Bye Bye Deutsche Bank

It smells like death.

No way to know for sure when the Bundesbank, Fed and ECB lose control of Deutsche Bank’s balance sheet.  But its stock price just hit an all-time low since its NYSE-listing in October 2001.

Anyone who owns the Deutsche Bank “Tier 1” bonds should sell them now. They are currently yielding about 8%, which puts on the same “tier” as U.S. triple-C (CCC/Caa) rated credits.

I’ve been wondering for quite some time if DB’s demise would be the 2016 “Lehman” event, but I don’t think it will be.  Why?  Because Germany has a fabled history in which it has demonstrated a willingness to print trillions to keep its system from collapsing.

4 thoughts on “Bye Bye Deutsche Bank

  1. I sent the chart over to my cousin, who’s in property development and management in London. Told him to duck, it’s deja vu all over again.

  2. Germany is on the Euro. It can’t print money to keep anything propped. Brussels can decide to prop up Deutche Bank if it wants, though.

    1. Mike – yes, Brussels will prop DB, but rest assured just as in 2008, so will the Fed, albeit stealthily in order to prevent the first domino from falling which would inevitably trigger a chain reaction toppling all the big banks, culminating with a collapse of the US banking system.

  3. ‘Because Germany has a fabled history in which it has demonstrated a willingness to print trillions to keep its system from collapsing.’

    Ah, it seems, Dave, that you have fallen for the common myth about the 1919-1923 German ‘Great Inflation’. The real reason for the money printing extravaganza was the Versailles Treaty (1919). Without that, Germany would not have experienced inflation on anything like the scale it did in the post-war years. The Allies: Great Britain, France, Belgium, Italy and the United States wanted to punish Germany (and to a lesser extent, Hapsburg Austria) for plunging Europe into four years of mayhem. They conspire to do this by demanding all of Germany’s gold as reparations. Germany tried to negotiate that reparations be paid in raw materials and finished goods but the Allies rejected that offer. In order to ensure their demand(s), Britain continued to blockade German ports as they had done since August 1914 which prevented desperately needed food and other essential supplies from reaching Germany. in 1918-1919, 100,00 women and children in germany died of starvation. This is not to condone the out-of-control lust for military conquest which had infected Kaiser Wilhelm II and his Army High Command for decades. These are just the facts. It is documented in a book about the German Foreign Minister, Walter Ratenau (His Life and Works) by Harry Kessler.

    The money printing wasn’t an act of reckless carelessness. It was an act of desperation to try to hold the economic and societal fabric of Germany together – and it failed. It is what is about to happen in America – only no one is blockading American ports or holding metaphorical ‘diplomatic gun’ to its government’s head.

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