Livinglies's Weblog

By William Hudson

German banking giant Deutsche Bank is on the verge of collapse without intervention and has lost more than half of its value since January.  The Hail Mary bailout solution has likely begun.

Note: Those who have cash parked at Deutsche Bank… may want to consider moving it for the time being to a safer bank.

Bloomberg is reporting that a number of funds that clear derivatives trades with Deutsche Bank AG have withdrawn some excess cash and positions held at the lender, demonstrative of mounting concerns about doing business with Europe’s largest investment bank.

While the majority of Deutsche Bank’s more than 200 derivatives-clearing clients have made no changes, some funds that use the bank’s prime brokerage service have moved part of their listed derivatives holdings to other firms this week, according to an internal bank document as reported by Bloomberg News.

Deutsche Bank purchased, packaged and resold exotic financial instruments and derivatives that contributed to the financial crash of 2008. Now the German government is claiming not to have the resources to bail out Germany’s largest bank even if they wanted to.

Yesterday, shares in “too-big-to-fail” German bank Deutsche Bank fell another 7%. The bank’s U.S.-listed shares to hit a new all-time low of $11.27 yesterday

The banking monopolies have succeeded in expanding their wealth with fraudulent loans and foreclosures, setting up fake financial accounts to create the appearance of expansion and value, while securing huge bailouts from taxpayers that they didn’t need in the first place.

All eyes are now on the global banking elite and especially German Chancellor Angela Merkel.

Deutsche Bank now stands on the verge of financial collapse while the unsound policies of Merkel — show that Deutsche vastly expanded its leveraged debt to the point of fiscal insanity.   Deutsche Bank’s total derivative exposure exceeds all the German government’s resources and all private German resources as well. Thus, the German government can’t politically bail Deutsche out even if they wanted to, and even if they confiscated everything of value within Germany- it would not be enough.

If Deutche Bank collapses, the debt exposure from other banks (including American banks) that have purchased debt instruments from Deutche will be catastrophic. The collapse will destabilize the world markets. If you think what happened in 2008 was bad- the implosion of the derivatives market would dwarf the subprime mortgage collapse and subsequent recovery.

The collapse of Lehman Brothers in 2008 triggered a collapse where Western-based Central banks were able to contain the $13 trillion in bailouts. However the failure of Deutsche Bank would not be containable and would trigger systematic banking failures.

The reality is that New York based CitiGroup, London based Barclays and Deutsche Bank are all in big trouble when you look at their exposure to derivatives. Deutsche Bank allegedly owns $25 trillion in over-the-counter swaps with Central banks and major American banks. With 1.6 quadrillion in the derivative markets, if Deutsche fails likely the European Monetary Union will follow with rippling consequences in the Central and major banks.

For over 100 years the Federal Reserve and their fiat currency have created an unsustainable, predatory and fraudulent system that benefits the elite at the expense of the other 99% of the population.

Economic output is not expanding at a rate that exceeds the expansion of debt. Basic economic theory shows how once this tailspin begins, the economy can’t recover until the debt has been liquidated through losses.

Once the next domino falls, a debt collapse could occur that would avalanche through the major international banking systems wiping out checking, savings and investment accounts. The banks, by law, may confiscate all customer accounts and assets. The funds you believe are yours that a major bank safeguards for you, are merely electronic digits and can be wiped out with a swipe of a mouse.

With that being said, a new bailout is most likely being masterminded because the collapse of Deutsche would wipe out Central banks. Thus, even though Germany alone cannot bailout Deutsche Bank, the EU officials can come up with some magic fiat-currency ‘solution’ to rescue Deutsche.

There can be no doubt, that the crooked European Central Banks or EU will create a new Ponzi scheme to bailout Deutsche- or perhaps an American white-knight investor or bank will assist with a “solution”. Unfortunately, the solution always favors the banks at the expense of the taxpayer/consumer.

Filed under: foreclosure | Tagged: bank bailout, Deutsche, deutsche derivatives |