The Wall Street Journal of Feb. 27 tells the story in its own headlines. On page C1, the story was, "JPMorgan Pulls Belt Tight," while on C3 the headline read, "Wall Street's Bonus Pool Hits $20 Billion." If that doesn't describe this crazy false recovery we are allegedly undergoing, nothing does.
Of course, the picky can point out that JPMorgan Chase is tightening its belt on its banking side and the Wall Street bonus increases are paid to traders, investment bankers and other employees of securities firms. But to the average Joe, it's hard to understand, if the JPMorgan Chase website says it is a leader in investment banking, how or why it doesn't somehow have a connection with the Wall Street crowd.
So, it is seen as ironic when a massive "global financial services firm" announces it will trim its payroll by 17,000 jobs by the end of next year (and it is not alone -- most financial giants have been and are cutting), while at the same time financial institutions who also engage in "investment banking" are giving big bonuses this year.
Don't get me wrong, this is not class warfare here. The investment bankers, traders, employees ... whatever, who are getting bonuses, had their bonuses slashed in recent years. And the layoffs at JPMorgan are reportedly coming in large part from its consumer bank and home loan departments.
And JPMorgan shouldn't be punished in the court of public opinion. While it was the most profitable bank in the U.S. in 2012, revenue has been flat, in part due to low interest rates, which have kept the financial institutions from making more loans, while at the same time costs continue to rise.
In other words, while the folks on Wall Street might be feeling like the economy is recovering, those who work in the real world of servicing regular old banking clients or making traditional loans aren't feeling the recovery at all. And I've got news for everyone: This story is not going to get any better.
With Federal Reserve Chairman Ben Bernanke's remarks indicating that rates will remain low, the stock market might jump for temporary joy. But its euphoria is being fed by a continued artificial pump of energy from a government that cannot keep on keeping on.
Meanwhile, economists are revising downward their projections for economic growth this year. That means not only the big banks, but just about every segment of the economy will see continued pressure to trim more and more fat where fat no longer really exists.