The Big Four Banks open their books and reveal record profits…The energy sector is on the ropes as the oil and gas industry struggles to rebound in a new economy…and the national debt soars to record
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JPMorgan Chase reported $9.4 billion in profits during the last quarter — 4% more than it made this time last year. Goldman Sachs made $3.6 billion, nearly double what it made in the same quarter a year ago. Wells Fargo and Citigroup were both profitable making $3.2 billion and $1.7 billion respectively.

To what should we attribute the success of the banks? By their own testimony, loans are not defaulting as badly as was once predicted, and the government stimulus has enabled the banks to steady their balance sheets and keep interest rates low with the help of the Federal Reserve.

Jamie Dimon, JP Morgan Chase CEO warned that while the bank he leads is doing quite well, there is a great amount of uncertainty about the future. He warned the economy could crash quickly were there another double dip recession, and he was doubtful many small businesses could survive much longer without some sort of direct government aid to them.

Watching the economic cycles during the pandemic, it is not difficult to observe the economy is not on solid footing for the vast majority of Americans. While the earnings of stocks and bonds are skyrocketing, not every sector of the market is growing. In fact, only a few are growing in ways that even remotely resemble the earnings of the big four banks.

The International Energy Agency released a report this week that showed a very uncertain future for the entire industry as new energy policies requiring a reduction in fossil fuels in some states has changed the energy business in dramatic ways. The report predicts the global demand for energy will decrease by 5% by the end of 2020, energy-related CO2 emissions by 7%, and energy investment overall by 18%. This will continue to create a huge shock to an already burdened system  - especially in the production of oil and coal.

The number of people who could permanently lose their job in this sector could rise to historic levels. What can be done? The trend is moving away from oil and gas toward new sources of energy. The change will require the building of a new employment infrastructure where workers can build new electric cars or develop a solar energy product line that is reliable and affordable. Transitioning workers in old line energy into the new world of energy requires careful thought and action.

By the end of 2020, the CBO projects federal debt held by the public is projected to equal 98 percent of GDP. By 2023, the federal debt will be 107 percent of GDP - the highest in the nation’s history, and by 2050, the federal debt will be 195 percent of GDP.

People can argue about politics and even about economics, but you can’t argue about arithmetic. The United States is on a fiscally unsustainable path.

To be clear, the looming financial crisis is not immediately on us. There are some policy changes that could raise productivity through additional public investment in the right places – like infrastructure and education. However, the idea that the government could start new social programs or continue massive spending binges without thinking about the future by believing the Federal Reserve can finance all of it is just not true.

We must stop believing that deficits do not matter. The longer Congress waits to make the tough choices that must be made, the more likely it is that there could be real long term damage to our economy. The choices before us will become more difficult if we don’t act very soon.

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