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Destroying Dimon's Delusionary View Of Economic Realities
Submitted by Lance Roberts via STA Wealth Management,
Over the weekend, I read an interesting article by Lucinda Shen at Business Insider discussing a recent interview between JPMorgan's CEO, Jamie Dimon, and NBC's Chuck Todd. According to Dimon:
"Amerca has the best hand ever dealt right now."
That is a pretty bold statement overall, but he does back it up with some statements of fact. However, for those "facts" to support such a sweeping statement of "greatness," they must be put into some context of previous economic cycles. Therefore, let's take a look at his points in a bit more depth.
"The U.S. economy has been growing at 2-2.5% for six or seven years, while that's not great, it's quite good."
The problem is, as shown in the long-term chart of economic growth below, it is the lowest average rate of economic growth in history.
Importantly, notice that since 1980, when the primary shift from a manufacturing to a service-based economy began, economic growth rates have been on the decline.
While Mr. Dimon may suggest that such a low economic growth rate is "good enough," it is not strong enough to foster higher rates or wage growth or economic prosperity for roughly 80% of American's. This was shown in the most recent Federal Reserve study on consumer finances.
Since 2007, the media value of financial assets for families with holdings has DECLINED with the exception of those in the top decile that includes "some folks" like Jamie Dimon.
Median before-tax incomes have also fallen from nearly $52,000 annually to roughly $47,000 currently.
And, most importantly, families that own equity in a business (small businesses generate the bulk of all job creation) has plunged.
This last point is the most critical as it relates to Jamie Dimon's comments regarding employment:
"We've added 10 million jobs since the 'Great Recession.'"
While that statement is true, it is worth noting that there is a huge difference between "quantity" and "quality." There is no arguing that employment in the U.S. has grown since the end of the "financial crisis," however the jobs created have been primarily located at the lower end of the wage scale. We know this simply by looking at average wage growth for the 80% of population that are not "Supervisors."
Furthermore, while "creating 10-million jobs" since the end of the recession sounds like a strong accomplishment it was not sufficient enough to absorb the increase in the population. In other words, for every job created there are more individuals actually "needing" a job.
With roughly 94-million individuals not counted as part of the "official labor force," the downward pressure on wage growth due to the increasing demand for available jobs remains a pervasive force. Of course, since individuals must produce first in order to consume, the expectations for stronger future growth rates are likely to be disappointed in an economy which is almost 70% based on consumption.
America Has Been Better
Jamie Dimon then goes on to support his thesis of "American exceptionalism" by stating:
"Make a list of everything important, rule of law, low corruption, unbelievable innovation, entrepreneurship ... the deepest capital markets — I'm not talking about banks. I'm talking about venture capital, private equity, companies, individuals, the best science, technology, engineering, math the world has. In fact, we train 40% of them [to] go back overseas."
As I have stated many times on daily radio broadcast, the "rule of law" and "low corruption" are two of the most important determinants of a country's economic prosperity. If businesses do not have faith in a fair and equitable backdrop in which to conduct business, they conduct business elsewhere. This is why 3rd world countries that are rife with corruption and ruled by dictators fail to succeed economically.
The problem is that America has slipped in these crucial ranks in recent years as noted by the most recently available data America ranks:
- 19th in National Satisfaction
- 14th in Education
- 3rd in Global Competitiveness
- 46th in Freedom of the Press
- 26th in Child Well-being
- 24th in Literacy
- 19th in Perceived Honesty
- 24th in Freedom from Corruption
- 10th in Economic Freedom
- 125th for GDP Growth per Capita
- 12th in Entrepreneurship
But for Jamie Dimon the U.S. does rank #1 in the number of "super-rich," an elite club of which he is a member.
Of course, for the banks, Wall Street, private equity funds and all variations of capital markets, it has been an "economic nirvana." The massive infusions of capital by the Federal Reserve have flooded the financial system driving asset prices higher and forcing a misallocation of capital into increasingly risky assets. While the U.S. may indeed be "number one" for financial engineering in all forms, it is rooted in a deeply artificial foundation that will eventually disintegrate into the next financial crisis.
But while financial engineering and venture capital may be juicing the profitability and wealth of a vastly small number of the total population, it is not driving the entrepreneurship needed to spark real economic growth. As noted by Gallup:
"The U.S. now ranks not first, not second, not third, but 12th among developed nations in terms of business startup activity. Countries such as Hungary, Denmark, Finland, New Zealand, Sweden, Israel and Italy all have higher startup rates than America does....and this is our single most serious economic problem...for the first time in 35 years, American business deaths now outnumber business births.
Let's run some numbers. You will often hear from otherwise credible sources that there are 26 million businesses in America. This is misleading; 20 million of these reported 'businesses' are inactive companies that have no sales, profits, customers or workers. The only number that is useful and instructive is the number of current operating businesses with one or more employees.
There are only 6 million businesses in the United States with one or more employees. Of those, 3.8 million have four or fewer employees.
Next, there are about a million companies with five to nine employees, 600,000 businesses with 10 to 19 employees, and 500,000 companies with 20 to 99 employees. There are 90,000 businesses with 100 to 499 employees. And there are just 18,000 with 500 employees or more, and that figure includes about a thousand companies with 10,000 employees or more. Altogether, that is America, Inc."
As you can see, almost 80% of all businesses have fewer than 10-employees. This is why economic growth has failed to spark as financial engineering, and monetary interventions, have had little or no impact on the vast majority of American businesses. However, tighter lending standards, increased healthcare costs, increased regulations and higher taxes DO HAVE a large impact on the profitability and sustainability of America, Inc. Therefore, it is not surprising that entrepreneurship and business equity ownership remain on the decline.
Furthermore, if this is indeed the case, then the BLS is likely overstating the very job growth that Mr. Dimon is pointing to as evidence of American exceptionalism.
Do not misunderstand me. I believe that America is the greatest country in the world. I have lived and worked in numerous countries during my life. and I will always call America my home.
For the top 20% of the population that have money actually invested, or directly benefit from surging asset prices like Mr. Dimon, life is great. However, for the vast majority of American's, the job competition is high, wages growth is stagnant and making "ends meet" is a daily challenge.
While Mr. Dimon's view of America is certainly uplifting, it is a bit delusional. But of course, give any person a billion dollars and they will likely become just as detached from economic realities.
As Jim Clifton, CEO of Gallup, sums up:
"The more we execute on our leadership's erroneous belief in innovation, the more our engine stalls out -- and the more people rightly worry about economic issues.
Because we have misdiagnosed the cause and effect of economic growth, we have misdiagnosed the cause and effect of job creation. To get back on track, we need to quit pinning everything on innovation, and we need to start focusing on the almighty entrepreneurs and business builders."
Does America have "greatest hand ever dealt." The data certainly doesn't suggest such. However, that can change. We just have to stop hoping that we can magically cure a debt problem by adding more debt and then shuffling it between Central Banks.
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Richer than... *cough* I mean dealt the greatest hand ever... *cough* I mean...
Cufflinks, BTChez
Dimon telling the truth is like a fish riding a unicycle, but I'd bet on the fish first......
It's extremely difficult to listen to someone like Jamie Dimon lecture about anything at all.
Here is a guy who has spent 16 hours a day for his entire adult life walking around inside a bank, talking to other people who also spend 16 hours a day basically trapped inside a bank playing some kind of weird "hey we're a team, but we're also trying to screw each other over" game. It's basically like prison but with better food.
He could lecture about the compliance systems of JPMorgan or how to subvert obscure regulatory oversight, but who the hell wants to listen to that?
The guy is a dullard. He's trapped just like the rest of us. He can't quit JPM and go fish, his ego wont let him. He has to turn up at 5am every day and listen to Mwarp mwarp mwarp mwarp.
I don't know how he copes with such a tedious life. Unless of course he is the terminal bore I suspect he is.
He has a billion dollars and doesn't have a fucking clue what to do with it. Mwarp mwarp hmmm I'll use it to buy some bonds mwarp mwarp. Shine a light! You're almost 60 and haven't lived a single day of your life.
labor participation way down, low or no or negative median income across virtually all industries, H1Bs and illegals getting a large chunk of new jobs, repeat of the Clinton job creation claims {I believe X has created new jobs - I have 3 of them where I used to have 1 that paid my bills}, etc. etc.
The growth of the financial sector goes into "GDP" - but it produces nothing and in the long run is actually deleterious to the real economy...
a little dated, but worth a quick look
http://www.tcf.org/blog/detail/graph-how-the-financial-sector-consumed-a...
ditto:
Financial Sector A Bigger Share Of Economy Now Than Before Financial Crisis
http://www.huffingtonpost.com/2011/12/15/financial-sector-economy_n_1151...
just can't hope enough that something bad happens to him and the other vermin
There was this:
However, what he described does not come ANYWHERE NEAR THIS.
Dimon:
$6.50 for fast food Burger Lunch.
$10.00 Burger Lunch at nice place.
And yet the Cartel says no sign of inflation.
Wholesale Beef prices must not have gone up that much this year from low supply of beef or prices would have been much higher.
Whatever Dimon.
Your Cartel wants our Housing Prices to go up, doesn't give a damn about Legal Fees since you write them off or they come out of Revenues. 50% of us will go bankrupt by age 65 mostly due to health care costs.
Dimon lives in a gilded work like Marie Antoinette.
Dimon is absolutely correct, America has never had it better.
But you need to understand that for Dimon, "America" is code for "Me and a couple of buddies I play golf with".
Then yeah sure, makes perfect sense.
The Fed has the greatest printing press and the WIzard of Oz had the greatest hot air balloon.
we first need to destroy the corrupt banker anti-capitalistic vortex. These are some of the worst people in history. The hated robber barons used their own money and built companies. These are math tricksters stealing as much as they can to move money to other parts of the world. Ever hear of a robber barron...moving his money to a tax haven? Or moving IP to Ireland to offshore profits? These corrupt crony have to be destroyed! The bubble should have wiped them out...but Paulson and then Geithner protected the corrupt bankers. The Tax code is the second destructive force in America where the middle class pay 30% of their income....and warren buffet pays nothing for 10 years or Goldman getting custom tax credits and paying nothing on billions.
Don't ask, don't tell, throw Jamie Dimon down the well.
It is beyond me that people still get upset when a guy like this says anything. He is a known liar. He KNOWS what he is saying is laughable. Of course america itself is screwed. He KNOWS that. Nothing the bankers or politicians or high up corporate types say is real. It isn't accident either. It isn't incompetence. It is a plan. Why waste time analysing it in the context of reality? They KNOW what they say is absurd to anyone who can actually see.
"Greatest hand ever dealt", eh, Dimon?
Talking shit will not extricate you from the fray, Dimon old boy. America might be your preferred home, but New Zealand is likely where you are heading when all the shit blows up in your face,
m o t h e r f u c k e r.
Master, I'm leaving it up to YOU to make sure his plane suffers the same fate as MH370...since God has stopped posting, and all.
48 Percent Of U.S. Billionaires Are Jewish. Jewish Americans are the most powerful and influential ethnic group in America. Jewish Americans make up 2 percent of the U.S. population yet comprise 40 percent of U.S. billionaires. 18% of jewish households have a net worth of $1 million or more.Jul 29, 2013
48 Percent Of U.S. Billionaires Are Jewish « Politics Inn
politicsinn.com/48-percent-of-u-s-billionaires-are-jewish/
http://politicsinn.com/48-percent-of-u-s-billionaires-are-jewish/
Jewish Wealth by the Numbers
http://takimag.com/article/jewish_wealth_by_the_numbers_steve_sailer/print
Forbes Israel boasts of power of Jewish billionaires
http://mondoweiss.net/2013/04/forbes-jewish-billionaires
With over 30 years of Jewish Fed leadership, and wildly, crazily disproportionate appointments of Jews to run federal agencies having anything to do with banking/finance - from commerce and treasury to the OMB to SEC to FDIC to CFTC...
Let me guess - the fact that the Tribe over the past 10, 20 years is a much larger % of US billionaires has NO RELEVANCE at all to a broader discussion of economic policy and its discontents, right?
Dimon is about as Greek as the troika.
Dumon: truth-teller?!?!?,,,,it's like sayin 'honest banker' or the Pope is jewish!!
What's causing us to fall isn't a lack of natural resources or a populace that is inherently lazy or stupid. It's the financial structure and its resulting debt overhang propped up by a government and monetary authority determined to make every bad loan good that the banksters ever made.
Capital can no longer shift in this economy, from dysfunctional to functional enterprises and systems. It's the politicos now who decide winners and losers from among their cronies, instead of Mr. Market deciding them from among anybody and everybody who cares to compete. With the result, it's no longer what you know that determines success, it's who you know.
Welcome to crony capitalism, with smilin' Dimon as the poster boy.
Dimon says the economy is "quite good", while the average American family would absolutely disagree.
Presenting with a vision contrary to his, I'm assuming that Dimon would simply argue that the average American family is wrong and that's why he's so much richer than them.
Somebody call the police. Jamie Dimon has been spotted. Arrest him.
Ssshhh...tell the spotters to get some rope and run interference instead...
More Debt is great, so long as you dont have to pay it back.
You know like all the banks.
Banks borrow the full faith and credit of the American people, turn around and loan that faith and credit back to the American people and charge interest on it.
Thus banks borrow your money, and dont pay it back, in-fact the way things run, not only do they not pay you back, they charge you for the "privilege" of loaning them money.
Thats how things work.
You are delusional if you think otherwise.
This is why people like Jamie Demon are on another planet they are counterfeiters, fraudsters, the entire financial and banking industry is, and the people who work in that industry and dont see it that way are fucking delusional.
Corporate Bailouts should be Outlawed.
That ship has sailed already.
Thats about as effective as outlawing murder after everyone is already dead and the bankers are holding the knife trying to wipe the blood off their drooling chins like the vampire vermin they are.
#1 in Pandering to Big Business.
#1 in Government Spending
#1 in Health Care Spending (And with no cost controls)
#1 in Fraud Waste and Abuse of Taxpayer Funds
#1 in Laws Destroyed by Lawyers, Most complex Laws, Taxes, Regulations and yet Banking is Non-Standard and mostly Self-Regulatory Organizations (SROs)
- And yet the Core of US Business is Small Business as pointed out above:
"As you can see, almost 80% of all businesses have fewer than 10-employees. This is why economic growth has failed to spark as financial engineering, and monetary interventions, have had little or no impact on the vast majority of American businesses. However, tighter lending standards, increased healthcare costs, increased regulations and higher taxes DO HAVE a large impact on the profitability and sustainability of America, Inc. Therefore, it is not surprising that entrepreneurship and business equity ownership remain on the decline."
- And Small Businesses have the least Lobby Power, unless you consider the Globalism-Pushing Chamber of Commerce
Federal Budget 2014 = $3.5 Trillion (B. Obama)
Federal Budget 2012 = $3.54 Trillion (B. Obama)
Federal Budget 2010 = $3.45 Trillion (B. Obama)
Federal Budget 2008 = $2.98 Trillion (G.W. Bush)
Federal Budget 2006 = $2.65 Trillion (G.W. Bush)
Federal Budget 2004 = $2.29 Trillion (G.W. Bush)
Federal Budget 2002 = $2.01 Trillion (B. Clinton)
Federal Budget 2000 = $1.79 Trillion (B. Clinton)
Federal Budget 1998 = $1.65 Trillion (B. Clinton)
Federal Budget 1997 = $1.6 Trillion (B. Clinton)
Jamie and his ilk says "If you raise taxes on us, we'll leave".
WELL THEN LEAVE, ALREADY!
AND YOU CAN TAKE THE REST OF YOUR GODDAMN DEBT CREATING TAX SUCKING BANKER WELFARE FUCKING ASSES OUTTA HERE WITH YOU WHEN YOU GO.
Jamie and his ilk says "If you raise taxes on us, we'll leave."
Is that threat or a promise?
Fuel the jets to Haifa, scumbag.
We can truly be proud. We are absolutely #1 at killing innocent people all over the world.
Jamie ya ain't dead yet so ya still got that goin' for ya.
I'm thinking about spending some money to go up to wherever that fucker is and follow him around... Every time he gets out of a limo or whatever....pointing fingers and yelling at the top of my voice... "Hey everybody! Have a look at this criminal son of a bitch! He's still running around free!!!"
There is no one more suitable for the nailgun treatment than this piece of shit.
He and his spawn need a nap! Whatv a dick.
Only in the US is the Issuance of Debt considered an Asset. The more Debt you can Issue, the more assets you have, the more assets you have the wealthier you are. When people stop buying your debt, well it's a house made entirely from cards.
Dimon suffers from Mad Hatter's disease (to paraphrase). "I can believe a dozen perfectly impossible things for a billion dollars".
Dimon: The man does well by lying to and stealing from his Muppets.
Dimon is a billionare banker. His view is not delusionary, it is fraudulent.
"Make a list of everything important, rule of law, low corruption"
JP Morgan is a convicted felon. No banker has gone to prison for participation in massive banking fraud. That is not rule of law, that is rule of privilege.