Things fade into the background if they’re no immediate danger to us. The aging nuclear power plant that provides power but is not in compliance with safety regulations and sits near an earthquake fault line (like the Indian Point nuclear reactor outside of NYC). Or the cost of war in lives and money that doesn’t effect you… yet. Or the bank that continues to go into debt making risky bets because the government bailed them out by also going into debt. And without making cuts in government services…yet.
Last week the CEO of JP Morgan Chase, Jamie Dimon, made an interesting announcment. The company lost over $2 billion dollars continuing their risky betting. Now, this is a fraction of their hundreds of billions of dollars in income. (Income, not profit: They have 3 times as much debt as assets.) So is Dimon preparing us for worse to come? Maybe. Or is he trying to establish an environment of acceptance of risky betting? Dimon said the investments were a “terrible, egregious mistake” but “we maintain our fortress balance sheet and capital strength to withstand setbacks like this.” Was this a PR move to instill trust in a market that is losing it?
In 1912, JP Morgan, the founder of this company, was speaking in a testimony with Congress. He was asked whether banking debt is based on money or property.
He answered that it was about character, “before money or anything else. Money cannot buy it…Because a man I do not trust could not get money from me on all the bonds in Christendom.”
Do you trust a market where you buy things like a television? How about a market that buys…money? There’s a big difference that needs to be appreciated. One is in the business of creating cheap goods and services for money. The other is in the business of creating money. One is less government driven and difficult to corrupt, while the other is more government driven and much easier to corrupt. What they have in common is that the consumer decides whether to buy their goods or services.
And that consumer is you and me.
One thought on “After enough time, even important things fade into the background”
As consumers in a recession, it is difficult if not nearly impossible to purchase higher priced goods and services just so we can support local business and increase availability of American made products. I try, and am an advocate for it but in all practicality, I cannot afford it most of the time.
As for Chase, in a nut shell, I do not fully understand how they do business. I have “owned” my home since 1988. I refi’ed through Chase to buy out my ex. Then after a few years, they doubled my payment to over $2g in 2009. I could not make it. So in late 2011, they modified my loan, gave me a 2% interest rate and my payment is about 25% what it was. I am pleased with this outcome; but why was all that necessary and why are there so many vacant foreclosed homes? The nearest I can figure, I have already paid the bank way more than my home is worth in the past 24 years. I think their “debt” is somewhat faked.