Wait! He Said WHAT???????!!!!!!!

Jamie Dimon: The Worst is Ahead for Banks
Tuesday, May 20, 2008 2:03 PM
JPMorgan Chase CEO James Dimon says banks will suffer more from the recession than from the subprime debacle itself.
Investment banks have written down tens of billions of dollar so far, but the worst is not behind us yet, Dimon says. Banks will be hit harder as the recession unfolds.
"The recession is just starting,” Dimon told an audience at the UBS AG financial services conference in New York.
"We don't know whether it's going to be mild or severe. It could be deep, it could be worse than the capital markets crisis."
Dimon also believes that there is "a third of a chance” that the recession is "going to be pretty bad.”
The recession could "come closer to a 1982 recession than the very mild recession we had in 2001 and 1990,” Dimon said.
Credit quality is also declining much faster than experts had previously estimated, and it is going beyond the portfolios of consumers, Dimon said.
Another negative sign is that the volume of credit card charges is dipping, he said.
The recession thus is causing the "round two financial effect" of banking industry turbulence, Dimon said.
"Commercial bank losses are growing — you see it in home equity, you see it in other mortgage products, you see it in small business, you see it in wholesale business,” he said.
"They are not getting terrible, but they are getting worse."
The effect of the recession could last for quite awhile, farther into the future than experts have forecast, he said.
With credit standards getting tighter and reserves for loan losses increasing, companies will be forced to deleverage their balance sheets, resulting in "weaker” capital, Dimon said.
"This could take into '09 and '10," Dimon said.
Dimon’s sentiment echo those of billionaire investor George Soros.
Wall Street is emerging from the credit wreckage, but Main Street — the economy that ordinary people have to live with — is headed downhill fast, Soros told listeners at a recent Council on Foreign Relations event.
"I think we have the acute phase of the financial crisis largely behind us,” Soros says.
"But the damage that has been done to the system has to affect the real economy. The effect of that is only beginning to be felt.”