Jamie Dimon Is Clueless
The CEO of the largest US bank JP Morgan Chase, Jamie Dimon, is as clueless about what's driving the US Economy as everyone else.
The longtime chief of J.P. Morgan Chase thinks that he has a clear view of what’s been holding back the U.S. economy over the past seven years.
“Ourselves! Our policies!” “Those things hold back growth,” Dimon said. “Even regulatory policy sucked up a lot of bank lending capabilities that sucked up growth,” .
WRONG... Mr. Dimon. Excess capital (zero interest rates/QE/etc...) have killed the economy. Not regulation.
When all CAPEX expenditures have been made and when all of the savings have been realized at ZERO interest rates, what else is there to do?
I often use this example to drive the point home. If someone gave me a Billion Dollars today I wouldn't know what to do with it. Invest in the stock market at Shiller's P/E of 29.5? - I think I'll pass. Real estate? Same story. Buy/Start a business? Overcapacity everywhere. Go short? Maybe, but that would be a speculation - not a long-term investment.
You get the point.
Excess capital and zero interest rates are the problem. That is why companies are buying back massive amounts of their own stock. There is nothing out there to invest in. Unless the FED hikes interest rates and keeps them high, the US Economy will never really grow again. As paradoxical as that may sound.
Japan is a perfect example of that with three lost decades under its belt. Unfortunately, the US central bankers are reading the same playbook.
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