“Finally, one of the great aspects of the American system is that it is okay to fail and to try again. But even that seems to be diminishing as failure, other than in Silicon Valley, is severely punished.”, Jamie Dimon

“I can tell you from firsthand experience (of being unfairly punished by largely unaccountable government bureaucrats, for my bank failing during an unprecedented financial crisis), that Jamie Dimon’s comment above is right on point and so are his ones below (on the reasons that America’s economic growth has been held back).”, Mike Perry, former Chairman and CEO, IndyMac Bank

Key Excerpts from JP Morgan Chairman and CEO, Jamie Dimon’s April 9, 2014 Annual Letter to Shareholders:

“But something is holding back our growth

Something is holding back the strong recovery of the great American economic engine. It is not lack of access to capital or loans, but it might be a combination of the following factors:

  • Concerns around excessive regulation and red tape…
  • “Obamacare” and the uncertainty it creates…
  • The inability to face our fiscal reality….
  • Entitlement spending…which now is 60% of federal spending…..
  • Uncertainty about the Fed’s unconventional QE policy….
  • Political gridlock…
  • U.S. corporate tax policy drives American capital overseas….
  • U.S. immigration policy is driving brains and entrepreneurs overseas..

In addition, uncertainty and hypersensitivity to risk may be holding back growth

Uncertainty also has always been a constant in business. But coming out of a financial crisis, in addition to the items I mentioned above, we may be living in a time of heightened sensitivity, uncertainty and risk aversion. It seems that just about everyone has become a risk expert and sees risk behind every rock. They don’t want to miss it…like they did in 2008. They want to be able to say, “I told you so.” And therefore, they identify everything as risky. Here a few facts to support the uncertainty and risk aversion hypothesis:

  • Corporations seem unduly conservative…
  • U.S. gross capital formation as a percentage of GDP has been at lower levels in the last five years than it has been for more than 40 years….
  • In 1993, the number of AAA and AA issuers was 413, and in 2013, that number was 147…..I have defended the rating agencies’ right to their opinions, but it seems they also may have largely overreacted to the financial crisis.
  • Finally, one of the great aspects of the American system is that it is okay to fail and to try again. But even that seems to be diminishing  as failure, other than in Silicon Valley, is severely punished.”

Posted on April 25, 2014, in Postings. Bookmark the permalink. Leave a comment.

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