Deutsche Bank Failing...

[Grant H.]

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

[Skip]

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.

[Gman]

With the equity markets booming even!

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

[SA Friday]

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.

[Gman]

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

[Skip]

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

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

[Aloha_Shooter]

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.

[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.

[O2HeN2]

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

Maybe incomest? Earnest is already taken

O2

[Skip]

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.

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)

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.

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.