The chief executive of the largest bank in the US says he’s keeping a close eye on large risks that could potentially break the poor camel’s back.
In his Annual Letter to shareholders, Jamie Dimon says AI and cyber risks are among the “tectonic plates” that he’s closely watching.
According to Dimon, AI agents could make cyber risks far worse.
“I have to mention this because it remains one of our biggest risks, and this is probably true for many other major industries and corporations. AI will almost surely make this risk worse.”
On top of cyber threats, the JPMorgan executive warns that geopolitical issues, particularly hostilities in Ukraine and Iran, could lead to the emergence of a new world order.
“Nations that are heavily dependent upon imported energy are already seeing the effects. And it’s not just energy, it’s commodity products that are byproducts of oil and gas, like fertilizer and helium. And given our complex global supply chains, countries are experiencing disruptions in shipbuilding, food and farming, among others. The outcome of current geopolitical events may very well be the defining factor in how the future global economic order unfolds — then again, it may not.”
Another risk in Dimon’s crosshairs is high global sovereign deficits and debt. He also says he sees a debt crisis as a likely outcome, as the US spends the majority of its budget on entitlements.
“The deficit globally is at an extremely high 5%, while global sovereign debt is at all-time highs. The current forecast from the Congressional Budget Office has our debt-to-GDP ratio going from 100% today to 120% in 2036.
High and increasing government debt will eventually have to be dealt with — the right way would be to deal with it now before it becomes a problem; the wrong way would be to let it become a crisis, which, in my opinion, is probably the likely outcome. Importantly, almost 60% of government spending is for entitlements and is not discretionary. This makes the job that much harder.”
According to Dimon, America’s debt-to-GDP ratio could decline if the Fed cuts interest rates by 100 basis points while the economy grows at 3%.
Featured image: Steve Jurvetson via Flickr
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