>> ceo jamie dimon spoke about the global economy and foreign relations today as part of their ceo speaker series. it is virtually assured that bond markets would project the rest out of congress could not reach a deal cutting the deficit. jpmorgan is being sued at the new york attorney general over allegations that subsidiary bear stearns deceived investors into buying mortgage-backed securities. this is an hour. [inaudible conversations] >> well, good afternoon. i am richard haass and i want to welcome all of you to the council on foreign relations into today's ceo speaker series meeting. this is part of the council on foreign relations corporate programs, which is supposed to increase connections and links between the business community in the foreign policy community, which to some extent are one and the same. i want to thank -- rather welcome not necessarily those of you do, but those around the world participating in this meeting or modern technology. speaking of modern technology, if people take a second to turn off their cell phones and the like, that would be most welcome. this meeting is on the record. as we say, anything can and will i'm sure be against you. in this danish, probably some things you haven't said will be used against you. the phrase for someone it's no introduction as often is. in this case it applies. jamie dimon is not simply the head of one of the principal financial institutions in this country, jpmorgan chase, but i believe has emerged as one of the most important and influential spokesman to the world of finance and business in the united states. the wait is going to work today to see and i are going to have this conversation for a few minutes and then we will open it up to you for your questions. one or two conflicts of interest in the table. jpmorgan chase is a corporate member of the council on foreign relations. whenever a 175 corporate converse amanda shareholders the company. i'm forsch landed distinct minority shareholder and i wish it weren't have to present a conflict, but alas it's not. so there you go. mr. dimon is suspect and if you know is that greek heritage. in the last 24 hours the chancellor of germany has been visiting the country of your ancestors of their forebears. how worried are you and what it might mean, not just for grace and not sonatas for europe, but because of globalization and economic linkages for the united states and for your own institution. >> thank you for your introduction. my ancestors 1915 chemists you can't blame me for what's going on there. as a sidenote now, meant my grandfather coming home years ago and greeks from both sides yelling and screaming about the then prime minister who is the grandfather a while back while backyard in almost the same points. socialism, capitalism, same day sky. so the issue obviously to succeed and survive, but from an economic standpoint, greece is not the issue. greece is a couple hundred billion dollars in debt on its own isn't a catastrophe. the catastrophe is to have the defaults increase before you have a firewall through italy and spain. in a very good likelihood italy and spain don't have the wherewithal to stop the banks. they need the money if they can't print euro. they are things called central banks, but they can't print euro from which has been a difficult position and that's why you need a banking union and fdic deposit scheme. $700 billion has ended up in spain. most went to germany. the german bank deposited in the bank to lend back to the time spinner central banks. so the problem has been widely socialist inside europe counter to what most people think. so to solve europe would need three things. you need to stop the banking crisis in spain. he made a real fiscal union. they have one that doesn't work. it was really a minority. they've got to do it soon because it's bleeding slowly. i do want to remind you who are really good reasons for the union. wise political and hundreds of thousands of users have multiple wars. so you could really say let's have a political union. the second was economic, market and a look at the united states and say we have a common market. state state regulation come the same old-school stuff like that, but it was a huge boost the economy. those reasons still exists. i personally will muddle through potentially so bad and policymakers know that. i could be wrong. you're going to see goodness, badness, it is going to her, not going over. but they can't do them all once. they have the will. all the politicians say there is no plan b. the way is really complicated. >> i expect we'll return to that , but let's just keep globetrotting for a second. even at the international financial meetings in japan and one of the things coming out of the imf predictions for slowdown in global economic growth. announced this morning to chop off as global demand for aluminum, which is something of an indicator. are you seeing the same thing or business operations? you're truly an international institution. are you seeing signs of a slowdown? the mac not quite like that. europe is a mild recession. you could argue not worse, but the government has spent 50% of the money. in asia is slower but nothing mystical or different than the newspapers. the united states is fundamentally stronger than people think much of the reasons for that a little bit later. in latin america, you know, some groups are slower, but obviously a slowdown quite a bit. >> in a show you seem sanguine about peer what about india slowing, china slowing, china slowing, china slowing and they're going they're going to need to check its good remember is to be a lot higher. they need the 7% or 8% to avoid the social unrest and to build the infrastructure. i think they're going to need that. they're going to change the leadership to be smooth and will continue former policies of the government, but they have the wherewithal. so they've got $3 trillion in reserves and capability to maintain. they move very quickly. so the stimulus package after the crisis they think was like seven months after the crisis, they did in fact, literally. so they know what they want to accomplish. i don't believe china can do that 10 years from now. now they have to micromanage in the infrastructure buildings still works. i think down the road to work for the next couple of years. >> are you as bullish about latin america? are you seeing the signs are pretty robust economic? >> we are opening offices and we do business in a lot of countries, but were on the ground. in sub-saharan in uganda and kenya. member, we go there for the multinational declines. when they go, we go. it's a mystical type of thing. it's optimistic, they say might latin america. so peru and chile is doing fine in brazil is a slowdown, but will make inconsistent investments in mexico also rethink is doing quite well. so our neighbors to the south to a better job of fiscal deficit, better job of monetary policy and create jobs out there. so we should help as much as we can on the trip problem happening. >> implicit in a lot of this -- a lot of which are seen as one actor wrestle the united states associate is so let's turn inward. how worried are you and how much are you planning for the fiscal cliff? >> that's a big deal to win the euro zone crisis happens in the debt ceiling crisis, we spend 50 to $100 million because of the complexity in global financial markets if you had a real failure. the fiscal cliff isn't quite that because it's more predictable, but we have a fiscal cliff, command center and all that kind of stuff going through to understand all of it. will be prepared. jpmorgan survived the fiscal cliff and i just think it's terrible policy to allow us to get close. the reason i think if that is because i read the papers and someone said it's not that bad. just a mushy bp. i would defy anyone of you to know what they are. therefore as a responsible policy to say well, let's see. let's not say. let's try to avoid that. one have been midnight december 31st. it's going to happen now. people will say this is bad and start to make decisions, don't hire, don't build, don't buy. let's wait and see. that is a recession. people pulling back a little bit. >> you agree people who say it's better to describe it less as a cliff than a slope? >> it will be a slope. >> imagined it to the fiscal cliff because we talk an ominous still another because congress finds a way to kick the proverbial can download a. how willing are you at some point that the united states can't do something on the order of a simpson/bowles for trying dollars over deppe said deal. how worried are you monday yurika and suddenly you're about area or iphone is red hot because the bond markets essentially meant against the united states? >> it is virtually assured. the question is when and how. i don't know if it's two years or five years, but it will happen. it's a matter of time. the united states can't barret definitely. look over the 100 years, bankruptcy in country after country who just thought they could get away with the reserve currency. again, what you take that of wait and see? were going to have fiscal discipline. it was imposed upon us and we did everything. we do to ourselves the right way. we in a way could enhance growth and jobs. so if we did some bad like simpson/bowles, whether as a year year ago whatever, the economy would boom. and we are showing that we have the ability. i would say americanness the way. as the well, but does know the way. more efficient tax system would've created much more certainty and a whole bunch of policy. i still think it's doable. the leaders need to say we're going to do it. >> when you think of the outlines of something like simpson/bowles for sure and has to include something is entitlement reform, spending control, tax increases? >> most businesspeople are not partisan, not parochial. we can all spend 20% of the government. i think simpson/bowles is 21%. and none have an system. so simpson/bowles is a far more efficient tax system that gets this huge waste, fiction costs in our society, legal system, uncertainty. so yeah, we would have had better growth and simpson/bowles was four for one or whatever, close enough it would've been good enough. if you get the growth going again, gross people out. >> let's talk about gross. the united states has been out for several years growing at roughly half which you might call the modern historical rate and set up in mid-30s, we are courageous below to give her a tape. if you are advising the next president, be it mr. obama or romney should more probably make the case publicly, here's a couple things to generate double or rate of economic growth say a 3.5%. one would be a comprehensive budget deal. what else would be on jamie dimon's list? >> when they give you the big picture about america, this great country of ours. the president recognized one thing for certain. they're going into that office with the world straight fresh. how terrible that america, it's just not true. those of you travel around the world have the best military in the family i transplantable for years. i'm talking about a venture capital, private equity, markets and bond markets. we have among the best businesses on the planet. small, medium and large with one of the most innovative entrepreneurial country around. i'm not talking about steve jobs. steve jobs. all in on the fact, steve jobs, you name it. we invest more capital equipment. we have a good rule of law, no longer the best. we still have a work ethic bear. if you're going to invest one place in this planet, it would be here. so we've got to get beyond. we don't have the divine right to success. we got to get immigration rights, fiscal policy right, otherwise it's another gift call shale oil. my god, the most profligate energy nation the planet. kaaba tenants that i know you miss it all that energy. were going to give you one more shot. let's hope you do this one right. so we have a problem. we should diagnose the problem. if you look at america today, why are we going to 2%? this one i can't prove. but i believe that europe isn't going to sink us, but there's a huge wet blanket out here in the wet blanket to name resolving uncertainty, real insurgency on taxes, policies, fiscal cliff. we have this constant business, not just a minute, the regulatory bee gees. i travel around america. wherever i go come businesspeople are faced terrible. we've done it to ourselves, folks. get rid of that wet blanket and it will take off. there's a great article that someone reprinted in "the wall street journal" was george shultz and milton friedman who gave president-elect to bomb us some. can system taxes, consistent regulatory. so the same positive story over and over and it will turn. you've got to believe in that, so america will do the right thing after its exhausted all the possibilities. i hope we do. the important partisan washington, if you think washington and business go to work with each other, terrible idea. collaboration should've happened. we should've had collaboration. we were in a crisis. every business wants to get things done, to pull together, worked round the clock, but it became a war. dodd-frank and health care and service edition of the wet blanket in the benefit to get a right the first time in move on. >> let's transition to that peer to the extent there has been a market absence of collaboration were significant friction, you would put the lion share responsibility on the political side? >> i would perform the business side because the prt, the business ceos come everyone i know says the committee to help? the councils coming meetings. now even wanting for the first time, but someone asked a question, is a 100 twentieths years in big companies come into your universal health care for american citizens, 80% said yes. they want it done right or a certain way. but there was a huge effort to pull together as americans make this work. and it didn't happen. you know us well as i do, but it didn't happen. it still could happen. so let's do it again. let's try again. we were to ourselves to do the best we can. >> one error you know better than i do than i do is regulation and regulatory policy. so that they put that out there. historically off the pendulum swings or something of conventional wisdom that pre-2008 the pendulum has swung too far in the direction of hunger regulation and the danger is obviously after to fascinate is one school side that it's going, the second still hasn't gone far enough. where do you come in? >> when i read a lot of people but deep opinions of little knowledge, a lot of them use a democrat trying to justify what they thought, which is not the way to compete with policy. as the clear, when it could regulation in america. good doesn't mean necessarily more or less. it just means good. highways post 65 miles an hour. you can't drink when he tried. the circuit is done properly. in some areas we created such confusion of overlapping jurisdictions, no way to adjudicate disputes. people do come that fraud. they make mistakes, tacked by seven different agencies is supposed to the one responsible for it. so we need good policy. clarity, simplicity. so a lot of people need more. they're saying they need more capital. okay, fine. let's have the debate and look at the facts. i've always been in support of a lot of capital. i want players going to go to five. i think some of these laws are written in basel. not written here, not good for america. they are for other people for their purposes and regulators say we have to have a common we want to do it right. i agree with that concept except it's bad for america. the rest of the world can't make heads. if you look at somebody's rows, you say that makes sense for this country. >> what about the poster child, the poster issued the proprietary trading in the poker room all that? would you come on i'm not? >> so after dodd-frank was mostly done and come after the and white paper and after ever went through their 2 cents in, then the volcker was going to the top. totally necessary. but that wasn't the problem. if you look at dodd-frank, we support good pro forma. they were democrats that make it binary. you either for or against it. i'm for some and again son. nothing to do with crisis. they had nothing to do with the poll thought deeply about. keep trading for big financial countries. i agree with that. we have to get rid of too big to fail. so i agree with the intent. what i have said is we have the widest, deepest, best, most transparent markets in the world. you can price almost anything a little blackberry with pennies. let's not throw the baby out with the bathwater. the struggle is trying to find market-making volcker and you almost can't. it's so big it's hard to determine what is market-making. so i just hope we write it in a way that will end up with the and best capital markets in the world yet that's what i hope. what happened as the regulators came out with 180 things with 18,000 from around the world. not just american investment banks, but around the world, asset managers, central banks,, governments get it right. at what point has got to be a dialogue. >> in general, should most regulation come from the outside portion firms essentially have a large troll so long as it's transparent? >> you should have regulation formed and designed. right in this crisis because banks are blamed for everything is keep an eye the process. and that's kind of a mistake because that's like if you design a hospital, keep the doctors out. of course banks make mistakes. they should be punished. it would've been better to sit down and have the conversation designed the system went about doing, which is people dumping 2000, 5000 pages of roaster and figure out what they need. some of these roles by the way, there is a great economic ecosystem for all different types of entities. small banks, big name. this banks in 50 countries. that's why were here. to do a lot of things other people can't do. some of these roles are terrible for banks. i say that because i don't want them coming after me with small banks, but he was the biggest bank of the banks? >> let's talk about that. you mentioned too big to fail. there is talk to chew it to be broken up and if you did get into serious financial distress that they would be system threatening, goes way beyond the institution. how does one deal with that? other than people having tremendous states are one-day or successors, how do we do with the problem that jpmorgan never made an institution as the threatening mistake with the ratifications would be far better. >> when people talk about class to go, this crisis had nothing to do. you may remember hedge funds had problems early on, mortgage brokers for saving someone's went bankrupt. penny not come along now, monoline investment banks, lehman and bear stearns, aig life insurance company in the biggest thing he shook a tester of all-time call fannie mae and freddie mac all have been way before that day. so was in a glass-steagall foundation. number two, we have to give credit to big to fail. if i send another sick of them i am, you should never pay jpmorgan fails. you need a way to bankrupt. they should be called minimally damaging bankruptcy for big banks as opposed to this fake concept of orderly liquidation. kind of something to resolving us, but we may still be around. i think it should be called bankruptcy. any specialized staff peer jessica hospital when it goes bankrupt and you can't turn the lights off, financial company all you need is turning to the system. it could be done. in fact it was quite successful by the fdic for a long period of time. so i think there's phrase you want to structure so the regulators say that jpmorgan starts to fail and missile chapter 14 commanders that happens with the money keeps on moving. equity h