Jamie Dimon becomes Whinger of Wall Street

Global Outlook

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The demise of Jamie Dimon, chief executive of JP Morgan and one of the world’s most prominent bankers, has been pretty sad to see. Yes, he is still both of those things.

I’m not talking about his professional demise, which, if there’s any justice, is still to come. I’m talking about his demise as a person who commands respect.

Once, Mr Dimon was the most bullish  of bulls. An unstoppable young buck.  Now, his whining is so relentless that  you wonder if he is John McEnroe’s weekend doubles partner.

He’s not the Wolf of Wall Street, he’s the Whinger of Wall Street. My seven-year-old son probably has a better understanding of responsibility and consequences.

Mr Dimon has been claiming that nothing is his fault since about mid-2008, when the mortgage securities bubble started to burst and JP Morgan and its Wall Street chums led the world to the brink of economic collapse.

So the routine, although well practised,  is getting pretty tiresome.

The cause of the whining is always the same thing. Those awful regulators – the same ones that helped bail out JP Morgan and that are entrusted with trying to prevent another meltdown – just won’t leave poor Jamie alone. They insist on keeping a very close eye on what his bank is doing, even having the temerity to turn up mob-handed to check the books. Five or six at a time. Imagine that.

Mr Dimon hit a new low this week during an analyst and reporter conference call to discuss JP Morgan’s fourth-quarter numbers. “Banks are under assault,” he said. “You should ask the question, how American is that?”

Let’s put aside for a moment patriotism being the last refuge of a scoundrel. Instead, let’s ask the question, how American is that? Well, pretty damned American is the answer, or at least ought to be the answer. Particularly when it comes to regulating a bank that is large enough to bring the country to its knees, one which has been consistently found guilty of breaking securities law.

JP Morgan has been knee-deep in just about every big banking scandal of the last decade. Mortgage securities fraud? Check. Libor rate-fixing? Check. Bernie Madoff? Check. Rigging the foreign exchange market? Check. It’s a recidivist, which, if it were human, would have had its licence to operate in financial markets rescinded years ago.

In just the last four years JP Morgan has paid fines in excess of $35bn (£23bn). It has been found guilty of, or admitted to, at least 14 major breaches of securities law. To give that figure some perspective, it’s enough to buy Marks & Spencer and Rolls-Royce and still leave some money in the bonus kitty.

JP Morgan is also going to have to find another $22bn or so in order to meet new capital requirements set by the Federal Reserve for “too big to fail” institutions, of which it is one.

Of the big US banks, it’s the only one whose capital currently falls short. The Fed has given it until 2019 to find the cash, which will probably come from retained earnings meaning lower bonuses. I expect Mr Dimon will hold his breath until they change their minds.

If JP Morgan were an ordinary American citizen who admitted to breaking the law with such regularity and severity, it would be behind bars with dim parole prospects. So Mr Dimon should thank his lucky stars that JP Morgan exists at all, never mind still being able to rake in quarterly profits in excess of $4bn and pay him more than $20m a year.

Rather than take every opportunity  he gets to embarrass himself further,  which appears to be his current modus operandi, Mr Dimon’s energy would be  far better spent trying to make sure his traders and bankers are actually obeying securities laws rather than, it seems, attempting to circumvent them. If he  can’t do that then JP Morgan will need  to think about finding an adult to run the show.

Ignore the trolls – cheap oil  is good for almost everyone

Six months into the bear market and the “oil concern” trolls are coming out of the woodwork in their masses.

Who are the concern trolls? People who are now trying to convince anyone who will listen that low oil prices are just as damaging as high oil prices.

The argument goes that cheaper oil is a clear sign of lower demand for energy, which is a clear driver of lower production, which is a clear sign of lower demand for things that people make. If that’s clear.

The trolls are even pointing at the reduced 2015 economic growth forecasts published last week by the World Bank as evidence that we must hope oil prices start rising again soon. Only they are deliberately misinterpreting the World Bank’s forecasts, which actually point to energy prices as being one of the few bright spots on the horizon. 

It’s a flawed argument, particularly when taking into account Opec’s continued influence over the price of oil. Despite the growth in non-Opec production, oil remains a commodity that is largely priced by a capricious cartel answerable to nobody.

So if a falling oil price is such a bad sign, the logical conclusion is that if oil or energy were free, the global economy would cease to function. An absurd notion. Oil touched $16 a barrel in 1998, and I don’t recall a recession despite The Economist running one of the worst front pages in history with the headline “Drowning in Oil”.

The bottom line is that lower oil prices have many effects and most of them are positive. Countries that rely heavily on oil for revenue are going to hurt, and not all of them are in the Middle East. Canada is going to feel the pinch sooner rather than later, although it is nothing like the pain Russia will feel. That’s the downside.

For every oil-producing company or exporting nation that struggles to make ends meet, or sees falling revenue and profits, other companies and countries will enjoy lower energy costs. More important, consumers will have more cash in their pockets. Nothing affects consumer spending quite like lower petrol prices. Hell, some people might even be flush enough to buy solar panels.

So don’t believe the trolls. Most of them are enthusiastically picking up stories planted by people who work for the oil industry anyway.