An opportunity to hammer-home what is probably the most important fact about the current iteration of the American economy.
Lifted in toto from Benzinga, April 18:
In the chaos of the 2008 recession, perhaps no bank stood more prepared than Jamie Dimon's J.P Morgan Chase & Co.
In advance of the crisis, Jamie Dimon realized that "underwriting standards were deteriorating across the industry," with late payments on subprime loans rising.
In late 2006, the bank led his firm to exit Wall Street's hot subprime business, starting with a frantic call made to J.P. Morgan's vacationing Chief of Securitized Products where he said, "I really want you to watch out for subprime! We need to sell a lot of our positions. I’ve seen it before. This stuff could go up in smoke!”
By getting out of the soon-to-be toxic products, J.P. Morgan was able to go on the offensive when other banks pulled back too late or were forced into bankruptcy.
J.P. Morgan's stock has risen nearly 260% from its pre-global-financial-crisis peak.
Reflecting on the recession, Dimon said "counter to what most people think, many of the extreme actions we took were not done to make a profit; they were done to support our country and the financial system."
Dimon is sounding the alarm on a debt-fueled economy appearing healthier than reality may be.
In his most recent annual shareholder letter, Dimon said, "The U.S. economy continues to be resilient, with consumers still spending. and the markets currently expect a soft landing." However, he offered this caveat, saying that "it is important to note that the economy is being fueled by large amounts of government deficit spending and past stimulus."
With the U.S. national debt already surpassing $34.6 trillion at a time when the Federal Reserve is still unable to cut interest rates in the face of stubborn inflation, interest payments on the debt are set to exceed U.S. defense spending this year.
Whether the increasing fiscal debt becomes a problem impacting broader markets to the extent that the subprime crisis did remains to be seen, but Dimon and his firm are prepared for anything with J.P. Morgan's self-described "fortress balance sheet."
Benzinga home page.
We visited Dimon and his letter to the JPM shareholders in "JP Morgan Chairman's Letter on Inflation, April 8, 2024 (JPM)" and "Inflation—JPMorgan CEO Jamie Dimon's Comments On The Bank's First Quarter Results (JPM)" and we looked at one possible end game exiting from March 20's ""Hotshot Wharton professor sees $34 trillion debt triggering 2025 meltdown as mortgage rates spike above 7%: ‘It could derail the next administration’"":
This is the sort of stuff I was thinking about in the intro to March 6's "Michelle Obama's office says the former first lady 'will not be running for president' in 2024":
...On the other hand, I'm not sure you would want to be President during the next four years, there are so many problems that have been growing and metastasizing just beneath the surface of the daily news that the person in the hot seat could end up just plain reviled.If I were a Democrat strategist I would propose letting Donald Trump win a second term while concentrating on House and especially Senate (to bottle up judicial, including Supreme Court, nominees) races.
A Trump win would give an excuse for riots (for the visuals) and if he is handcuffed by the Legislative branch to limit the range of possible responses, you go beyond polycrisis to the omnicrisis. Throw in a bit of Frances Fox Piven with her "overwhelm the system" and "motor voter" strategies and you could see one-party rule for thirty years....
