Comments on: Chart of the day: JP Morgan’s excess deposits A slice of lime in the soda Sun, 26 Oct 2014 19:05:02 +0000 hourly 1 By: MrRFox Tue, 22 May 2012 08:47:14 +0000 BE A SPORT – show Jamie Dimon how turn his Whale of a losing position into a minnow, and win a book from Felix’ desk. My secretary has one on her desk in CA from that OWS thing a few weeks back. First one to post the answer that turns Jamie’s turkey into an eagle (relatively speaking) will be awarded the tome. Here are the ground rules –

The successful exit strategy will require a little help from the Bros in DC – it can’t be anything that isn’t apparently neutral on its face, plausibly necessary to protect the stability and functioning of the financial system, and yet effectively puts all the high cards in JD’s hands.

Hint I: Like all vexing problems, cracking this one requires that you appreciate all the unusual strengths that arise from the existing status of the client – in this case, JPM.

Hint II: The client’s adversaries may also enjoy a similar status – maybe, but that doesn’t mean they’ll be permitted to utilize it the same way JD does.

(With all the cash JD has already stuffed into Demo pockets, he’s entitled to at least a little help when he’s desperate – we are in an election year, aren’t we? Who’s gonna say “No” to Jimmy-the-ATM? He just needs you to help him figure-out what to ask for that his soul brothers can politically deliver.)

I’ve already posted the solution on another site, so it’s been time/date-stamped. When this drama is all played-out – shouldn’t be long now – I’ll post the link, or sooner if someone nails it before then.

By: y2kurtus Tue, 22 May 2012 01:16:18 +0000 I would like to put forth an alternitive vision to the base case:

-Base caes = JPM is sucking up lots of deposits from small US based businesses, big US based businesses, richey rich, Scrouge McDuck, widows and oprphans ect. They are then too stingy or lazy to lend them out to growing businesses but instead gamble them abroad.

-my take. JPM is the largest us based money center bank. As such they hold dollar denominated profits generated abroad by Multinationals who cannot repaterate about a trillion dollars that the IRS has absolutely no right to tax but thinks it can. Cisco, Walmart, Intel, Coke and about 400 other of the S&P 500 companies have cash trapped abroad. Is it possible that this cash (almost alwasy held in US dollars form) is counted in JPM’s fast growing “excess deposit” hoard?

If my uneducated guess is correct JPM could very well be lending more in the United States than it is taking in in deposits. I bet lots of Italian companies and individuals like the idea of JPM deposits in a worse case outcome for Europe.

If your sure that the basecase is accurate by all means “move your money” Felix’s federally insured member owned credit union or my federally insured mutual community bank would love to have your business!

By: KenG_CA Mon, 21 May 2012 21:20:54 +0000 TFF, that question isn’t targeted at you, but those who make far more than they need to live on, or companies that just accumulate their profits and put them under virtual mattress.

If everybody has been doing what you have been, the economy wouldn’t have grown as large as it has, as only debt has allowed it to reach its current size, and as you say, there wouldn’t have been any debt crisis. But when profits are earned and not used in any way, they are effectively taken out of circulation, and that shrinks the economy.

Spending money is more effective stimulus than tax cuts, and that’s what I’m calling for.

By: TFF Mon, 21 May 2012 20:58:24 +0000 “Did you make a lot of money this year? Yes? Good, now either invest it or give it to the government.”

Yes. Gave much of it to the government. Used the rest to pay down debt. Spent the usual. Also sold some investments to pay down debt. Not ideal for stimulating the economy.

If everybody did as we do, the economy would collapse into a deflationary spiral. But then, if everybody did as we do, there wouldn’t have been a debt/credit bubble in the first place.

Government spending serves as a floor, perhaps. But much of the “stimulus” has been rebating taxes to people. Much of that rebated money has been used to PAY DOWN DEBT (or accumulate cash hoards). Spending money is a more effective stimulus than tax cuts.

By: KenG_CA Mon, 21 May 2012 20:00:36 +0000 TFF, I don’t see QE or government spending so much as stimulus as it’s setting the floor for the economy. In the absence of private investment, the economy collapses. Think of government spending as bridge financing – without it, the economy won’t last until the investment capital starts to flow.

No, you know my plan. Did you make a lot of money this year? Yes? Good, now either invest it or give it to the government. The government won’t be anywhere nearly as good or efficient as you will be in deciding what to do with it, so I suggest you invest it in something. I’m guessing you’ll get a better return on it than you would if you pay it in taxes or do nothing at all with it.

By: GenLee Mon, 21 May 2012 18:57:05 +0000 Doesn’t the rise in excess deposits have a lot to do with the Feds decision to start paying interest on excess reserves. Simple solution to start getting banks to lend money out in the real economy is to stop paying them for parking their deposits in the Fed.

By: TFF Mon, 21 May 2012 18:09:19 +0000 KenG, there is only so much you can effect with monetary stimulus. If people aren’t spending, and the government isn’t spending (just gimmicks and tax rebates), then the economy isn’t going anywhere. You can flood the market with cash (as they’ve already done) and the economy STILL isn’t going anywhere.

QE wasn’t the problem, but it isn’t really the solution either. Liquidity trap, perhaps?

By: MrRFox Mon, 21 May 2012 17:12:42 +0000 Damn right – nobody likes Gefilte Fish.

Long FB, are you, AT? (Me either.) Today is the first day of the rest of Z’berg’s life. Hope his marriage works out better than his IPO – she seems like a nice lady.

By: AndrewTyndall Mon, 21 May 2012 17:04:13 +0000 I know, I know. And Dimon’s a Greek. Which makes the Gefilte Fish reference all the more gratuitous.

By: MrRFox Mon, 21 May 2012 16:55:07 +0000 Just ’cause Timmy’s a Gentile (? – a matter of some dispute, apparently) doesn’t mean he doesn’t like bagels.