Dimon warns that US’s biggest problem is ‘the enemy within’

JPMorgan Chase CEO Jamie Dimon has warned that China isn’t the biggest threat to the US, it’s “the enemy within.” Dimon appeared at the Reagan National Economic Forum in Simi Valley, California, on Friday, arguing that “tectonic plates are shifting.”

“Those tectonic plates are the geopolitics with these terrible wars, terrible proxy terrorist activity around the world, North Korea, the potential proliferation of nuclear weapons over time, which is the greatest threat to mankind,” said Dimon, one of America’s top bankers.

He said the other tectonic shift is the global economy, before going on to seemingly criticise the aggressive trade policies and the apparent breaking up of traditional Western alliances by President Donald Trump. “The other tectonic shift is ... the global economy. So the global military umbrella of America, and then the global economy, of which trade is a part,” he said. “The other parts are, do people want to partner with you? Do you have your alliances? You have investment agreements and all those various things. And they're changing.”

“Then our debt ... We added $10 trillion in five years,” he noted about the national debt, which stands at more than $36 trillion. “You had (former President Ronald) Reagan up there talking about deficits. The debt-to-GDP was 35 percent, and the deficit was three and a half percent. Today, it's 100 percent debt to GDP ... and a deficit of almost seven percent.”

“We go into recession, that seven percent will be 10 percent, and so we have problems, and we've got to deal with them. And then the biggest one underlying both, that is the enemy within,” he said.

“China is a potential adversary — they’re doing a lot of things well, they have a lot of problems,” Dimon added. “But what I really worry about is us. Can we get our own act together — our own values, our own capability, our own management?”

The CEO made the comments amid a sharp decline in trade between China and the US following the implementation of Trump’s widespread tariffs. The president's trade policy has been in flux amid new agreements and court rulings. The tariffs have prompted further uncertainty in a trade relationship that significantly impacts the rest of the world. The dispute with China escalated on Friday as Trump claimed the Chinese “totally violated” the most recent trade agreement.

“They’re not scared, folks. This notion they’re gonna come bow to America, I wouldn’t count on that,” said Dimon. He added that he concurs with Warren Buffett, the outgoing Berkshire Hathaway CEO, that while the US is usually “resilient,” this time could be different.

“We have to get our act together,” said Dimon. “We have to do it very quickly.”

The CEO argued that the US has a “mismanagement” problem and that a litany of things needed to be done, including fixing regulations, permitting, immigration, taxation, inner city schools, as well as the health care system. Dimon said the US could grow three percent a year if those things are taken care of. Referencing previous speakers at the conference, Dimon said: “What you heard today on stage was the amount of mismanagement is extraordinary. By state, by city, for pensions ... and that stuff is going to kill us.”

Last year, Dimon warned about inflation, political polarisation and wars that are creating risks not seen since WWII.

The nation’s most influential banker, Jamie Dimon, told investors that he continues to expect the US economy to be resilient and grow this year. But he worries geopolitical events including the war in Ukraine and the Israel-Hamas war, as well as US political polarisation, might be creating an environment that “may very well be creating risks that could eclipse anything since World War II.” The comments came in an annual shareholder letter from Dimon, who often uses the letter to weigh in broad topics like politics, regulation and global events and what it might mean to JPMorgan Chase, as well as the broader economy. Dimon also used his letter to forcefully defend the firm’s diversity and equality efforts, pushing back on the arguments from Republicans who have said such efforts at Fortune 500 companies, colleges and universities are discriminatory and promote left-wing ideology.

Agencies