I've waited until I was able to get hard numbers on the ratio between total liabilities and deposits. If we make the assumption (as is true with all balance sheets) that total assets = total liabilities (equity is counted as a liability to get this balance...I guess that's why it's called a balance sheet), we can use the ratio of deposits to total assets to get the ratio of deposits to total assets.
I found this for Chase before and after buying Washington Mutual at: http://investor.shareholder.com/jpmorganchase/press/releasedetail.cfm?Releas eID=337648 Before the purchase, deposits were 41% of total assets, and afterwards, they were 44%. But, at http://finance.yahoo.com/q/bs?s=jpm&annual You have stated, from your experience that deposits are a much smaller fraction of total liabilities. With all due respect, either JPMorgan is deliberately falsifying information, or you make invalid assumptions concerning how one assumes long term debt must be commercial bonds. It is a fact that almost half of JP Morgan's assets are now deposits (unless they are lying of course). > > The balance sheet you referenced has total assets of nearly 2 trillion > euros, and 422 billion euros of deposits under liabilities. As long as > the losses on the assets do not exceed about 79% (loss of 1.6 > trillion), then the depositors could get their money back. In this case, since Deutsche Bank is a mixed house,that could very well be true. > > You just brushed off the essential problem at the heart of bank runs > with a > > "it would just". > > I'm not talking about preventing bank runs. The issue I am addressing > is whether the depositors would be able to get their money back in > bankruptcy. If the depositors won't be able to get their money back > eventually, then that is a more severe crisis than just an insolvent > bank. Yes, but if checking accounts are worthless until the sweet bye and bye, then there is a giant problem. Further, as I've experienced in cases that only involve the hundreds of millions and you should know, the attempt to sell of trillions in assets all at once would decrease the value of the assets even further. I've lived through the crash of '86 in Houston, where banks got no more than 30 cents on the dollar for many foreclosed properties. The process took years. In your scenario, you have people with checking accounts patiently waiting 2 years before they can write checks again. The results of what would happen are so clear to me, and are born out by recent data, I'm not clear what statements that meet approval but all but the small minority of uberlibertian economists that you think are stuff and nonsense. Some of these assumptions are: 1) Companies who find that they can't make payroll lay people off. 2) People who's checks are no longer good can't make their mortgage payments. 3) Failures within the financial system set off a cascade effect. 4) The failure of AIG immediately after the failure of Leeman Brothers indicates both the interconnectiveness and the inability of private insurance to handle this type of catastrophic failure of a AAA rated company. 5) Without some intervention _all_ of the US investment banking houses would go bankrupt. 6) In such a market, where giant AAA and AA rated companies default en mass, people are fearful and don't know who's a safe bet for a loan. 7) In such a case, credit starts to freeze. Let's, though, go back to Deutsche Bank. They are under water and there is a run on the bank (with their bad loans and the lower transparency in the EU than the US they may be hiding the fact that they are presently under water and hiding it). As a result, checks written on Deutsche Bank accounts are not honored. You ignored this question before, but what do you think would be the action of the people who can no longer pay their bills? What happens when major industries cannot pay their bills? I'd argue that they'd cut every cost possible, but still risk going into default. I'd argue there would be massive layoffs, and mortgages not met. I'd argue there would be a positive feedback loop. Dan M. _______________________________________________ http://www.mccmedia.com/mailman/listinfo/brin-l
