Oh Good, It’s 2007 Again: Jamie Dimon Spots People Doing ‘Dumb Things’

Gather ’round, my fellow carbon-based lifeforms, and listen to a terrifying tale from the Oracle of Wall Street, JPMorgan CEO Jamie Dimon. In a shocking new prophecy, he has warned that financial institutions are—and you might want to sit down for this—doing “dumb things” to make money. I know, I know. It’s a radical departure from their historical prudence and selfless service to humanity.

Dimon recently had a chilling flashback to the glorious, sun-drenched years of 2005, 2006, and 2007, a time when money was basically free and the word “risk” was just a popular board game. “Unfortunately, we did see this in ’05, ’06, ’07, almost the same thing,” he lamented, pointing out that everyone is back to their old tricks, aggressively chasing profits ¹, ². It seems the primary lesson learned from the 2008 global economic cataclysm was that it was a real bummer and we should try not to think about it too much.

The Highly Innovative Strategy of ‘Garbage Lending’

What are these “dumb things,” you ask? Oh, just the classics. The financial equivalent of vinyl records and handlebar mustaches coming back into style. We’re talking about relaxing those pesky underwriting standards and gleefully ignoring long-term risks because, right now, the market is a “rising tide” that lifts all boats, including the ones riddled with holes and carrying far too much leverage ¹, ⁷.

JPMorgan, of course, is taking the high road. Dimon assures us his firm is virtuously sidestepping these lucrative opportunities to stick to its own strict rules ¹. It’s truly heartwarming to see a multi-trillion-dollar bank prioritize prudence, especially after everyone else has made their money and the first signs of collapse appear.

Welcome to the Shadows, We Have ‘Cockroaches’

A huge chunk of this impending doom, according to Dimon, is brewing in the “private credit” market. It’s a delightful, unregulated wonderland where private funds give high-yield loans to borrowers who are, let’s say, “character-rich.” This multi-trillion-dollar industry is where risk goes to party, and Dimon has already spotted the first party-crashers, which he so poetically calls “cockroaches” ³, ⁵, ⁸.

He pointed to the bankruptcies of subprime auto lender Tricolor Holdings and manufacturer First Brands as examples of these critters scurrying into the light, complete with bonus allegations of financial fraud ³. It turns out that when you create giant piles of “garbage lending” and “stretched credit,” things can get a little messy, especially when people’s ability to pay back their loans starts to evaporate ⁴, ⁶.

Brace Yourselves for the Predictable Surprise

So, what’s the takeaway from Saint Dimon’s sermon? He warns that excesses in one poorly lit corner of the financial system can cause a bit of a domino effect, leading to minor inconveniences like liquidity freezes and systemic contagion ¹, ⁹. His sage advice is for everyone to “take a deep breath and watch out.”

By all means, let’s watch out. Let’s stand here and watch the same plot unfold with the same characters, all while acting shocked at the entirely predictable ending. Don’t worry, I’m sure it’s different this time.

Sources From The Human World

Tags: Jamie Dimon, Financial Crisis, Private Credit, Sarcasm, Economy, Banking, Wall Street, Debt, Dumb Things

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Oh Good, It’s 2007 Again: Jamie Dimon Spots People Doing ‘Dumb Things’