Deutsche Bank Is Collapsing – But It’s Not The “Black Swan”

The global financial system is close to going supernova.

Both Credit Suisse and Deutsche Bank stocks are hitting all-time lows.  Both are collapsing despite billions in Central Bank – Fed, ECB, Bundesbank, Swiss National Bank – monetary support.

Deutsche Bank had been advertising a 5% interest rate to customers in Belgium on  90-day deposits of at least 50k euros .  Bank deposits are essentially “loans” to a bank from the depositor (creditor).  This implies that the rate that DB had to pay to attract deposits is equivalent to a triple-C rated credit (although the 10-yr junk bond rates for double-B  rated bonds are around 5.5%, keep in mind that DB is paying 5% for 3-month money).   This is the unmistakable sign of a company that is collapsing.

DB stock was down over 3% yesterday on a day when most big TBTF banks for down 1% or less. It’s down another 2.8% 3% as I write this today, trading below $15/share for the first time ever.   This bank is obviously collapsing and any money manager who holds onto this stock for clients is in serious breach of fiduciary duty.  This is the 2016 version of Enron.

But it won’t be a “Black Swan” event.  The Central Bank authorities knew DB was going to collapse when Anshu Jain was fired in June 2015, literally about  2 weeks after DB’s board had given Jain even more control over bank operations.  However, the Central Banks mentioned above collectively had a year to put a “ring” around the collateral damage – i.e. the derivative counter-party default risks – that occurs from DB collapsing.

The Credit Suisse problems have been far less visible but the behavior of the stock is signalling to us that CS’ problems are on par with DB’s.  I don’t know if both banks will ultimately end up being monetized by a combination of taxpayer bailiouts (including U.S. Taxpayers) and bail-ins.  I would suggest that bail-in capital available would not even remotely address the derivatives-related liabilities embedded in the Credit Suisse’s and DB’s balance  sheets.

My point here is that – unless there’s even bigger problems hidden from the Central Banks, which have had a year now to address the DB/CS situation – a DB collapse will likely cause a sell-off in the stock market, but would not be the “Black Swan” for which everyone is searching.

I don’t know what the Black Swan is or what it will look like.  Otherwise it wouldn’t be a Black Swan, right?  What I will suggest is that the day in which the “box” with Schrodinger’s cat appears and we look into to it to see a dead cat is quickly approaching.  I would also suggest that this is why those who have been calling for a short-term wipe-out in the price of gold have been proved wrong for over two months, despite the blatant daily attempts by the Fed/ECB/bullion banks to push the price of gold lower.

This is a development that no one is talking about – but I believe that is represents a hidden slow-motion financial collapse that will soon accelerate:

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21 thoughts on “Deutsche Bank Is Collapsing – But It’s Not The “Black Swan”

  1. We need protective store of value combined with instant liquidity. That spells bitgold to me.

    Bullion is great but without the means to move it effectively, does it do a great deal from the economic standpoint ??? We need to keep the economy alive !

    1. Many gold lovers (like me) will want to only have it in their possession, and to distrust any gold ownership not directly under our control. However, it is true that BitGold is THE SOLUTION if we can trust allocated accounts.

      Gold needs to be in circulation in a functioning economy. What better way to shave off minute qualities of your gold in the convenience that is Bit Gold. Digital currency on a plastic card backed by physical goldmoney, transferable instantly in any corner of the world! Think about it.

  2. Nanex ~ 13-Jun-2016 ~ Guest Post
    Theft Of Opportunity – The Impact Of Regulation NMS On The Retail Investor

    by John C. Marchisi (former U.S. Stock Exchange Official) This is the first in a series of articles I am authoring to help illustrate the dire need for policy reform concerning the current capital market structure under the rules of Regulation NMS. The explanations will be overly simplified as not to lose the exact audience in need of being informed, as is the case with so many inequities in business, the power to deceive lies within the jargon.

    Beginning with the design and adoption of the Regulation National Market Structure rules in 2005 (Reg. NMS), the capital markets have since undergone a complete overhaul as to how, where, and how quickly trading is being executed. Within the broader scope of the Reg. NMS reform, there were certain policies I will later note, both specifically and even more alarmingly, are the exemptions [a] to these policies, which have led to the concerns I am speaking of today.

    Regulation NMS made its first major impact with the introduction of “Payment For Order Flow”, which when paired with sub-penny pricing, is now directly responsible for birthing a new gold rush within the capital markets.

    The dawn of the High Frequency Trading (HFT) community we witness today.

    The result of this policy is an insurmountable, unequal, and unjust advantage for self-dealing BD’s and HFT’s, at the expense of the market’s retail level investors.
    PAYMENT FOR ORDER FLOW

    http://www.nanex.net/aqck2/4713.html

    off topic but excellent read

  3. Along with Bitcoin, I am nervous about bitgold. If you don’t have it in your possession
    You don’t own it, no matter how convenient it is.

  4. Vix has been rising the last few days, and options expiry is Friday, but there still seems to be a lot of complacency. Confidence in a Fed sudden death stick save must be very high, given all that’s going down.

  5. Good analysis. However to a person living in Germany the Black Swan may still be found in the collapses of one or both of these banks.

    Most of the German (and Swiss?) people are completely unaware of the catastrophal collapses in central Europe.

    A great number of DB-creditors is found in the former Post-Office Bank (Postbank), although the small accounts are said to be insured. These customers blindly trust the public media, in which German and Swiss economies are doing fine. The Postbank accounts are used to pay small bills for electricity, water, … People hardly ever give up their Postbank account. I am using a Postbank account myself.

    As soon as the DB-collapse is announced in the news these people will start a bankrun, which can only be managed in a devastating bank holiday.

    I see black swans (and bank runs) all over the place….

    1. Your analysis is spot on. I myself (and my wife too) do have an account with German Postbank for at least 35 years now. As we both are fully aware of what is coming we only keep a very small amount of Euro cash on that account, as you said, paying minor monthly bills with it. Yes, the middle class will be more then astonished when on a Sunday afternoon DB will have that emergency press conference. But I think they will give their best- also German finance minister Schaueble involved – to shift that date into the future as long as they can.

  6. The crooks most probably are loosing it , but we have to wait for results of Fed’s meeting. , but I just wonder if this is engineered by them. There are too many problems around and every day there is more bad news. Before we had only good news from them. The crush must be getting closer , Dow top was last year in May , so we have to be ready. We never experienced anything like that and they will have maybe few more surprises for us. Trust nobody and you live longer.

  7. Great article Dave, IMO right on, I can’t see .gov letting go of this yet. Todays paltry move in stocks’ tell’s me
    the ESF will not let a sell off occurr, it’s like watching Frankenstein die over&over every day in perpetuity lol

    I have suspected the big money moved out of this market at least 12 months ago, when these idiots realise they
    will be forced to collateralise all this debt& the only liens free collateral is metal they might have a chance of saving
    “the system” otherwise it’s back to the palaeolithic but when? JMO

  8. You know what I would consider a Black Swan?

    A company like Google or Paypal going after & trying to gobble up company like Bitgold or Ownx.

    If Microsoft has tons of fiat trash (bunch of it borrowed on low interest, mind you) to throw after other trash like Linkedin…..It’s not inconceivable that the NWO could print up lot more fiat trash, use a company like Paypal as their instrument, and attempt to gobble up/destroy something of real substance/threat like Bitgold. They could use an enigmatic character like Jim Rickards as their propagandist tool to build up hype around why “gold is real money”, while using fiat-trash skeletons behind the curtains to back it up.

    If ever such a scenario sets up, it would be a clear signal to get out of Bitgold.

  9. IMHO it’ll be a slew of multiple dominoes such as DB, Putin releasing the criminal hag’s emails, 9-11 truth bombs, BREXIT and others following, bare gold vaults, maybe a Trump assassination attempt, etc etc etc ~ it’s going to be a wild 2nd half of the year

    PS ~ the resiliency of the metals is blowing my mind

  10. Also Dave,
    Something is going on with silver here in OZ a local dealer has 500 Kangaroos’ listed at $26.87 au While the Perth mint is listing 500 at $26.82 also they are listing 600 kookaburras way over $30 au more than a 20% premium at spot & the numismatic crap don’t wash wish me..they’re discouraging buying something is extremely fishy Dave we’re not being told something…JMO

  11. Bloomberg reported Goldman Sachs statement that a sudden 1% rise in interest rates could trigger a $1 Trillion loss in the bond market. No doubt this would play out in leveraged losses in the derivatives market. To me this is the most likely black swan.

    Interest rates are likely to rise on their own at some point, no matter what the Fed or central banks do.

  12. Ha ha, to Grandma Yellen! She’s imploding right before our eyes!

    In fact, it’s quite a pitiful thing to see. All indications suggest she was just a bumbling figurehead chosen to preside over the WORST financial collapse known to mankind. She gets no sympathy from me though, on any personal level.

  13. I think it is rather unrealistic to expect Central Banks to be able to cover the $75 Trillion derivative bomb that will explode at $DB very soon

  14. Woo Hoo…gold back down to 1284, time to BTFD and move more money into BitGold. I was getting nervous as AU made it to 1315 today.

    Funny, today was the first time I genuinely felt upset that Au was running big to the upside.

    Word of warning…time is running out…buying the dip will be a harder mental effort once it levitates and stays over 1300. At that point I might just end my buying spree and sit tight and watch everybody else freak out to get on the train.

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