Author Topic: JPMorgan CEO Says Bank Crisis Not Over, America Shifting Into a ‘Vicious Cycle’  (Read 283 times)

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Offline Ptarmigan

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JPMorgan CEO Says Bank Crisis Not Over, America Shifting Into a ‘Vicious Cycle’

JPMorgan CEO Jamie Dimon said in a letter to shareholders that the U.S. banking crisis is not over, and that even when it does end, its impact will linger for years, while warning that America seems to moving into a “vicious cycle.”

“As I write this letter, the current crisis is not yet over, and even when it is behind us, there will be repercussions from it for years to come,” Dimon wrote in the wide-ranging 43-page missive that included the ominous warning that storm clouds threaten the U.S. economy.

The collapse of Silicon Valley Bank (SVB) triggered a crisis of confidence in the U.S. banking sector, prompting financial authorities to rush through a rescue package to stem a potential run on bank deposits that threatened broader financial instability.

“Any crisis that damages Americans’ trust in their banks damages all banks—a fact that was known even before this crisis,” Dimon wrote.

Things are going to get worse.

“While the central banks of the world are now selling instead of buying securities, the governments of the world have larger debts to finance. The United States alone needs to sell $2 trillion in securities, which must be absorbed in the market,” Dimon wrote.

The Russian war in Ukraine is also having an impact on global energy and food prices, Dimon said, adding that he sees a risk that energy and food insecurity could trigger “another level of geopolitical dislocation” in the form of a huge wave of migration.

Dimon believes we are shifting from a savings glut to scarcity of capital, along with higher interest rates and higher inflation than in the recent past.

“Essentially, we may be moving, as I read somewhere, from a virtuous cycle to a vicious cycle.”
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