A Job Well Done

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At today’s hearings, Jamie Dimon said “We didn’t do a stress test where housing prices fell.” Kevin Drum is astounded:

Wow. By 2006, housing prices were nearly double their trend growth levels and JPM never even considered a scenario in which they might fall. Just wow.

The really jaw-dropping thing, though, is that even in retrospect Dimon has been a nearly perfect CEO and JP Morgan basically a perfectly-run company. During the boom, they all got filthy rich. During the bust, a bunch of their competitors went out of business. Thanks to the bust millions of people around the country are now unemployed. Hundreds of thousands of children have been pushed below the poverty line and are suffering consequences from it that will last a lifetime. The entire younger generation is going to suffer because of the massive debt-overhang. But Dimon and the Morgan crowd are still getting filthy rich in part thanks to government emergency measures designed to mitigate the crisis.

And this is not because Morgan had tons of foresight. They didn’t even consider a scenario in which housing prices might fall. It’s an idiotic mistake. The exact same mistake that everyone else made. But they made it to a somewhat lesser extent than their leading competitors. So rather than suffering, they’re benefitting.

It’s the miracle of capitalism!

Two guys are in the woods and they spot a vicious bear. One starts tying his sneakers. The other says “you’re never going to outrun that bear.” The first says, “I only need to outrun you.” And yet our society is so determined to worship money and success that this idea has developed that guys like Dimon and Lloyd Blankfein who managed to outrun the other guy actually outran the bear.