The giant US bank, JP Morgan, has just announced record profits of $6,500,000,000 for the first quarter of 2013. This is an astonishing amount of money considering that the US economy is struggling; the growth figure for the last quarter of 2012 was just 0.4%.
The main contributor to these profits was the investment banking division. Yes that’s right, the same area of banking that led to the financial collapse of five years ago. As a consequence of that crash, the US taxpayer bailed out JP Morgan the sum of $25,000,000,000 in 2008.
The other large US banks such as Citigroup and Goldman Sachs have also announced big increases in profits. It seems that the Federal Reserve’s stimulus package of buying $85,000,000,000 worth of ‘assets’ every month is having quite pleasant repercussions on Wall Street.
JP Morgan said that there are signs the US economy is “healthy and getting stronger”. Healthy and getting stronger for who? Elsewhere in the country we learn that there are 47,000,000 people living on food stamps. That’s nearly one in five US citizens and it’s an unprecedented number.
At the beginning of April, the Californian city of Stockton was granted permission to file for Chapter 9 bankruptcy protection. This is the largest US city so far to go bust. Detroit is a much larger city that could be heading the same way.
It seems that the actions of the Federal Reserve since 2008 has created two parallel economies or even realities. The rich are getting richer and the poor are getting poorer.