Friday, June 24, 2011

Jamie Dimon's Quote of the Day

June 25, 2011
Mighty US can shake off the gloom, says JPMorgan chief

You probably think it is the headline itself. Not exactly.

"The people that we deal with a lot on Wall Street are some of the most ethical people I know." - Jamie Dimon, CEO and chairman of JPMorgan Chase & Co.

No! That's not it. You'd think it was it but you'd be wrong.

"It's so unfair to talk about Wall Street and ethics." - Jamie Dimon, CEO and chairman of JPMorgan Chase & Co.

Nope. That's not it either. That quote sure seemed like a sure thing though. Right? Unfortunately, there can be only one quote of the day. Sorry.

We are in this kind of malaise of some sort. Some of that is understandable. - Jamie Dimon, CEO and chairman of JPMorgan Chase & Co.

We're in a kind of malaise of some sort and some of it is understandable?


Here's a chart of just some of the malaise for those who might have missed it.

Click to enlarge.

The chart shows where total nonfarm payrolls would be if the employment trend from 1939 to 2000 was still in effect today. Note that we are now 38.2 million jobs below the trend line. Further, our odds of returning to the trend line at any point in the distant future are worse than a snowball's chance in hell.

This might not mean much to the CEO of a large multinational banking corporation, but down here on planet earth we tend to notice the complete and utter failure of a major exponential trend. We are especially likely to notice it when our entire economy depends upon it continuing.

Source Data:
St. Louis Fed: All Employees: Total nonfarm


Jerry Critter said...

Thank you republicans and George Bush!

Stagflationary Mark said...

Jerry Critter,

There's absolutely nothing that either party could have done to keep us on trend or get us back to it.

Here's my thank you list.

1. Every financial "expert" who used long-term historical data and extrapolated it into the distant future (think David Lereah, Jeremy Siegel, and Wall Street in general).
2. Every person who bought the story that #1 was selling. This especially applies to any government worker who planned our future based on that never ending prosperity story.

That's pretty much everyone, myself included.

Take me for example. Although I started to turn defensive in 2000 (first year I bought TIPS and I-Bonds), it wasn't until 2004 that I turned into a permabear.

Why did it take me so long? According to the employment chart I offered in this post, we were already 14 million jobs below trend. I was too late. Had I created the chart in 2000 I clearly would have seen how impossible 170 million nonfarm payroll jobs would have been 11 years into the future (right now).

What really gets my goat is that we're still being sold how bright our future is even though we're 38.2 million jobs below trend.

I refer you to Dimon's headline.

Mighty US can shake off the gloom, says JPMorgan chief

There is no way we're going to fill 38.2 million missing jobs with 14 million unemployed. It is not physically possible. The odds of shaking off the gloom is therefore a nearly impossible task.

Some might argue that we could 10 million of our unemployed back to work and things would be a lot better. I would agree (if we could do that, which is still a big if). Even then, we will never have the sustained growth of the 1939 to 2000 period again though.

This has huge implications for our economic (ponzi) system since it relies on the growth being there.

Stagflationary Mark said...

Oops. I see I missed a word. I meant to say...

"Some might argue that we could put 10 million of our unemployed back to work and things would be a lot better."

Stagflationary Mark said...

Here's a bonus thought.

Who really thinks that we will put 10 million people back to work making goods for the Chinese? That's basically the falling dollar and growing export story we're being sold these days.

From where I sit China is just as desperate to keep their workers employed as we are, if not more so. I therefore find it hard to believe that our plan will work. It has raised the price of oil though. That's something I guess. Sigh.

mab said...

Jamie Dimon is hopelessly out of touch. If Sarbox was enforced, Dimon would be facing life in prison.

What is the root cause of the "malaise"? The U.S. (and the world) is in the throes of extractive and usurious finance. Decades of counterproductive debt creation has unbalanced the economy and impoverished tens of millions in debt. We had financial fraud as the primary driver of our eCONomy for years. What a business model! Financial innovation???? WTF!

And here's the thing. Per the Fed's actual mandate, credit in excess of economic output is to be prevented not enabled. But we "need" to get credit flowing again rather than unwind the fraud and usury. WTF! Since when is it the role of Gov't to legitimize rather than prosecute financial fraud?

The knowledge of economic stewardship has been lost. Our country is now CONtrolled by financial and eCONomic criminals. Political correctness and propaganda stand in the way of a full understanding and recognition of the problem.

Stagflationary Mark said...


WTF indeed!

Here's a bonus heckle of Dimon and his ethical beliefs regarding Wall Street.

June 25, 2009
Do Analysts’ Earnings Per Share Forecasts Affect Their Bias?

Over the entire time period, analysts' long-term forecasted EPS growth averaged 14.7 percent, but companies only averaged actual long-term EPS growth of 9.1 percent.

The data is from 1984 to 2006. That sure looks like an indication of pervasive unethical behavior to me. Many retail investors actually believe that financial analysts are offering them useful information too. Go figure.

I'm reminded of a used car joke.

A guy buys a car. On the way home he's driving downhill and the brakes start to fail. The road starts to slope uphill and then the engine dies.

He goes back to the used car dealer and complains, "You told me it was a fine car!"

The salesman's reply, "I said it was a fine car on the level. Why were you driving it up and down hills? Did you not understand my disclaimer?"

on the level

Honest, without deception: “We doubted that the offer could be genuine, but it turned out to be on the level.”

Watchtower said...

According to this chart, even the housing bubble wasn't enough to bring the nonfarm jobs up to the trend line, in fact it didn't even touch it, not even briefly.
I wouldn't have thought that.
Thanks for the chart.

Stagflationary Mark said...


The chart is only going to get worse over time and I plan to keep posting it.

We've had a perfect storm of exponentially based prosperity illusions.

1. Expectations of exponential job growth led to rationalizations of exponentially increasing debt. Enough said.

2. Women entered the workforce in exponentially increasing numbers. They now make up 50%. They are all in. That growth engine is now dead. Those extrapolating it forward will be extremely disappointed.

3. Our exponentially increasing cumulative trade deficit started off as a trickle and has turned into a gusher. What once seemed to offer us free lunches is now feeding from the trough.

It's like three legs of a wooden table and we've got a termite problem.

How's that for an uplifting analogy? Sigh.

Stagflationary Mark said...

They say that we need 150,000 jobs per month just to keep up with population growth.

What they don't say is that we need 300,000 jobs per month to keep up with the trend that was in place from 1939 to 2000. That's assuming we were actually on the trend line. It does not count the additional jobs it would take to get back to that line.

Anyone who uses historical data from 1939 to 2000 and doesn't factor that fact in might come to some really questionable conclusions about stocks for the long run.

Stagflationary Mark said...

From that link:

This is because the 20th century, on which many of Siegel's conclusions are based, was the most economically successful century in the short history of the United States and will not necessarily repeat itself. - Robert Shiller

lambert strether said...

Why we need a Jobs Guarantee. Solves the aggregate demand issue, too.

Stagflationary Mark said...

lambert strether,

Of the following two choices, the latter does seem more appealing.

1. Bail out the banks because the unemployed cannot pay their bills.

2. Provide jobs to the unemployed so that they can pay their bills.