The head of US bank JP Morgan has warned that the world faces the most dangerous moment since World War II, with lives and economic growth potentially at risk.
In his annual letter to investors, Jamie Dimon said the world has “generally moved towards becoming stronger and more secure” in recent years, but Russia's invasion of Ukraine in February 2022 He said that he had experienced a major reversal.
“When something terrible happens, we tend to overestimate its impact on the global economy,” Dimon says. “But recent events are very likely creating risks that could overshadow anything since World War II. We should not discount them.”
The Wall Street banker did not mention Israel's attacks on Gaza in recent months, but said the “abhorrent attacks against Israel and the ongoing violence in the Middle East” also “raise many assumptions about the future direction of safety and security.” “We have defeated them and are putting us in a situation like this.” at this pivotal time in history. ”
In a letter to investors on topics ranging from politics and artificial intelligence to interest rates, Mr. Dimon wrote that a breakdown in international relations “could and potentially could end with virtually no impact on the global economy. “It could be a deciding factor,” he warned.
He added: “The ongoing wars in Ukraine and the Middle East are likely to get worse and escalate in unpredictable ways. Most importantly, the specter of nuclear weapons, which remains perhaps the greatest threat to humanity, is… , to emerge as the final arbiter and strike deep fear into the hearts of all of us.
“The best protection begins with an unyielding determination to do whatever it takes to maintain the strongest military on earth. This is a commitment within our economic capabilities.”
This follows a similar warning by the International Monetary Fund, which said in December that the global economy was on the brink of a second Cold War, which could “annihilate” the progress made since the collapse of the Soviet Union. Ta.
Gita Gopinath, the IMF's first deputy managing director, said at the time that the world was at a “tipping point” where tensions between the most powerful nations were increasing and the fragmentation of the global economy into regional power blocs was accelerating. . US and China – trillions of dollars of global output at risk of disappearing.
“If we were to enter a second Cold War, we might not see mutually assured economic destruction, knowing the cost. But the gains from open trade could disappear. Yes,” she said.
Dimon said the surge in government spending is related not only to increased military spending, but also to climate change plans, health care costs and changes in global supply chains, adding that “the rise in inflation and interest rates are lower than the market expected.” It warned that this could lead to a rise in
He said JPMorgan already has contingency plans in place for U.S. interest rates, which currently range from 5.25% to 5.5%. – It can rise above 8% or fall to 2%.
“We remain concerned about sustained inflationary pressures and are considering a wide range of outcomes to manage our interest rate exposure and other business risks,” he added.
Dimon's warning about persistently high inflation comes after the IMF warned the world's most powerful central banks on Monday not to keep interest rates high for too long.
The Washington-based fund said the Bank of England's current high borrowing rate is due to the fact that a higher proportion of UK homeowners have fixed-rate mortgages than in some countries, reducing the impact of rising interest rates. He said they should be cautious about maintaining costs.
This comes as the Organization for Economic Co-operation and Development, which represents 38 of the world's major democracies, found that food prices in the world's richest countries rose at the slowest pace in February since before Russia's invasion of Ukraine. The announcement came after the company announced that
Analysts have been cautious about the extent of cuts in recent weeks, but this could prompt multiple rate cuts this year.