A few days ago JP Morgan announced that it was going to stop making student loans. Great, who needs them?
Since the crisis the banks have been largely irrelevant when it comes to lending. Bank credit has only really grown with respect to auto financing, however, real estate, student loans, it's been all government.
Take a look at this chart. It's a chart of the dollar volume of student loans being made by the Federal Government. We don't need the banks with the government lending like this.
The crisis has exposed one glaring fact...that the banks are good at one thing and one thing only and that is gambling in the markets and losing money. (Then extorting us to pay them back for their losses.)
Oh yeah, if they make money (and it happens from time to time) it's only because their bets are rigged, like with Libor, which is nothing more than outright thievery. (And the Fed does nothing.) Oh yeah...and fees.
I don't know how many of you have had this experience recently: go into your local bank...they are so courteous and nice and friendly, right? But you just know they're screwing you in some other way.
Anyway, check out JP Morgan's financial statements. The nation's largest bank makes a paltry 1.0% return on assets. Great job, Jamie Dimon! You're a true, Master of the Universe!
And by the way, the only reason it even makes that ridiculous 1.0% is because the U.S. government--WE THE PEOPLE!--pay it welfare in that amount. That's right...interest on our own, freakin' money that we create without limit.
The poor get nothing, but we give $30 billion to JP Morgan. America...what a country!
Mike,
ReplyDeleteI just dont see how the banks can increase their system liabilities when the govt net spending is flatlining...
We have been stuck at a level just above $4T per year for at least 3 years now...
So just before the GFC, govt top line was just above 3T and there was about 7T of 'loans and leases' in the system...
Then you had all of the defaults and chaos and nationalizaton of home lending in late 2008 and nationalization of student loans in 2010 and the stimulus came in in 2009 and the govt top line jumped up to a bit above 4T pretty quickly but since then we are stuck in a holding pattern...
the move from 3T to 4T has supported the increase you point out in govt lending over this period, but the banks, perhaps in better shape now, still cant get in the game because the govt topline is stuck still at 4T so the bank credit is stuck at 7T...
FY '10, '11, and '12 and now '13 have been stuck at around $4T...
So the govt is not injecting increasing amounts of USD balances into the non-govt and hence the banks cannot increase their lending... there is just no additional system income to support any increase in bank lending...
Next year looks the same I'm sorry...
2015 looks ok for now based on the recent OMB projections (on the order of a $200b increase) but the debt morons in the GOP (with Dimon one of the head cheerleaders btw ...) are threatening to scuttle this...
What I see the banks doing lately is actually operating the enterprises they have foreclosed upon...
They are operating real estate, hotels, restuarants, transportation, other small businesses they have foreclosed, etc...
They shouldnt be allowed to do this imo... it is unfair to the businesses that are not banks who have to compete in the marketplace... but the govt is just letting them do this with impunity I guess they have some sort of idea that someday they will have to liquidate/spin off these enterprises, but the banks are starting to make money doing this (they have returned to profitablity) and they may just say "screw lending" for now and they are just going to make profits running the foreclosed enterprises for now... as the govt just lets them do this currently...
as the govts now 4T of yearly top line injections creates the income that they access in these businesses as the source of current profits...
as you point out, the govt itself is actually doing all of the lending now (sans autos) and it looks like the banks are just starting to work their existing real asset base for operating profits...
this is not the way it is supposed to work, and it is unfair to real businesses...
rsp,
There is a Bloomberg article on the taxpayer funded welfare paid to J.P.Morgan here:
ReplyDeletehttp://www.bloomberg.com/news/2012-06-18/dear-mr-dimon-is-your-bank-getting-corporate-welfare-.html
The welfare they get more or less wipes out their profits.
Most people would be content with a risk-free storage and transaction service for their fiat. And that service can only be PROPERLY provided by the monetary sovereign (e.g. the US Treasury) ITSELF - not some government insured banking cartel with their own pet counterfeiter, the central bank.
ReplyDeleteWHere do you get the $30 billion number from and what exactly is it?
ReplyDeleteWhere does the $30 billion number come from the last line of your post and exactly what is it?
ReplyDeleteThe self-reproducing language of economic cynicism
ReplyDeletehttp://failedevolution.blogspot.gr/2013/09/the-self-reproducing-language-of_9.html