Deutsche Bank

Mark_79Mark_79 Posts: 57 Copper ✭✭
Anyone who follows sites like ZeroHedge will know that the banks of mainland Europe are in a woeful state, the UK banks fare little better and the US banks a bit better still.

The Italian banks are on the verge of collapse, Greek banks are still the basket case of Europe and the banks of many other countries are no better.

This brings me on to the share price of Deutsche Bank.

For anyone wanting a heads-up IMO once the price drops below the psychological barrier of €10 it will soon either a) Crash and burn or b) Spark the biggest bank bailout/bail-in ever seen in history. The value of the Euro relative to gold/USD will collapse as will GBP. The price of gold (in USD) will rocket. Again IMO this will be bigger than the 2008 crisis. It won't be the end of the world but I would not be at all surprised if some kind of capital controls are imposed across Europe i.e Limited/no withdrawals in cash, I can also see deposits to sites like BitGold and BitCoin exchanges also curtailed.

My advice would be to keep a very close eye on the DB share price, other banks around Europe may fail first but DB really really is too big to fail (and also too big to bail out???) Make sure you're prepared BEFORE things go south, savings in gold, some physical cash to hand etc. Who knows when DB will eventually fail but to me the situation looks pretty terminal.





Comments

  • GoldmattersGoldmatters Posts: 4,069 Admin
    @Mark_79 Thanks Mark, I think you may be on to something :)
  • GrandpaBrianGrandpaBrian Posts: 679 Silver ✭✭✭✭
    More food for thought on this huge but wobbly bank...

    http://www.bbc.com/news/business-36723034
  • semperfisemperfi Posts: 30 Tin ✭
    When Dutche bank goes below $10 XAU goes above $50 I just picked up some more shares after visiting ZH today>
  • KlausKlaus Posts: 102 Copper ✭✭
    The problem with DB (one of them) is that it's a game changer. In this debtors vs creditors divide (Italy, Spain, Portugal, etc vs Germany, Netherlands, etc), it is the first time a TBTF bank is in deep trouble in the creditor side since the new rules are in place.

    So if Germany finds a market-based a solution (capital increase with Chinese or Qatar saving DB, for example) or lets DB fail and winds it down, you may be well sure that they would not let change the rules again to bail in for Italian or French banks.

    If Germany folds, then probably a Europe-wide solution for banks will be made. What would be this Europe-wide solution? No idea, because I don't think that the European people would stand an old bail-in, taxpayer-funded, printing money solution if it is only for banks. Maybe the helicopter money or the QE for people would have to be also implemented
  • KlausKlaus Posts: 102 Copper ✭✭
    edited July 2016
    And there is also a calendar problem. By the end of the month the ECB stress tests are due. By October there is a constitutional reform referendum in Italy is to be held the Italian government is strongly pushing forward. Also don't forget that the Brexit was voted on June 23rd so the afthermath ot the vote coincided with the end of the semester and the half-year results and balance sheets, so we should wait and see how it impacted in the €6tn derivatives in FX the DB is involved into. At the same time, there are currently talks in place to implement a government in Spain after the June 26th general elections...

    A lot of things going on at exactly the same time
  • KlausKlaus Posts: 102 Copper ✭✭
    Sorry. In my first comment I wrote bail in when meant bail out. Here is what I actually meant:

    The problem with DB (one of them) is that it's a game changer. In this debtors vs creditors divide (Italy, Spain, Portugal, etc vs Germany, Netherlands, etc), it is the first time a TBTF bank is in deep trouble in the creditor side since the new rules are in place.

    So if Germany finds a market-based solution (capital increase with Chinese or Qatar saving DB, for example) or lets DB fail and winds it down, you may be well sure that they would not let change the rules again to a bail out for Italian or French banks.

    If Germany folds, then probably a Europe-wide solution for banks will be made. What would be this Europe-wide solution? No idea, because I don't think that the European people would stand an old bail-out, taxpayer-funded, printing money solution if it is only for banks. Maybe the helicopter money or the QE for people would have to be also implemented
  • Mark_79Mark_79 Posts: 57 Copper ✭✭
    Never mind too big to fail, I think DB might be too big to bail.

    IMO once the collapse begins a whole bunch of skeletons will come out.

    They've got a track record for shady practices already, LIBOR, rigging the Gold/Silver spot, etc.

    God only knows where this will leave the Euro and the wider European/World economy. Again, just my opinion but this will make 2008 look tame, the numbers are orders of magnitude bigger this time around.
  • KlausKlaus Posts: 102 Copper ✭✭
    Following what I mentioned, it seems the chief economist at DB calls for a €150bn bailout for banks throughout Europe.

    The figure will have to be much higher bit anyways, the importance here is they begin floating the idea.

    We will see
  • Mark_79Mark_79 Posts: 57 Copper ✭✭
    I see that DB is up (a bit) today on the talk of bail out.

    I see three possible situations happening.

    1) Nothing happens. The banks crash and burn. Due to derivative expose all banks and insurance companies are affected. Gold goes up.
    2) Bail-in. Regular Joe, investors take a hair cut. Trust in the financial sector is lost. People start buying gold. Gold goes up.
    3) Bail-out. This will run in to the trillions once all the skeletons come out. So much currency is created that its starts to become worthless. Gold goes up.

    Whatever happens the future looks bright for gold.

    While ever economies are growing at 1-2% and you've got ZIRP and NIRP gold is going to do well. With today's crazy world its impossible to plan for the next six months (especially in the UK!!!) never mind 5/10 years, but I can see the low growth NIRP/ZIRP situation continuing for quite a while yet, which makes a very bullish case of owning gold.

    BTW UK interest rates look like they're going to drop to 0.25% on Thursday. Really as I see it there is no real economic case for holding your money in bank ATM. How the hell did we get in to this situation. IMO once the penny drops (that none of this sovereign debt is ever going to be be paid back) there is a good chance that the gold standard will be making a return, however this could be many years away or equally could happen in 2017. Who knows anymore??
  • KlausKlaus Posts: 102 Copper ✭✭
    Follow up.

    Jacob Lew met yesterday with Gernmany's Finance Minister Wolfgang Schauble and advocated to preserving the stability of the banking industry, while Shcauble said that any resolution of the Italian banking crisis must be made according to rules in force to shre the burden (and, so, extend losses to private investors)
  • KlausKlaus Posts: 102 Copper ✭✭
    New follow up.

    Two Qatar funds have increased their stake in DB from a combined roughly 6% to a combined just under 10%.

    Positioning themselves for the next steps?
  • rohanibuang61rohanibuang61 Posts: 2,379 Gold ✭✭✭✭✭
    Hi @Mark_79 My believe with BitGold/Goldmoney is at the highest in comparison to fiat currency, bond, FX market and stock market of which these are all manipulated. So I think keeping Gold in BitGold/Goldmoney is the best choice to the open public.
  • IconateIconate Posts: 68 Tin ✭
    @Klaus I wouldn't count out the possibility of bail-ins
  • KlausKlaus Posts: 102 Copper ✭✭
    Iconate said:

    @Klaus I wouldn't count out the possibility of bail-ins

    Neither would I.

    The thing is that Italian banks have many households as bondholders so it is politically difficult to impose losses on them (a bail in) for there is a government-backed constitutional referendum in October that may bring the government down. But also a taxpayer-funded bail out would spark protests by the 5 Star anti-euro movement

    As a matter of fact an Austrian bank already found a market-based solution, and a couple weeks ago a German regional bank also found one. But the elephant in the room is DB (and the French banks) and I would assume that, if DB finds a market-based solution, there would be no incentive to allow a bail out for Italian banks and they may go down the pit.

    On the other hand it is politically difficult to defend another EU-wide taxpayer-funded bailout so I wouldn't count out any autcome.

    Today, Italian newspapers say that they are working on a market-priced capital increase for Monte dei Paschi in which Italy would act as guarantor if there are not enough subscribers. Also they expect for today an EU Court of Justice resolution on the State-aid implemented for Slovenian banks a few years ago.

    It amazes me how the market is ignoring this difficult uncertain situation (which probably was addressed last week by Jacob Lew and Schauble in their meeting)
  • KlausKlaus Posts: 102 Copper ✭✭
    edited July 2016
    And in the Slovenian case, the EU Court of Justice has ruled that the bail in rules imposing burden on investors are legal:

    “Burden-sharing by shareholders and subordinated creditors as a prerequisite for the authorization, by the commission, of state aid to a bank with a shortfall is not contrary to EU law”

    Result: European listed banks deepen their losses in the market, possibly seeing that the case for Italian banks bailout is increasingly complicated
  • KlausKlaus Posts: 102 Copper ✭✭
    And S&P cuts DB's outlook to negative "As Operating Conditions May Challenge Strategy Execution".

    And so it seems S&P believes it has core business problems
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