Oct 28, 2012, 12.41 PM | Source: CNBC-TV18
The US needs to get its fiscal rather than monetary policy right if it has to fix the economy’s problems, feels James Dimon, Chairman & CEO, JPMorgan Chase.
Fiscal cliff is being referred to as the situation when certain tax cuts will be withdrawn and simultaneously there will be a cut in government spending as well from the start of next calendar. The double whammy comes at a time when the US economy is still struggling with the after effects of the global financial crisis of 2008.
Dimon said already many businesses in the US were holding back their investments in anticipation of the fiscal cliff. He said the markets may prefer Mitt Romney as the next US President, over Barack Obama. Dimon said Europe was making slow progress, and that European markets had done better than expected.
Contrary to the widely-held view, Dimon expects the macro environment in China to improve, and not worsen.
Here is the edited transcript of the interview on CNBC-TV18.
Q: What is your view on the US economy now?
A: I am going to put two pieces for you. The underlying strength of the economy is actually pretty good. Corporations, middle market sized companies, consumers are in better shape. Housing is turning. It is not as strong as anybody would want. It is possible the election changes that, but I would also tell you it is possible the economy could do very well or very badly regardless of anything.
I think what is really, really important is good policy. We need good policy in United States. Think of a fiscal deal, Simpson-Bowles type deal, I think that will make all the difference and we would urge anyone who becomes president to try to get something like that done quickly.
Q: Who would the markets like Romney or Obama?
A: I do not really know. My guess is that the people who vote for Obama would say Obama, the people who vote for Romney would say Romney.
Q: What would the markets be pleased with?
A: Businessmen mildly favour Mitt Romney, but that does not mean that necessarily it will be better for the markets.Long time ago, they tried to separate the economy. It is far bigger than politics. It’s a machine in a oil tanker, its hard to move, but for better force.