«I was really looking forward to my trip to Athens, Greece and disappointed to postpone my visit. Your country has made good progress in its return to economic stability. And I look forward to rescheduling this trip to Greece and reaffirming J.P. Morgan’s commitment to Greece’s economic growth», says Jamie Dimon at TA NEA, a few hours after the announcement that his trip to Athens is cancelled.
The Chairman and CEO of JP Morgan, provided the following responses to TA NEA’s questions regarding the US and European economy and the economic landscape in Greece. The CEO was due to visit several European countries during the next week, including Greece where he was to meet the Greek Prime Minister, Mr. Antonis Samaras, and clients. However the trip cancelled on Tuesday evening, July 1st following the recent diagnosis of curable cancer, which he communicated to the firm’s employees on Tuesday. In a message to the employees he said «While the treatment will curtail my travel during this period, I have been advised that I will be able to continue to be actively involved in our business, and we will continue to run the company as normal. As you all know, we have outstanding leaders across our businesses and functions — so our company will move forward together with confidence as we continue to deliver first-class results for our customers, communities and shareholders».
A few months ago you said “the moon and the stars” have finally begun to align for the US economy. Are you satisfied with the growth and employment level? When will the US economy fully recover?
The current economy in the U.S. is fairly healthy and growing on a broad basis, which is also important for the world economy. U.S. companies, both large and small, are in good shape. The banking system has largely recovered, and the capital markets are wide open. Nearly 8 million more Americans are employed today than before the financial crisis, and the population is still growing by 3 million people a year. Consumers’ debt service ratio; i.e., the amount of income needed to service their debt, which peaked in 2007, now is down to its lowest level since 1980. Housing has turned the corner, and Americans have been blessed with new discoveries in oil and gas.
Good public policy in the U.S. could create even stronger growth going forward. If we want to ensure long-term success, America needs thoughtful, forward looking policies around education and immigration as well as a national energy policy, a national infrastructure policy, an environmental policy and a sound tax policy. What we need to put these policies in place is good old-fashioned collaboration and compromise. And these policies will also generate confidence, the secret sauce for the economy – for both individuals and companies. Growth will lead to more jobs and, we hope, more prosperity for all.
What would be the metaphor you would use for the current state of the European economy?
I believe that the European Union is one of the great collective endeavours of all time – where participating countries are striving to form a permanent union of nations for the benefit of all their citizens. And today there are still important reasons for it to exist, including peace among the countries and fiscal unity. Europe has made progress in strengthening its economy and solving its issues. But as these 17 nations try to resolve some very complicated issues, it will be a long and winding road.
Europe has to focus on its fiscal policy, its banking treaties and proper regulation in order to help the economy grow. We all are rooting for Europe to succeed and to strengthen its economic situation and at JPMorgan we are actively trying to help.
The FED uses quantitative easing in order to spur economic growth. Speaking as an American banker, what would you like the ECB to do? Has its policy helped countries like Greece?
Mario Draghi is a very smart central banker and I have a lot of confidence in him. The ECB commitment to do whatever it takes to support the Europe has provided a very strong foundation for rebuilding confidence in Europe. The sustained contraction of spreads and the increased availability of capital, which has been further supported by the most recent measures, underpin the economic recovery. Such policies, along with reform progress, have also helped the country of Greece and the companies of Greece to access the capital markets and rebuild economic activity. In addition, we need to remember that monetary policy alone is not going to fix all of the issues economies have. You need very good policies to support economic growth, including proper fiscal policy, regulatory governance, transparency in the capital markets and other things – not just monetary policy.
Are the United States still worried that Europe is not on the right track to recovery? What needs to be done in terms of boosting growth and employment? If I asked you to describe in a phrase the European response to the crisis, what would it be?
Europe has made progress in solving its issues. Countries like Greece, Italy and Spain have moved forward with their austerity programs and the European Central Bank has made powerful commitments to maintain sovereign debt and bank liquidity. The Eurozone has also taken meaningful steps to advance its banking union and to support the euro.
Overall, Europe, like the rest of the world, needs to compete with good policies, good government, clear fiscal guidance and proper banking regulation to help encourage sustainable growth in its economy.
While many of the right steps have been made, it still is going to be a very complex and prolonged challenge. There will be many months when things seem safe and sound, but it will take time for a full recovery. In the meantime, Europe will continue to make progress in incremental steps
When did Greece show up in your radar? At which point during the past four years did you begin to believe Greece might be a good opportunity for investors? Why? What would be your case for Greece to potential investors?
We have all been following Greece from abroad during the last few years. The Greek sovereign crisis opened a new chapter in the aftermath of the recent financial crisis and posed significant risks to financial stability, particularly in Europe. At JPMorgan, we are not fair weather friends. We have been in Greece for 50 years and we are going to be in Greece in the future. We helped the country raise money and we helped the banks in Greece during difficult times in order to help the country recover. We always believed that the European and the Greek people would find their way and manage through the crisis return to stability and prepare for growth. The environment today includes a more efficient infrastructure and economic and reform progress, which provide a strong backdrop for sustained growth and opportunities in Greece.
JP Morgan chase is investing in Greece and supported Greece΄s rebound in the markets last April. Would you participate again in long terms bonds issue? Are other American investors interested in Greece?
We have been delighted to be member of the syndicate that brought Greece back to the market last April. The new Greek government bond was one of the fastest returns to the capital markets by a sovereign that has been through such a deep fiscal crisis, and it demonstrates the extensive repair work that has been undertaken in the country. American investors have moved quickly to follow the opportunities in Greece, since they are familiar with recovery stories in the emerging markets and in the US. Investors from all over the world continue to seek opportunities in Greece and JPMorgan remains very actively engaged in these investment flows.
How did you decide to include Greece in your european tour?
JPMorgan has been present in Europe for almost 150 years. During this period, we have been supporting the countries of Europe and our European clients in both good and bad times. JPMorgan has had a presence in Greece for over 50 years and we are here for the long term. My visit reconfirms our support to Greece and our Greek clients in the new era of opportunity that the future should bring.
What would you advise Greece to do in order to rebrand its name as an attractive place for investors?
Providing a stable environment for investors to make thoughtful decisions and deploy capital without red tape and bureaucracy is very important. The markets believe there is significant opportunity to invest in Greek assets. But Greek assets still have to compete with other global opportunities, therefore keeping the rules clear, transparent and straightforward will help encourage further foreign investment.
What have you learned from the last financial crisis?
As I have previously discussed a multitude of issues caused, or contributed to, the last financial crisis: structural issues, such as a critical lack of liquidity in some of our country’s money market funds and in short-term financing markets; high leverage throughout the system; unregulated shadow banking; poor mortgage underwriting; huge trade imbalances, among other factors.
A great number of the regulatory changes adopted after the crisis were essential, including higher capital and liquidity standards and Resolution Authority also was necessary to give regulators both the legal authority and the capability to manage and unwind large financial firms. These measures and many others will help to ensure a strong global financial system for everyone in the future.
What I also saw during the crisis and in its aftermath that made me very proud was how the employees at JPMorgan stepped up to help clients and communities around the world.
JPMorgan Chase was a port of safety in the last storm – a source of strength, not weakness, for the global economy. We tried to do things to help – and sometimes took bold actions to do it. And I believe that no matter what the future holds, we will be a port of safety in the next storm.
