E Jamie Dimon Is Janet Yellen, Proving Will Rogers Right

Jamie Dimon wants it all. Before I quote him and try to read between the lines, people should realize that Dimon wants higher interest rates as that would benefit JP Morgan, but not too high. Rising rates help real estate lending.

He doesn't want the shock of quickly rising rates so he knows lower rates help his counterparties. But I believe he thinks that the counterparties to his bank could supply more bonds if necessary as collateral in JP Morgan's big derivatives holdings if rates rise a bit, slowly over time. He doesn't want them to have to supply extra collateral all at once. Lehman, after all, went bust. It was a major counterparty to JP Morgan and significantly weakened the bank, whether Dimon would admit it or not.

Jamie Dimon's statements seem confusing. He wants to have his cake and eat it too. He wants larger spreads on loans, which is only possible if rates go up, but he has made confusing statements proving Will Rogers right in his assessment of bankers. In the Great Depression, Rogers uttered these famous quotes showing bankers are a bit confused, wanting low rates and high rates concurrently:

"Bankers are likeable rascals. Now that we are all wise to 'em, it's been shown that they don't know any more about finances than the rest of us know about our businesses, which has proved to be nothing." DT #1924, Oct. 4, 1932

"The whole financial structure of Wall Street seems to have fallen on the mere fact that the Federal Reserve Bank raised the amount of interest from 5 to 6 per cent. Any business that can't survive a 1 per cent raise must be skating on mighty thin ice... But let Wall Street have a nightmare and the whole country has to help get them back in bed again." DT #950, Aug. 12, 1929

Of course, now, it is worse than in the Great Depression. We cannot tolerate a quarter of a percent rise in rates! But why is it worse? And can we find any wisdom coming out of the mouth of Jamie Dimon?

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Disclosure: I am not an investment counselor nor am I an attorney so my views are not to be considered investment advice.

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