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 Post subject: Deutsche Bank: The German beast is about to collapse
Post Number:#1  PostPosted: 11 Feb 2016 01:21 
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The earnings season has started, and several major banks in the Eurozone have already reported on how they performed in the fourth quarter of 2015, and the entire financial year. Most results were quite boring, but unfortunately Deutsche Bank once again had some bad news.

Just one week before it wanted to release its financial results, it already issued a profit warning to the markets, and the company’s market capitalization has lost in excess of 5 B EUR since the profit warning, on top of seeing an additional 18 Billions EUR evaporate since last summer. Deutsche Bank is now trading at less than 50% of the share price it was trading at in July last year.


At the same time, while they were pointing the finger to Greece and the 80 billion loan, the German monster was making the bubble of the Millennium totalling $ 73 trillion in derivatives! The large savers and investors are withdrawing their money from the financial products of the bank.

The Germans were hiding the problem under the carpet, but during the last days the CDS have collapsed and Wolfgang Schäuble still mumbles about the Grexit.

It’s such the contamination introduced by Deutsche Bank that we will no longer talk about economic burnout but for global havoc. To understand the size of the bubble, see the chart:

The left column shows the German GDP. The middle column shows the GDP of the entire Eurozone and the right column the exposure of Deutsche Bank, as reported above. As we can see, in comparison, the size of the Greek debt it’s very small.

In other words, a failure of the Deutsche Bank will amount to a bankruptcy, equivalent of 220 countries with similar debt problem, like Greece.

See now what the CDS have revealed in recent days:

Of course the market isn’t wrong about this one.

The shit is now really hitting the fan at Deutsche Bank after having to confess another multi-billion euro loss in 2015 on the back of some hefty litigation charges (which are expected to persist in the future). And to add to all the gloom and doom, even Deutsche Bank’s CEO said he didn’t really want to be there . Talk about being pessimistic!

Let’s take a step back and explain why the problems at Deutsche Bank could have a huge negative impact on the world economy. Deutsche Bank has a huge exposure to the derivatives market, and it’s impossible, and then we mean LITERALLY impossible for any government to bail out Deutsche Bank should things go terribly wrong.

Keep in mind the exposure of Deutsche Bank to its derivatives portfolio is a stunning 55 Billion EUR, which is almost 20 times (yes, twenty times) the GDP of Germany and roughly 5 times the GDP of the entire Eurozone! To put things in perspective, the TOTAL government debt of the US government is less than 1/3rd of Deutsche Bank’s exposure.


Right after Germany’s largest bank (and one of the banks that are deemed too big to fail in the Eurozone system) surprised the market with these huge write-downs and high losses, the CDS spread (‘Credit Default Swap’) started to increase quite sharply. Back in July of last year, when Deutsche Bank’s share price reached quite a high level, the cost to insure yourself reached a level of approximately 100, but as you can see in the next image, the CDS spread started to increase sharply since the beginning of this year. It reached a level of approximately 200 in just the past three weeks, indicating the market is becoming increasingly nervous about Deutsche’s chances to weather the current storm and that has crushed the entire German stock market...


Already in the levels of the time Lehman Brothers, with the difference that it was Deutsche Bank one of the organizers of the colossal scandal. No one can sustain this bubble when it burst and knowing from history, when the Germans burst, we have world war.

Do not underestimate even the recent Hollywood movie "shorting" which dealt with the Lehman scandal. The film describes the Deutsche Bank as organizers of the scandal. Apparently the Americans are pulling the carpet, at least seemingly, to Germany.

According to various business commentators, from late November 2015 it has been detected colossal capital movements, since the path to ruins it’s evident.

Expect background developments while the dangerous Wolfgang Schäuble (German Financial Minister) still speaks of Grexit and Mrs Angela Merkel visits Turkey to convince them to reduce the immigration flow to the EU.

Europe's banks are bracing for another roller coaster ride in the markets. Deutsche Bank is eyeing a debt buy back as part of its "we're absolutely rock-solid" strategy. This would hoover up a particular type of debt that markets have turned on since EU bail-in rules made investing in banks a riskier business.


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