Georgi Stankov, June 12, 2015
Everything is happening now with the speed of light and even quicker – simultaneously. As the renowned political expert Gilbert Doctorow revealed in his latest interview with RT, it needs only one stumbling block for the EU hostile policy towards Russia and its total subservience to the Empire of Evil to crumble:
But what he fails to understand is that this stumbling stone could be so huge that the whole edifice of the EU with feet of clay can very easily collapse when a single major European bank declares bankruptcy. And as it seems now the Deutsche Bank is in a pre-infarct state of imminent bankruptcy.
In order to better understand the scope of the impending “greatest possible disaster” (known as GAU in German), let me give you a few numbers. The 12th biggest bank worldwide, the Deutsche Bank harbours 75 trillion $ derivatives, which Warren Buffet defined correctly as financial WMD. This is 20 times the GDP of Germany, the fourth biggest economy in the world after the USA, China, Japan and ahead of Russia on the 5th place, and by far and large the most sound national economy in the West. If the Deutsche Bank declares bankruptcy, and there are many serious and significant signs that point to this imminent outcome, then not only will the motor of EU go under, but the whole EU with its already failed currency.
At the end of this month we shall know when Greece will default as there is no other possible outcome. When this happens, the Deutsche Bank will lose between 50 and 100 billion € Greek bonds. There is no way how this bank will survive this loss of liquidity, given the fact that only a year ago it was compelled to sell a large chunk of its own capital on the equity market with a 30% reduction as to generate the much needed cash.
The dismissal of its CEO this week, effective end of June, only a few weeks after he was endowed with bigger executive powers, is more than ominous. Even more ominous is the history of the new CEO, a former CEO (names are irrelevant in this discussion as we are talking exclusively about cabal banksters) of the Swiss bank UBS (Union Bank of Switzerland). This bank is notorious for massive losses in 2008, in the follow-up of the US subprime mortgage crisis, which exceeded US$37 billion, the largest such losses of any of its peers so far. The bank could only be saved by massive financial support from the Swiss government and some dubious Singapore investment corporations, which possess a large portion of the bank now. Hence the new guy in charge of the Deutsche Bank, a British cabal bankster, has a lot of experience in state bail-out and bail-in of big banks.
Below, I will publish two excellent publications that elucidate the recent history of Deutsche Bank that led this bank on the brink of imminent bankruptcy. It is a mixture of high criminal energy, arrogance and utter incompetence. And most probably a result of controlled demolition of this bank by the AAA- (anglo-american assholes axis) bankster cabal in order to punish Germany for its effort to escape the dictatorship of the Empire of Evil and join forces with Russia. This we shall know very soon. We live in the time of immediate creation.
Deutsche Bank CEOs “Shown Door” – World’s Largest Holder of Derivatives In Trouble?
by Mark O’Byrne, June 8, 2015, GoldCore
– Deutsche co-CEOs announce “resignation” nine months before their contracts expire
– Only two weeks ago, CEO Anshu Jain was given more power to reorganise the bank
– Deutsche have been engaged in money laundering, tax evasion, derivative and manipulation scandals
– Deutsche is world’s largest holder of financial weapons of mass destruction (FWMD)
– Deutsche Bank’s derivatives position almost 15 times (20 times is the correct number, note George) as large as Germany’s GDP
– Announcement follows Greek failure to pay IMF on Friday and growing financial risk
The joint CEO’s of Germany’s largest bank, Deutsche Bank, the twelfth largest bank globally in terms of assets, unexpectedly announced their resignation over the weekend. Anshu Jain will resign at the end of this month, almost two years ahead of schedule while Juergan Fitschen will stay on until May of next year.
It is believed they resigned but some media reported that the CEOs heads had “rolled”, they were “shown the door” and Reuters reporting that Deutsche had “purged its leadership.”
The announcement followed what Deutsche Bank described as “an extraordinary meeting” over the weekend. It is particularly surprising given that Jain had been granted extra powers at the bank only two weeks ago to reorganise the scandal plagued lender.
In the past year Deutsche, like many international banks, have been found to have been engaged in a slew of corrupt practices from manipulation of interest rates, for which the firm was fined $2.5 billion in April, to tax evasion and money laundering to “mis-selling” of derivatives.
Deutsche Bank’s derivatives position is truly enormous. It was recently estimated to be around $54 trillion ($75 trillion is the correct sum, note, George). Germany’s GDP, the fourth largest in the world, was a mere $3.64 trillion in 2015. Were Deutsche Bank caught off-side in its derivatives positions there is not a government or institution on earth that could bail it out and it could lead to contagion in the German financial system and indeed in the global financial system.
The contagion from such an event would be devastating. It is for this reason that Warren Buffet described derivatives as WMD or “financial weapons of mass destruction.”
It is unnerving that the shock resignation should follow an “extraordinary meeting” over the weekend following the failure of Greece to meet its scheduled payment to the IMF on Friday.
This does not count as a Greek default but it increases the risk of a default on the amalgamated 1.5 billion euros that now must be paid by the end of June. A default and the triggering of credit default losses would cause massive volatility in financial markets and potentially destabilise an already shaky global bond market and global financial system.
There have been a number of shocks to the market this year which would have been expected to have led to sharp losses in the derivatives market but slipped quietly by.
The debris caused by the massive volatility in the Swiss Franc following its being unpegged from the Euro – where it spiked 30% in minutes in January – seems to have been swept under the carpet. Austria’s bad bank Heta failed in late February with apparently no casualties.
We do not know what provoked the dramatic reversal in attitude to Anshu Jain at Deutsche Bank but it looks very much like the bank may be getting its house in order in anticipation of another major scandal or crisis. When said crisis breaks the responsibility can be dumped on the previous leadership.
Since Warren Buffett’s initial warning in 2002 , 13 years ago, he has been remarkably quiet on the real and growing threat to global markets and the global financial system. Despite the fact that the scale of the risk today is of an order of magnitude greater now than it was then.
This is unfortunate given the global financial system itself is far more volatile and casino like today than it was in 2002. Sucking on the teet of Wall Street can lead to self induced omerta.
The global derivatives market is highly complex, totally unregulated and frighteningly large. One of the world’s leading derivatives experts, Paul Wilmott, who holds a doctorate in applied mathematics from Oxford University, has warned that the so-called notional value of the worldwide derivatives market is over $1.4 quadrillion.
A quadrillion is an incomprehensibly massive figure: it is 1,000 times a trillion or 1 with 12 zeros. A trillion is 1,000,000,000,000 and a quadrillion has 15 zeros – 1,000,000,000,000,000. The annual gross domestic product of the entire planet is between $50 trillion and $60 trillion. Thus, the derivatives markets notional value is more than 23 times the size of the value of all of the goods and services traded in global economy in one full year (I have estimated in past articles on economics the total debt to be about 50 times the world GDP, which is a fairly good estimate given this figure. Note, George)
The crisis in Greece, the rumblings in the global bond market and indeed in Europe’s fourth largest bank and the threat posed by financial weapons of mass destruction should give cause for concern.
Is Deutsche Bank the next Lehman?
by NotQuant, June 11, 2015
Looking back at the Lehman Brothers collapse of 2008, it’s amazing how quickly it all happened. In hindsight there were a few early-warning signs, but the true scale of the disaster publicly unfolded only in the final moments before it became apparent that Lehman was doomed.
First, for purposes of drawing a parallel, let’s re-cap the events of 2007-2008:
There were few early indicators of Lehman’s plight. Insiders however, were well aware: In late 2007, Goldman Sachs placed a massive proprietary bet against Lehman which would be known internally as the “Big Short”. (It’s a bet they would later profit from during the crisis).
In the summer 2007 subprime loans were beginning to perform poorly in the marketplace. By August of 2007, the commercial paper market saw liquidity evaporating quickly and funding for all types of asset-backed securities was drying up.
But still — even in late 2007, there was little public indication that Lehman was circling the drain.
Probably the first public indication that things were heading downhill for Lehman wasn’t until June 9th, 2008, when Fitch Ratings cut Lehman’s rating to AA-minus, outlook negative. (ironically, 7 years to the day before S&P would cut DB)
The “negative outlook” indicates that another further downgrade is likely. In this particular case, it was the understatement of all time.
A mere 3 months later, in the course of just one week, Lehman would announce a major loss and file for bankruptcy.
And the rest is history.
Could this happen to Deutsche Bank?
First, we must state the obvious: If Deutsche Bank is the next Lehman, we will not know until events are moving at an uncontrollable and accelerating speed. The nature of all fractional-reserve banks — who are by definition bankrupt at all times – is to project an aura of stability until that illusion has already begun to implode.
By the time we are aware of a crisis – if one is in the offing — it will already be a roaring blaze by the time it is known publicly. It is by now well-established that truth is the first casualty of all banking crises. There will be little in the way of early warnings. To that end, we begin connecting the dots:
Here’s a re-cap of what’s happened at Deutsche Bank over the past 15 months:
- In April of 2014, Deutsche Bank was forced to raise an additional 1.5 Billion of Tier 1 capital to support it’s capital structure. Why?
- 1 month later in May of 2014, the scramble for liquidity continued as DB announced the selling of 8 billion euros worth of stock – at up to a 30% discount. Why again? It was a move which raised eyebrows across the financial media. The calm outward image of Deutsche Bank did not seem to reflect their rushed efforts to raise liquidity. Something was decidedly rotten behind the curtain.
- Fast forwarding to March of this year: Deutsche Bank fails the banking industry’s “stress tests” and is given a stern warning to shore up it’s capital structure.
- In April, Deutsche Bank confirms it’s agreement to a joint settlement with the US and UK regarding the manipulation of LIBOR. The bank is saddled with a massive $2.1 billion payment to the DOJ. (Still, a small fraction of their winnings from the crime).
- In May, one of Deutsche Bank’s CEOs, Anshu Jain is given an enormous amount of new authorityby the board of directors. We guess that this is a “crisis move”. In times of crisis the power of the executive is often increased.
- June 5: Greece misses it’s payment to the IMF. The risk of default across all of it’s debt is now considered acute. This has massive implications for Deutsche Bank.
- June 6/7: (A Saturday/Sunday, and immediately following Greece’s missed payment to the IMF) Deutsche Bank’s two CEO’s announce their surprise departure from the company. (Just one month after Jain is given his new expanded powers). Anshu Jain will step down first at the end of June. Jürgen Fitschen will step down next May.
- June 9: S&P lowers the rating of Deutsche Bank to BBB+ Just three notches above “junk”. (Incidentally, BBB+ is even lower than Lehman’s downgrade – which preceded it’s collapse by just 3 months)
And that’s where we are now. How bad is it? We don’t know because we won’t be permitted to know. But these are not the moves of a healthy company.
How exposed is Deutsche Bank?
The trouble for Deutsche Bank is that it’s conventional retail banking operations are not a significant profit center. To maintain margins, Deutsche Bank has been forced into riskier asset classes than it’s peers.
Deutsche Bank is sitting on more than $75 Trillion in derivatives bets — an amount that is twenty times greater than German GDP. Their derivatives exposure dwarfs even JP Morgan’s exposure – by a staggering $5 trillion.
With that kind of exposure, relatively small moves can precipitate catastrophic losses. Again, we must note that Greece just missed it’s payment to the IMF – and further defaults are most certainly not beyond the realm of possibility.
And if the dominos were not adequately stacked already, there is one final domino which perfects the setup.
Meet Tom Humphrey. He heads up Deutsche Bank’s Investment Banking operations on Wall Street.
He was also head of fixed income at Lehman.
History never repeats. But it does rhyme. In market terms, it tends to rhyme just about every 7 years.