With dramatic tones and clear warnings that leave no room for complacency, Jamie Dimon, head of JPMorgan, speaking to CNBC, outlined a global landscape of heightened risk, full of geopolitical tensions, fiscal “bombs,” cyber threats and an upcoming credit cycle that, as he estimates, “will be worse than normal.”
Dimon began with a reference to military developments, expressing his support for soldiers and workers in areas of tension, noting that the hope is that developments will lead to a “long and just peace” in the Middle East.
However, he warned that geopolitical risks are extremely difficult to predict, while leaving open the possibility of escalation with unpredictable consequences.
In one of his most worrying remarks, Dimon underlined that the Western world must remain “free and safe for democracy,” but clearly warned:
“You should expect cyberattacks or terrorist attacks, either here or globally.
Banks may be targets.”
As he stressed, JPMorgan spends enormous amounts on cybersecurity, as it considers cyber risk to be one of the biggest risks facing the banking system, even greater than the economic cycle itself.
Fiscal bomb: “Governments are in a worse position than ever”
Although households and businesses appear, for the time being, to be in relatively good condition, Dimon warned that governments, and especially that of the U.S., have “much more debt than ever.”
And his most resounding warning: “There will be a credit cycle. And I believe that, when it happens, it will be worse than normal.”
He attributed the increased risk to: excessively high asset valuations, very low credit spreads, market complacency, loose lending standards and incidents of poor underwriting and increased fraud
He even warned that there are players in the market who “go one step further than they should” in order to close loans, dangerously increasing risk.
Dimon recalled that in every crisis sectors collapse that no one expected: In 2000 blue chip stocks were hit, in 2008 even Warren Buffett-type stocks collapsed and in the next cycle, perhaps technology and software.
He did not even rule out the possibility that artificial intelligence (AI) could disrupt the technology sector more deeply than the market currently estimates.
Dimon acknowledged that AI will bring revolution: cancer cures, accident reduction, fewer working days.
But he warned that the speed of adoption could cause massive job losses before workers have time to retrain.
“It is not enough to tell someone who was earning 150,000 dollars that he will now work for 30,000.”
He called on governments and businesses to prepare immediately with retraining programs and income support, otherwise, as he implied, the social shock will be violent.
Warning for the banking system
Dimon was particularly strict toward companies that operate like banks without being subject to the same regulatory framework.
He underlined that banks operate under: FDIC insurance, AML and BSA regulations, liquidity obligations, capital requirements and social obligations (Community Responsibility Act).
And he made it clear: “If they want to be banks, let them become banks.”
He warned that if there is no “level playing field,” ultimately the public will pay the price.
Referring to the sensitive issue of debanking, Dimon admitted that the bank closes accounts when there is legal or regulatory risk.
He stressed that banks often have less information than the authorities, but are subject to strict penalties if something “slips,” creating a suffocating compliance framework.
Jamie Dimon’s message on CNBC is clear and worrying: Geopolitical risk remains high, cyberattacks are a matter of time, public debt is a ticking bomb, the next credit cycle will be more painful and AI may cause social shock if there is no preparation
Today’s market calm, according to his view, is not a guarantee for tomorrow.
And as he clearly implied: Complacency is the greatest risk of all.
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