JP Morgan Chase (NYSE:JPM)
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JPMorgan Chase & Co (JPM) Chief Executive Jamie Dimon said Wednesday that the U.S. economy is on the mend, with businesses rich with cash after having weathered the worst of the financial crisis.
"Corporate America is in great shape," Dimon said during a talk at Rice University. "A lot of cash, a lot of capital."
"The great American business machine" is "starting to hum," he added.
The executive said that recovery could have probably been speedier without the political spat about raising the debt ceiling, which fostered uncertainty among investors. "I think that this dramatically slowed down" recovery, he said.
Dimon said that China will "pretty much accomplish its objectives" for growth, at least in the short term, as it's a carefully managed economy. Europe remains in crisis, though; in order for Europe to sail out of its current crisis, Italy and Spain need to establish austerity and growth plans that are believed by investors, Dimon said.
If Greece had defaulted when its debt problems became clear, it "wouldn't have been a big deal," Dimon said. But a Greek exit from the euro would have been "catastrophic," as it would have triggered a run on Italy and Spain. It would also have sown confusion among investors and businesses trying to assess whether contracts would be priced in euros or in local currencies. "When they restructure the euro treaty, they should allow an orderly exit," he said.
Dimon said he disagreed with Dallas Federal Reserve president Richard Fisher's proposal to break up the largest banks in the U.S., as American banks need size to compete with behemoths from China, Europe and Brazil. "We need big banks," he said. However, flawed institutions should be allowed to collapse without bailouts, he added. "We've got to get rid of 'Too Big To Fail,'" he said. "It should be called 'bankruptcy for big dumb banks.'"
Despite strong investor interest in gold, Dimon said he would rather invest in what he called productive assets.
-By Angel Gonzalez, Dow Jones Newswires; 713-547-9214;[email protected]