Could A Deutsche Bank Collapse Crash The Markets?

“I don’t think it’s any coincidence that gold runs from $1285 to as high as $1445 around the time that all the news about Deutsche Bank started coming out” [the failure to merge with Commerzbank followed by the “good bank / bad bank” split announcement].

It was reported by Bloomberg that Deutsche Bank clients – mostly hedge funds – are pulling $1 billion in capital per day from the collapsing bank.  Still no details have emerged on the how the “bad bank” holding company will be funded or what will go into it. What we do know is the original proposal for a bad bank was for $43 billion in bad assets. That number has bubbled up to a proposed $74 billion. In truth, no one knows for sure the degree to which DB’s derivatives holdings are radioactive.  Disgraced former CEO, Anshu Jain, admitted that near the end of his failed tenure.

Deutsche Bank is being prevented from collapsing by the German Government, the Bundesbank and the ECB.  That’s been implicitly acknowledged over the last few years that this is case.  The attempt to wash Deutsche Bank’s problems through a merger with Commerzbank failed.  In 2008/2009, Bear Stearns’  and Wash Mutual’s sins were cleansed through bankruptcy court and through JP Morgan. In the same way, Merrill Lynch’s disastrous balance sheet was cleansed through Bank of America.

The fact that a similar attempt to wash Deutsche’s bad assets using Commerzbank failed  should give us an idea of the relative scale of Deutsche Bank’s hidden financial nuclear waste compared to the derivative bombs that detonated in 2008.  I guess the money the Fed and U.S. Taxpayers gave Deutsche Bank in 2008 wasn’t enough…

Chris Marcus, of Arcadia Economics, invited me on to his podcast to discuss DB, gold, mining stocks and, of course, silver:

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8 thoughts on “Could A Deutsche Bank Collapse Crash The Markets?

  1. The question that has been surfacing is:

    Is China (and Russia & others like Iran Turkey, etc) hell bent on eliminating the USDollar as the world’s reserve currency, as soon as possible, even right now?

    My brief reasons are as follows:
    1) China reneged on supposed agreed upon parts of the trade deal with the U.S. China was just using a stall tactic for time and bought at least a year of time before the 25% tariffswere slapped on by Trump. Trump got played and is pissed. You can tell by his recent tweets on China.

    2) China does not want a trade agreement because that would greatly help retain the USD as the worlds reserve currency. And this is the problem due to unlimited USD digital printing unabated..China and Russia is saying how do we stop and put an end to their USD unlimited printing madness and insanity that is killing them and the world financially and economically and even militarily. Since the USD as the worlds reserve currency represents total complete financial control in the world.

    3) This is why China, Russia and others have been buying gold for years to get out of the bankrupt USD.

    4) China and Russia and other countries are now doing trade between their own currencies and bypassing the garbage USD to stop supporting the USD.

    5) So China’s actions seem to say, there will be no trade agreement and China, Russia and others are doing everything to take down the world economy to destroy the USD.
    It may require nothing short of that to take down the USD. China knows the European Union is an economic/financial basket case also. China has to do whatever it takes from their perspective to take down the USD as the worlds reserve currency and their actions tell me they are ready regardless of the consequences.

  2. I have given up on bank’s accounting a long time ago. Mark to fantasy, the concept of risk weighted assets and fake stress tests are too much for me. Sine we are not allowed to know the true state of the banks, we can only speculate. What strikes me odd are the $45 trillion of derivatives on DB’s books. Surely this would be the first position to get rid of to improve the standing of the bank. My educated guess is that they can’t without rendering the bank insolvent. Who will pick up the bill? Germany has a GDP of $4 trillion. A Federal Budget of $400 billion (Below that are the regional “states” budgets and the municipal budgets). That country will be finished financially forever when it does. So will the EU since Germany is the main paymaster. Today Zerohedge reports about a run on DB. Reportedly clients pull $1 billion a day: https://www.zerohedge.com/news/2019-07-16/bank-run-deutsche-bank-clients-are-pulling-1-billion-day

    At the same time the gold price gets trashed. Coincidence?

    PS. It is worth watching the silver price it. It is up strongly. There is talk about a Chinese whale gobbling up silver futures. Alasdair Macleod knows more about this.

  3. I don’t really care what happens whether is Deutsche Bank or Syria or Iran , most important thing Gold is going much higher. Seat tight and enjoy ride.
    My native Poland try to get their Gold too.

  4. Is Deutsche Bank (DB) covering some of their PM shorts and attempting to do it in an orderly way?

    With PMs prices up today, let’s see if PM bulls smell DB blood and make PM prices go up in a disorderly way.

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