JPMorgan Chase CEO: Recession Just Beginning

NEW YORK — JPMorgan Chase & Co.'s chief executive said Monday that while the crisis in the credit markets appears to be three-quarters over, he believes a U.S. recession is just beginning.

"Even if the capital markets crisis resolves, it does not mean that this country will not go into a bad recession," said CEO James Dimon, whose bank saw its first-quarter profit fall by half due to the recent collapse of the U.S. mortgage market. "The recession just started."

"We don't know if it's going to be mild or severe," he continued, speaking at a conference in New York hosted by Swiss bank UBS AG. "We're thinking there's a third of a chance that it's going to be pretty bad ... closer to the 1982 recession than the very mild recessions we had in 2001 and 1990."

Also incomplete is JPMorgan's acquisition of Bear Stearns Cos., the toppling investment bank that JPMorgan offered to buy in March.

"I want to make it perfectly clear: Mission not accomplished," Dimon said. He warned investors that while he still believes the deal was a good decision, "we are bearing an awful lot of risk" by taking on Bear Stearns' assets.

Bear Stearns is expected to post 2009 earnings of $800 million to $1.13 billion, Dimon said.

JPMorgan has so far found positions for 40 percent of the 14,000 Bear Stearns employees and job opportunities outside the company for an additional 1,500 people, Dimon said.

Bear Stearns shareholders are scheduled to vote on the proposed acquisition on May 29.

JPMorgan shares rose 67 cents to $47.24. Bear Stearns shares rose 15 cents to $10.38.

Comments

[Troubledwawa]

http://www.pbs.org/newshour/bb/business/jan-june08/soros_05-13.html

This is a George Soros interview from the Newhour tonight.

He goes into this subject deeper, if you're interested...

[NicoleAnonymous]

He also said he has saved almost half the BS jobs. If BS had filed bankruptcy the way any other company in America would have had to then everyone would have lost their job. But now the Fed has bailed out the company with taxpayer money and we all know which half will lose their jobs.

The "back office" jobs including IT, admins, HR, marketing and so on will be gone but Jamie Demon wiil keep all the incompetant bankers who are really the people responsible for destroying the company because if there is anything we have learned from this mess it's that bankers can do a horrible job and still keep their jobs but everyone else will suffer.

[Robert59]

First Warren Buffet now the CEO of JP Morgan Chase telling us they think we're in a recession. Neither professes to know how deep it will be; my guess is they are both low balling it as to call it like it is would terrify people.

As for the stock market what a useless gauge of the economy and the president is even worse.

[epictetus]

I disagree, I don't think that they're lowballing it. They can't predict the future, but Dimon doesn't give a very rosy assessment. The 1982 recession led to a major growth in unemployment. From 1980 through 1982, the unemployment rate grew from about 5.9% to about 10.7%. More than half of that grwoth occured during the 1982 recession. It took years for the job market to recover.

[Robert59]

I think the 82 recession which hit my family and I hard (my parents lost their house), I newly possessed of a master's degree, couldn't find a job much less get an interview after sending out 300 resumes. Whole neighborhoods in Houston and to a lesser extent in Dallas became ghost towns.

The '82 recession will look like the good old days compared to this next downturn which is why I think they're low balling it.

The country's economic fundamentals are in a mess. A 10 trillion dollar national debt, oil still climbing, two wars, and we haven't even talked about all the personal debt out there and the first of two waves of foreclosures, neither of which have peaked.

The '82 recession, it's why I ended up in the military.

[zizyphus]

A voice from the other end of the economic spectrum- My gut feeling is that we are heading for a serious, major, full-on depression.

Naturally, I hope I am mistaken. But the gut says to plant fruit trees and vegetables against the time when oil is 250 a barrel and shipping becomes prohibitive.

I live in Hawaii, most stuff here comes by boat or plane. So, I planted some citrus trees, some salad and soup vegetables, and am converting lawn to edible ground covers like sweet potato and blackeye peas. Plus, I can sell the surplus produce to the natural foods stores as I don't use chemicals on the plants.

I always remember my uncle Ed telling me about serving (Colonel) in the Army in WWII in Europe- he saw a child reaching under a fence to steal a vegetable and the farmer stepping on her hand. That is why he bought his own forty acre farm as soon as he retired from the military. He wanted to make sure he had his own means of food production, which I see now is very wise.

[dadw5boys]

Short version-- recession = tight money.

How many Billions extra have the oil companys taken out of the economy?

How long will Americans have to work to replace those $ taken?

You can wash the numbers any way you want you will still return to this.

[Chavez08]

"How long will Americans have to work to replace those $ taken?"

I live in Michigan, we're quickly losing our ability *to* work.

[getalife80]

That is Michigan's fault, it has a terrible business climate, the worst in the country. No one would think of starting a business there.

[Irons]

Huff 'n Puffers, the only thing CEO Dimon has over you is a rich daddy, and how he gets away with making comments on the state of the economy is beyond me - it's like Bush talking about the war - he doesn't grok squat. He's probably a trust-fund kid who went Ivy League. Lord help out financial institutions with these kind o bozos at the head.

[epictetus]

There's a bio of him on Wikipedia. He went to Tufts, majoring in economics and biology. Then he went on to get an MBA at Harvard business school. And yes, his father WAS rich, but his grandfather was a Greek immigrant who went to work on Wall Street.

I would estimate that he knows more than most of us about the economy. Majoring in economics at Tufts can do that to a person. I doubt that he is a "bozo". Whether you completely trust him or not, that's another issue entirely. However, guys in his postition don't usually make a habit of running their mouths and announcing false information.

These banks are no joke, here's a quote (pulled from WIkipedia), from a talk he gave at Columbia Business School last September: "We have more programmers than Microsoft... from arbitrage to CDO pricing to even automated bank statements- in-house development drives everything we do. Could we build something like Microsoft Windows? Well, for the one-third of the features we absolutely need, I think the answer is yes."

[NoahVail]

Funny how history repeats itself, especially when we keep making the same mistakes.

Then:
http://en.wikipedia.org/wiki/Hooverville

Now:
http://news.bbc.co.uk/2/hi/americas/7297093.stm

[JackMehoffer]

He's right, everythings being propped up until the election

[katok]

Somehting tells me that Jamie has nothing to worry about, he's with the "Home" team. Big Ben and his friends will serve ashis safety net. The rest of us are lambs going to slaughter.

[Chavez08]

"Big Ben and his friends will serve ashis safety net. The rest of us are lambs going to slaughter."

It's the nature of Neoliberalism ("Reaganomics") to dissolve nation states and create a global resource pool - labor and natural resources - and wide open trade routes with no governing bodies getting in the way.

The reason all Republicans and some Democrats don't want to provide healthcare to the lower classes is because, to Neoliberals, *people are mere commodities*. There is no emotional attachment to humanity and they very much prefer that we in the lower classes die when we are older and less productive to make way for new waves of younger, more productive serfs. Those who are not making widgets on quota are expendable. The elites feel we are parasites who are bleeding their prize market system if we want to be treated by the cancer caused by their factories or diabetes, autism caused by their products.

Neoliberalism - The name of the game is to hoard wealth for the "chosen" and create trade empires based on slavery. It's working as expected.

[lorla]

Excellent post.
Any thoughts on what can be done by everyday people to push back, or are we powerless to fight this?

[lorla]

Remember the small group of people getting hosed down in Seattle protesting NAFTA? The writing was on the wall then.
There are many problems with the unions now, because they have become corporations, fighting to survive just like any other business. That being said, unions offer rights regarding safety, equality, job security and a voice for working people.
Working people have let go of rights that previous generations fought hard to obtain. At the same time businesses started going global, unions should have been going global as well, fighting for safe and fair working conditions for humans, not just Americans.
There is a strike going on at American Axle right now that has caused GM to take a backseat to Toyota, because they are GM's main supplier. GM suffered a huge quarterly loss because of this.
American Axle is demanding employees take a 50% cut in pay in one fell swoop, and assume much higher benefit costs at the same time. All this at a time when the company is making record profits and the CEO is getting a huge increse in salary.
This strike has been going on for more than three months, and doesn't even get local TV coverage.
Organized labor should not be a thing of the past. It should be implemented for all jobs and developed to protect any "green collar" jobs that evolve in this transitional era we are experiencing.

[robbor]

you know, after reading all this stuff regarding the economy and the mortgage scandal I've come to the conclusion these financial experts don't know jack. the whole institution needs to be governed, like an adult watching over a child fore this is what these experts are, mere children. when times are good they're raking it into their pockets and when times go sour their response it "well, we just didn't know"

[landmine]

Look, Jamie is telling it like it is. Is he part of "the system"? One has to be "in it" to change it.
America has become fat, lazy and sloppy. He did a lot to tighten things up and make things run better.

I filled up my small truck took 12.2436 gallons @ $3.6949 a gallon. $44.67.
I will not be driving 1000 miles to visit my Dad this year. Not stopping to eat, for a motel, not going out to dinner, etc. All those people are not getting my money. Some of you work in those industries? I won't be driving to favorite camping spots, to drag strips in other states to follow my Harley Dragsters, I'm looking for cheaper cigars, I seldom go out to eat anymore, I'm starting to bank my money. I may need it to last awhile if something happens to my job, my kids jobs, etc. Depression.

I won't be adding on the sunroom this summer. Cost of materials went way up. Any of you working in transportation or construction supplies? Depression.

Bush is printing money, because he doesn't have enough to pay for things. Does that make the dollar more valuable or less?

It takes a lot to break out of comfort zones. Fear, preconditioning, brainwashing, prejudice and the inability to reason effectively.
We need new leadership in this country. If you think the same old people are going to give it to you, you are part of the problem.

[dadw5boys]

If you can build you a wind mill or install solar panels to run at least your home air conditioner and you will save more. Soon electric bills will be matching gas prices in price increases.

[cdnnewsjunky]

Good post. Good read.

[Chavez08]

God Bless the Free Rackets!

[rh654]

This CEO is trying to cover up his massive incompetence he showed by allowing his company to institute lending policies that have generated huge losses for the company.

He is trying to talk up how bad things are and will get in order to help deflect everyone looking at the mess he helped to create within Chase.

There are banks that are doing quite well who did not relax lending standards over the last 10 years to make loans to anyone who could find their way to a form and fill it out.

[Chavez08]

Incompetence? Bankers, by nature, are Reverse Robin Hoods. CEOs are and will stay in the top 1% and not matter how bad things get, they will still have mansions and yachts. The so-called "Free Market" is a game of trickery, deception, apathy and "Take it all" greed.

Capitalism rewards criminals, jackels and condemns those who are product members of society.

"Nice guys finish last!"

[Edward]

I agree with some of what you say. But Capatilism in its prior forms lead to a robust middle class. I'm from Pittsburgh where welders, shapers and general steel workers had good lives here and could make a good living for many years. Capatilism in that form wasn't evil.

It's this new form of system that isn't even really free market that is killing us.

[Lib2daBone]

The took.. and took.. and took.. and never gave anything back to the Worker Bees. Like pigs at a trough., they de-regulated ,legislated, lied and plundered. Jobs to China, cuts to infrastructure, just -in-time delivery. Gouge the independant trucker with high diesel prices, why not? There's nothing truckers can do about it.. hahahahah . Now , they have broke the system. They have killed the golden goose that was feeding them easy money. The lazy corrupt SOB's are huddeled around the stinking pile of rotting garbage called the "American Economy", looking for every last dime of tax-payer money they can get their pasty fat Republican hands on. Every last morsel they can tear lose from the pile of bones. Extend unemployment Benefits? Why "No", can't do that.. it would be inflationary. When will the ignorant people in this country say "ENOUGH"!

[woodwakr]

Thanks, Lib2daBone... I couldn't have said it better myself. I can only add: 'then they reorganize so their main office is a closet in Aruba, and AVOID PAYING USA TAXES so you & I have to make up the difference!'

The greedy bastards can all rot in hell.