and waving “No nukes” banners to celebrate the last of this nation’s 50 nuclear reactors switching off.

The crowd at a Tokyo park Saturday said they were not concerned about government warnings of power shortages.

One of three reactors at Tomari nuclear plant in the northern island of Hokkaido is going offline for routine maintenance checks.

After last year’s March 11 quake and tsunami set off meltdowns at Fukushima Dai-ichi plant, no reactor stopped for checkups has gone back up personal business card. Japan requires new tests on withstanding quakes and tsunamis, and it needs local residents’ approval to restart reactors.

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The United Nations hopes to have 30 cease-fire monitors in Syria next week and plans are already being made for the deployment of up to 300, a spokesman for international envoy Kofi Annan said Friday, as France called on the international community to prepare for the possible failure of the increasingly fragile peace deal.

Seven observers are on the ground and another two will arrive on Monday, said Annan’s spokesman.

“During the course of next week we hope that those that we are seconding from missions in the area who can move quickly will be there and we will make the numbers up to 30,” Ahmad Fawzi told reporters in Geneva.

The preliminary agreement between Syria and the United Nations on the deployment of U.N. observers says they will have freedom to go anywhere in the country by foot or by car, take pictures, and use technical equipment to monitor compliance with the cease-fire engineered by Annan.

But the issue of using helicopters and aircraft will likely dominate discussions in the coming days, Fawzi told The Associated Press.

The larger contingent of up to 300 also still needs to be approved by the U.N. Security Council.

“As soon as the Security Council adopts a resolution authorizing up to 300 monitors on the ground, we will be ready to deploy very, very rapidly,” Fawzi said.

“We are preparing for the deployment because we feel that it is going to happen sooner or later because it must happen,” he added

In France, Foreign Minister Alain Juppe called on the international community to live up to its responsibilities and warned that if Annan’s peace plan “doesn’t function, we have to envisage other methods.”

U.N. Secretary-General Ban Ki-moon accused Syrian President Bashar Assad on Thursday of failing to honor the peace plan that went into effect a week ago payday loan.

Juppe said on France’s BFM television that his country would support a U.S.-backed proposal for a U.N. arms embargo and other tough measures against Syria.

The peace plan is “the last chance before civil war. … We don’t have the right to wait,” he said.

Juppe hosted U.S. Secretary of State Hillary Rodham Clinton and other diplomats in Paris on Thursday to try to work out options for Syria.

Annan’s diplomacy succeeded in getting Russia to back the monitoring mission, but Syria’s ally continues to resist more forceful measures.

“The Russian position is in the process of evolving,” Juppe said without elaborating.

U.N. chief Ban told the Security Council on Thursday that the situation remains “highly precarious,” citing an escalation of violence including “shelling of civilian areas, grave abuses by government forces and attacks by armed groups.”

That view was echoed by Annan’s spokesman.

“The situation on the ground is not good, as we all know,” Fawzi said. “There are casualties every day. There are incidents every day. And we have to do everything we can to stop what’s going on. The killing, the violence in all its forms.”

The observers, who report to Annan daily, will have freedom to install temporary observation posts in cities and towns, to monitor military convoys approaching population centers, to investigate any potential violation, and to access detention centers and medical centers in coordination with the International Committee of the Red Cross and Syrian authorities, the agreement says.

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Angela Charlton in Paris contributed to this report.

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Japan’s quarterly central bank survey shows no improvement in business confidence from the previous quarter. The worse-than-expected result reflects a deteriorating outlook among medium and smaller manufacturers despite easing worries over the crisis in Europe.

The Bank of Japan’s quarterly “tankan,” released Monday, showed the main index for big manufacturers was at minus 4 for the January-March quarter, unchanged from the last quarter of 2011. Many analysts had forecast an improvement to minus 1 faxless pay day loans.

A negative reading indicates greater pessimism than optimism among those surveyed.

Data released last week showed weaker than expected factory production in February, underscoring the fragility of the economic recovery as growth in Asia slows.

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ST. LOUIS • A developer is pouring $30 million into renovating a Cupples Station building downtown, while in the same complex of 19th-century warehouses a similar structure continues to sit empty and in danger of collapse.

It’s a tale of different buildings and different owners with starkly different approaches. Both buildings are within a city historic district and are on the National Register of Historic Places.

Cupples 9, a seven-story warehouse built in 1894, had been empty for years when an affiliate of the Koman Group, a Creve Coeur-based developer, bought the building out of foreclosure last spring. Clayco Inc. is Koman’s general contractor to restore the building’s red brick exterior and renovate the interior of heavy Douglas fir beams and columns as modern loft-style offices.

Koman already has two Cupples 9 tenants: Osborn & Barr, an agriculture-focused marketing firm, and Mackey Mitchell Architects, a St. Louis design firm founded in 1968.

Mackey Mitchell announced this week that it will leave its longtime home near Union Station and by late this year take over about half the fifth floor at Cupples 9, which is a block west of Busch Stadium.

The firm, begun in 1968 by Gene Mackey, plans to lease about 11,000 square feet of Cupples 9 space, about 4,000 square feet fewer than what it occupies now at Power House, an office building just south of Union Station. Mackey Mitchell designed that building, where it has rented space for 24 years.

Dan Mitchell, the firm’s president, said Mackey Mitchell plans to retain all 45 employees when it moves Cupples 9, which has 12-foot ceilings, large windows and exposed brick walls. The firm is planning “a more linear” seating arrangement to enhance employee communication, creativity and collaboration, Mitchell said.

“We’ll have a kind of bench-style configuration with more community space or team space dispersed through the studio,” he said.

Mackey Mitchell chose Cupples 9 after examining numerous buildings downtown, in the Central West End and near St. Louis University before opting to remain downtown, said Mitchell, adding that the firm’s Power House lease expires next February.

Osborn & Barr, as Cupples 9’s anchor tenant, will occupy floors two through four.

Dan Farris, Koman’s senior investments manager, declined Thursday to discuss details of the Cupples 9 redevelopment. He said more information about the project will be announced in about two weeks.

A block west of Cupples 9 on Spruce Street is Cupples 7, which has experienced only decay since 2005, when developer McGowan/Walsh bought the building and announced plans to convert it to lofts and commercial space. The project never got off the ground.

Ballpark Lofts III LLC, the building’s current owner, applied last year for a demolition permit, which the city’s cultural resources officer, Betsy Bradley, denied. The city’s Preservation Board upheld Bradley’s decision. Pending in St. Louis Circuit Court is Ballpark Lofts’ appeal of the Preservation Board’s ruling. A hearing on the appeal is scheduled for Thursday.

Joining the appeal is Montgomery Bank, which lent Ballpark Lofts more than $1 million to buy Cupples 7. The loan is in default. The bank has an agreement with the St. Louis treasurer’s office, which would pay off the loan, then work out a payback agreement with Ballpark Lofts. Such a transaction would occur only if Cupples 7 is demolished first.

The treasurer owns a parking garage next to Cupples 7 and is concerned the garage would be damaged if the old warehouse collapses. Barricades the city put up around the building in September impedes access to the garage, the treasurer office’s lawyer has said.

Much of the building’s roof has collapsed and most of the interior is in ruins. A structural engineer hired by the owner told the Preservation Board last year the brick walls are unstable. Bracing the walls and “mothballing” the building for possible redevelopment later could cost $8 million to $10 million, officials said.

Osborn & Barr’s move to Cupples 9 will result in a two-floor vacancy at Cupples 8, another of the old warehouses that McGowan/Walsh renovated as offices and condos.

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With more money sitting in their bank account than some companies are worth, Silicon Valley giant Apple finally decided it was time to pay a dividend.

Tim Cook, CEO of the maker of iPhones, iPads, iPods and Mac computers announced Monday the company would be using some of its $98 billion cash on hand to pay out a dividend for the first time since 1995, as well as buy back stock.

In an industry where paying out a dividend is sometimes seen as a sign that a company is past its innovative best, Cook insisted the $2.65 quarterly dividend will still leave plenty of cash for the company to develop new products, as well as giving it a war-chest to use for takeover opportunities.

TRAVELS WITH CHARLES: Our town’s low-profile, high-finance specialist, Charles Lowenhaupt, flew home from Sydney the other night on a flight loaded with such high-profile Aussies as Nicole Kidman and hubby Keith Urban, Tobey Maguire and Orlando Bloom.

Lowenhaupt, who is recognized worldwide for managing wealth for ultra-high net worth families, was there for meetings at his office, Lowenhaupt Global Advisors Australia.

When he flew home via Los Angeles on Qantas airlines, Lowenhaupt was in first class and found himself seated with the stars. He says all minded their own business while Kidman and Urban had dinner together with one of their children, Sunday Rose, 3. Their younger daughter, Faith Margaret, 14 months, was upstairs in business class with a nanny.

According to the entertainment mags, the family of four spent a stint in Australia visiting their families while Kidman was a judge at Tropfest, an annual festival of short films. Other judges were Cate Blanchett, Geoffrey Rush and Toni Collette.

Urban also had business there, filming an Australian version of “The Voice” with Joel Madden and Delta Goodrem.

On a side note, Bloom’s gorgeous model wife, Miranda Kerr, is an ambassador for Qantas.

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Consumer sentiment improved a tad in February to rack up a year high as Americans became more confident about the economy’s resilience, a survey released on Friday showed.

The Thomson Reuters/University of Michigan’s final reading on the overall index on consumer sentiment came in at 75.3, edging up from 75.0 the month before. It was the highest level since February 2011.

It surpassed economists’ expectations of 73.0 and recovered from a decline to 72.5 in February’s preliminary reading.

“It is not that surging oil prices, instability in the Mideast, the European crisis or uncertainties about future tax and spending policies could not ultimately derail the recovery, but that consumers expect the pace of overall economic growth to continue to slowly restore lost jobs despite these potential problems,” survey director Richard Curtin said in a statement.

The survey’s barometer of current economic conditions eased to 83.0 from 84.2, but the survey’s gauge of consumer expectations also rose to its highest level in a year at 70.3 from 69.1.

A third of consumers spontaneously reported hearing about more job opportunities, the highest proportion ever recorded by the survey.

But consumers’ outlook for the economy and job growth was more positive than their views on their own finances. Improving finances were reported by 27 percent of respondents, down from 29 percent in January.

The survey’s one-year inflation expectation held steady at 3.3 percent, while the survey’s five-to-10-year inflation outlook rose to 2.9 percent after sitting at 2.7 percent for four months.

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A senior U.N. nuclear expert says his team is leaving for Tehran with hopes that Iranian officials will agree to talk about suspicions that the Islamic Republic has worked _ or is working _ on a clandestine atomic arms program.

Herman Nackaerts of the International Atomic Energy Agency is heading a group of experts focusing on the allegations, which Iran continues to deny.

Nackaerts told reporters Sunday before boarding a flight to Tehran “the highest priority remains of course the possible military dimensions of Iran’s nuclear program.”

The trip is the second one in less than a month as the IAEA attempts to dent nearly four years of Iranian refusal to cooperate with its probe. IAEA experts came back from their last visit in late January with no concrete results.

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The number has been repeated so often by presidential prognosticators that it’s an article of faith: No president has been re-elected since World War II with an unemployment rate higher than 7.2 percent.

But the stock market turns out to be a pretty good predictor, too.

The Dow Jones industrial average has soared 62 percent since President Barack Obama took the oath of office during some of the darkest days of the Great Recession. The Dow was just below 8,000 then and stands near 13,000 today.

If a recent study of stock markets and presidential elections is any guide, Obama can start preparing his second inaugural address.

“There’s something to this,” says Phil Orlando, chief equity market strategist at Federated Investors, the $370 billion investment firm.

There are plenty of other signs often consulted for their political forecasting power, like whether a team from the National Football Conference or the American Football Conference wins the Super Bowl.

This one makes a little more sense: When the economy picks up and unemployment falls, confident investors put money into riskier investments and stocks rise. Voters are likely to reward the sitting president with another four years.

“The stock market reflects trends in the economy,” Orlando says. And as any political operative can attest, in a presidential campaign, it’s the economy _ you know the rest.

The study was backed by the Socionomics Institute, a think tank studying how a shared mood among a group sways its members’ actions. Their researchers dug up data on economic output, prices, unemployment and stock-market performance and matched them to presidential elections.

They went all the way back to the first re-election in 1792, when George Washington beat John Adams and won a second term as the president.

The researchers found a solid connection between the stock market’s direction in the three years leading up to Election Day and the election results. Gains of 20 percent or more for the Dow nearly assured victories for sitting presidents. Drops of 10 percent or worse got them tossed out.

Voters returned Calvin Coolidge to the White House in 1924, just as the Roaring ’20s started roaring. They booted Herbert Hoover in 1932 while the stock market suffered through a three-year plunge.

The authors of the Socionomics Institute study say everything can be traced back to the prevailing optimism or pessimism. Their organization studies “the social mood.” But how do you read the mood of a whole country?

The authors say that the stock market is the best available gauge of how the country is feeling, “because investors can act swiftly to express their optimism or pessimism.” Bad day? Time to sell. Things looking up? Time to buy.

“An increasingly positive social mood produces a rising stock market as well as votes for the incumbent, and an increasingly negative social mood produces a falling stock market as well as votes against the incumbent,” they write.

To the authors, it’s the mood that determines the election, not the stock market. The stock market is just a reliable gauge of the national temper, an incredibly accurate mood ring.

In recent successful re-election campaigns, the connection appears clear. Ronald Reagan won re-election in 1984 following the Dow’s 41 percent surge and despite an unemployment rate of 7.2 percent. Bill Clinton was awarded a second term after the Dow gained 63 percent in the three years leading up to Election Day.

But there are misfires. James Madison, for instance, won re-election in 1812 despite a 34 percent drop in the market over three years. George H.W. Bush lost to Bill Clinton even though the Dow rose 51 percent over his term in office.

Doug Wead, a presidential historian who served in the elder Bush’s administration, says the stock market theory sounds suspect.

“The stock market isn’t even a good indicator of the economy,” he says. “You can have the stock market going up while the rich get richer and the poor get poorer.”

There’s also the danger of oversimplifying _ relying on one number, in this case the Dow’s performance, while ignoring everything from scandals and wars to third-party candidates.

In William Howard Taft’s last three years in office, the Dow lost 12 percent, and Taft lost the 1912 election to Woodrow Wilson. But if Theodore Roosevelt hadn’t split from the Republicans and run under the Progressive Party banner against Taft that year, Taft might have returned to office.

It was a similar story with the first President Bush in 1992. The independent candidate Ross Perot siphoned off votes from both candidates, but historians generally believe more came from Bush’s Republican camp. Clinton won with just 43 percent of the popular vote.

The economy also slipped into a recession during Bush’s second year in office, and as he campaigned for re-election, the unemployment rate hovered well above the dreaded 7.2 percent mark.

Orlando, of Federated Investors, says a change in any single statistic won’t guarantee a president gets re-elected. Analysts should consult a range of figures. One that looks less reassuring for Obama is his approval rating, he says.

No president has been re-elected with a Gallup approval rating below 48 percent approaching Election Day. Obama’s numbers are improving, and the election is more than eight months away, but for now he’s teetering on the edge _ 48 percent.

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