“Bitcoin is a Fraud and will Blow-up”, and the Robots are coming for your Job

By Jack J. Kelly

You have to love J.P Morgan’s Chief Executive Officer, Jamie Dimon. In an era of uptight political correctness and corporate executives afraid to have any personality in fear of offending someone who may  boycott their products and whine on Facebook, Dimon is refreshingly unique. He is one of the few bank executives to openly and plainly speak his mind.

Yesterday, at a conference in Beverly Hills, California, Jamie Dimon addressed the ridiculous, unbelievable, stratospheric rise in the price of Bitcoin and accompanying public and media infatuation with this, and other crypto currencies.  Getting right to the point, Dimon simply said Bitcoin “is a fraud and will blow-up”. “The currency isn’t going to work. You can’t have a business where people can invent a currency out of thin air and think that people who are buying it are really smart”, he added.

When questioned about traders engaged in trading Bitcoin at J.P Morgan, Jamie Dimon growled “I would fire them in a second for two reasons. It is against our rules and they are stupid and both are dangerous”.  It seems that Dimon is equally brusque with own family. “My daughter bought Bitcoin, it went up and now she thinks she’s a genius“.  That must have been a very uncomfortable dinner when the Bitcoin subject arose at the Dimon penthouse apartment. I wonder if his daughter clapped back at Dimon telling him that at least  Bitcoin didn’t have to receive a trillion dollar bailout from the government to avoid bankruptcy during the financial crisis. Maybe she also chided him over his bank having to pay multi-multi-billions in fines because of fraudulent mortgage practices, misleading CDO Investments,  anti-competitive conduct in Municipal Bonds, foreclosure abuses and Robo-signing, mortgage misrepresentations, electronic trading scandal, unethical credit card practices, the London Wale rogue Libor traders, the bank’s role in the Madoff matter, and other hijinks – but I digress.

As of today, Bitcoin has fallen more than 11% since Jamie Dimon’s comments. We have asked his daughter if she sold her holding but have not heard back.

Another CEO was also in the news today regarding unpleasant technology issues. Vikram Pandit, the former Citi CEO who held court at the bank during the financial crisis, predicted that 30 percent of banking jobs will disappear within five years (maybe that was said in anger since he left his cushy well paying Citi CEO job?) due to ascension of technology, evil robots, and artificial intelligence within banking and finance. In particular, humans in the “back office” will be hardest hit. Employees engaged in tasks that could be replicated by technology will replaced by technology. If you think that is farfetched just ask a trader. Oh, wait, you can’t because they have almost all been replaced by algorithms and super fast software.

Bank of America’s Chief Operating Officer, Tom Montag, echoed this sentiment, forecasting that Wall Street’s biggest firms will be using technologies including machine learning, robotics and cloud computing to add to their operations, forcing people to find new types of jobs. Maybe the disenfranchised professionals could learn how to dust off the robots?

Allow me to put the numbers of displaced people into perspective – be prepared it may make you ill.  According to Pandit, one million (yes 1,000,000) banking and finance related jobs could be gone in Europe and 770,000 (yes, seven hundred and seventy thousand) jobs could be lost in the U.S due to technology initiatives.

Now before you puke, in small print we noticed that Vikram Pandit started his own boutique investment bank that invests in non-bank financial startups so he may be a little bit biased. Also,  it could be sour grapes. Although he “resigned” from Citi, The New York times cited his $56 million compensation, $165 million Pandit received from Citi for selling his hedge fund, Old Lane Partners to the bank, and other reasons and tensions helped lubricate the transition. I’m just pointing out that maybe we should take the above with a big grain of salt.

Nevertheless, the rapid deployment of technology has a significant impact on employment within financial services, banking and Wall Street. If executives believe that they can easily and cheaply replace people with technology there is little incentive to hire real live people. It is better for management to keep vacant seats open until the technology catches-up to enable the banks to transfer over once human managed functions to the smart machines. For the people who remain, raises will be less and opportunities fewer and far between since it will be more cost effective to have robots that do not need benefits, 401ks, and vacations. They also don’t talk back or write bad reviews about their boss on Glassdoor.

Technological advances also allow companies to move jobs to lower cost states, especially  for jobs that that do not require face-to-face interactions with business people and clients.  These jobs are filled by less experienced post-college kids and pay considerably less than the veterans based in Manhattan. The threat of moving a job or entire division chills the ability of a person to demand a higher raise or bigger bonus knowing full well that she could be replaced by a computer or a junior kid in Raleigh, North Carolina or Jacksonville, Florida.

Have a great day!

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