Deutsche Bank Failing...

This is bad news for the global economy...

Laying off 18,000 people, pulling out of global sector

The EU is totally screwed at this point. Their two major sources of money, UK and GER, are no longer there. UK is leaving, and GER is in trouble based on how tied to the .gov Deutsche Bank actually is. This means there's no money to continue to cover Greece's colossal 'ef up, and all the other socialist BS in the EU...

It will be very interesting to watch how this goes in the coming days/weeks, because this literally could be the start of the global recession/crash (not trying to be alarmist, but the way the board is stacked with all the BS between Russia, China, the EU, the USA, etc, this could get really bad, really quick).

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Originally Posted by Grant H.

This is bad news for the global economy...

Laying off 18,000 people, pulling out of global sector

The EU is totally screwed at this point. Their two major sources of money, UK and GER, are no longer there. UK is leaving, and GER is in trouble based on how tied to the .gov Deutsche Bank actually is. This means there's no money to continue to cover Greece's colossal 'ef up, and all the other socialist BS in the EU...

It will be very interesting to watch how this goes in the coming days/weeks, because this literally could be the start of the global recession/crash (not trying to be alarmist, but the way the board is stacked with all the BS between Russia, China, the EU, the USA, etc, this could get really bad, really quick).

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Wonder how current forefront potentially damaging news in the US will be used to bounce around and move attention either way

Yeah, it will be interesting.

The head of the IMF is on record saying sub-zero interest rates in Japan and from the ECB are a "net positive" for the global economy...

It's mind boggling to understand just how screwed the global economy really is...

Wonderful.

I just hit a major milestone I've been waiting for throughout this recovery, and was hopeful I was still on track for retirement in 2-3 years...

I shouldn't be such a pessimist, but that's fallout from the crazy market swings the last 10-12 years.

Trust me, I get where you are coming from.

I just started a new job recently-ish, and have setup retirement, health care stuff, on and on, just for this to get real interesting.

So based on the chart in the article they are probably the only bank in the world that continued to drop in value after the 2008 crash? Sounds more like incredible mismanagement moreso than general market issues.

I'm also not reading this as a take on the global economy. Deutsche Bank is closing its equities line of business that has been a loser for them.

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Originally Posted by Gman

I'm also not reading this as a take on the global economy. Deutsche Bank is closing its equities line of business that has been a loser for them.

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With the equity markets booming even! Maybe every position was short to get tRUmp? [LOL]

I'm wondering if the Eurozone's decreasing access to UK taxation/capital is part of this. I know Brexit is stalling but the writing is on the wall of and the UK will have to honor the vote. A slim majority of Brits just don't want to pay for the continent (I don't blame them). That leaves Germany as Europe's economic powerhouse and the premier German bank wants out of equities? Doesn't look good.

Sounds like the shock to the socialist system that Europe needs. Not something I’m going to worry about right now.

I think you guys are missing the domino effect that this will likely carry for the global economy.

Yes, DB is "only" closing a portion of themselves, but they are laying off nearly 50% of the work force, and going through "re-organization"... A 50% reduction in work force, and "re-organization" is far more serious than "Yep, their closing their not profitable division, and business will continue unaffected". With their being tied to the hip with GER .gov, this means bad things for the financial situation in GER, which is going to lead to bad things for the rest of the EU, being as GER is one of the major cash cows for the whole of the EU.

Once the EU markets start suffering (remember, the Head of the IMF, now head of the ECB said she believes that negative interest rates are a good thing in today's economy), the entire European market is going to stall at a minimum, if not recede/crash. Anyone in the US that thinks this won't cause a stall/recession/crash for the global economy is fooling themselves. It will be the straw that broke the camels back...

The rest of the global market is over extended, we are in the single longest economical expansion in history, and things are stagnating, despite artificial propping up due to interest rate manipulation and other shenanigans... Stagnation is the precursor to major negative changes when you have debt piles like everyone in the world does...

Worldwide debt to GDP (WWD was 225% of GDP) is so grossly out of whack that there is literally only one way out of this mess now, and that is a "debt reset".

A debt reset is bad news, fyi...

I get it, I probably sound like the alarmist nut off his rocker, but sometimes you'll have that...

One thing I learned in 2007/08 is that there is far too much power and money invested in the status quo. Remember when they threatened “tanks on Main St.” if they didn’t get the bailout? Remember the lie “quarantine the toxic assets?” It was a cash infusion to cover CDS/MBS so the game could continue with the pre-selected winners.

This could be huge or the central banks will cover it using mostly US taxpayer pledged debt. I was joking about the shorts but they could have substantial exposure.

It only reinforces my views and strategy from 2007. Be hedged.

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Originally Posted by Skip

With the equity markets booming even!

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...and other banks are successful with them. Maybe Deutsche Bank has been doing it wrong?

There are very few universal truths, but one you can almost always count on is diversity wins out. Turning all of Europe into the same financial quagmire instead of the financial diversity of multiple separate countries was bound to cause a socialistic crash. As EU stands, they can neither amputate Greece's gangrene nor can they assist and still buffer themselves from the infection.

I was reading in the past week that Greece elected a conservative. That should be fun.

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Originally Posted by Gman

...and other banks are successful with them. Maybe Deutsche Bank has been doing it wrong?

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Only when they have capital. No one is making money on commissions.

I get it about the head of the ECB being off her rocker and the crazy worldwide debt issue but I don't accept the idea that Deutsche Bank having a problem will create a global domino effect or that they will be able to push a debt reset unless the other banks and governments accept it. They'll certainly try and taxpayers worldwide should resist but Lehman's fall didn't cause a global domino effect by itself. DB has other positive assets so the work force reduction is more about reducing their cash outflow problems than about an implosion in their capital base.

The answer is not to loan money to persons or entities which cannot or will not repay the loans...

I know, that idea is racist or something else non-PC and therefore objectionable and censored.

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Originally Posted by Circuits

I know, that idea is racist or something else non-PC and therefore objectionable and censored.

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Maybe incomest? Earnest is already taken :)

O2

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Originally Posted by Circuits

The answer is not to loan money to persons or entities which cannot or will not repay the loans...

I know, that idea is racist or something else non-PC and therefore objectionable and censored.

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A legit solution that would work with fiat or PM backed currencies...

One Dollar Of Capital - A Definition And Challenge*

https://market-ticker.org/akcs-www?post=209282

(snips throughout)

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One Dollar of Capital is simply the principle that nobody be permitted to "create credit out of thin air", thus artificially expanding the spendable supply of "money" in the system. This, and only this, is the reason for all of the bubbles and financial collapses throughout history.

Banks are limited to depository institutions

Investment banks can trade, be involved in in the capital markets or whatever else they wish. However, they are forbidden deposits, government-backed insurance of any form or any sort of public assistance.

All institutions must mark-to-market every night.

No loan may be made beyond either the marked-to-market value of the collateral pledged or the firm's own capital.

We maintain a statutory "zero barrier" on excess actual capital in all institutions that have the privilege of lending against assets, at a level high enough to prevent a negative equity event from occurring.

All institutions that lend against assets must publicly disclose all transactions, marks and capital every night.

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The reason institutions will lend on high risk loans is because they can monetize that risk (CDS) and aren't ultimately lending their capital. Denninger's proposal would change this and also force market rates while closing the retail gap (saving > borrowing). Institutions would still make margin but it would be completely transparent and because capital would back debt, the risks are minimized.

Where this needs work is how to handle and write-down/off uncollateralized defaults. This can't be allowed to create deflation but you can't reward an institution for defaults or we have the same problem.