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Deutsche Bank: Germany's Financial Colossus Stumbles

theguardian.com

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Re: Deutsche Bank: Germany's Financial Colossus Stumbles

#11

Post by wobbleblob »

jgreen10 wrote: post #6

Well, Germany has been allowed to act as the emperor with no clothes for a while now; an economic powerhouse sitting on empty pension chests with an ageing population. To compare pension fund assets: US: $46k/capita UK: $42k/capita Netherlands: $76k/capita Germany: $2.9k/capita http://www.oecd.org/finance/Pension-funds-pre-data-2015.pdf

My colleague from Greece has been giddy as a schoolboy about this story all week. Not quite the roaring, thunderous fits of laughter as with the Volkswagen scandal, but this is still developing.

Re: Deutsche Bank: Germany's Financial Colossus Stumbles

#12

Post by chvid »

Germany led by Merkel has set itself up for trouble.

Cyprus and Greece have created a precedence for creditor bail-ins. Public finances are stretched due to refugee inflows and opposition to Merkel is growing even internally in her massive coalition government.

This setup may lead to something not predicted (ie. DB not getting the guarantees it needs or even a creditor bail-in) or more predictively the rise of left or right-wing non-established / populist politics.

Re: Deutsche Bank: Germany's Financial Colossus Stumbles

#13

Post by Kristine1975 »

wobbleblob wrote: post #11
jgreen10 wrote: post #6

Well, Germany has been allowed to act as the emperor with no clothes for a while now; an economic powerhouse sitting on empty pension chests with an ageing population. To compare pension fund assets: US: $46k/capita UK: $42k/capita Netherlands: $76k/capita Germany: $2.9k/capita http://www.oecd.org/finance/Pension-funds-pre-data-2015.pdf

My colleague from Greece has been giddy as a schoolboy about this story all week. Not quite the roaring, thunderous fits of laughter as with the Volkswagen scandal, but this is still developing.

I'm from Germany and the troubles of the Deutsche Bank please me to no end. The only thing I'm scared of is that it will be declared "too big to fail" and bailed out with tax money, while at the same time there's no money for schools, police, refugees etc because Wolfgang Schäuble is obsessed with his "black zero".

Re: Deutsche Bank: Germany's Financial Colossus Stumbles

#14

Post by 1ris »

jgreen10 wrote: post #6

Well, Germany has been allowed to act as the emperor with no clothes for a while now; an economic powerhouse sitting on empty pension chests with an ageing population. To compare pension fund assets: US: $46k/capita UK: $42k/capita Netherlands: $76k/capita Germany: $2.9k/capita http://www.oecd.org/finance/Pension-funds-pre-data-2015.pdf

Germany does not have such a thing as a pension chest. Pensions are directly paid by the working generation. That has it's problems, but it does also have it's benefits and makes this comparison useless.

Re: Deutsche Bank: Germany's Financial Colossus Stumbles

#15

Post by dangerpowpow »

jgreen10 wrote: post #6

Well, Germany has been allowed to act as the emperor with no clothes for a while now; an economic powerhouse sitting on empty pension chests with an ageing population. To compare pension fund assets: US: $46k/capita UK: $42k/capita Netherlands: $76k/capita Germany: $2.9k/capita http://www.oecd.org/finance/Pension-funds-pre-data-2015.pdf

That is because pension is handled differently in germany?

Re: Deutsche Bank: Germany's Financial Colossus Stumbles

#16

Post by vegabook »

Deutsche Bank is counterparty to 55 trillion euros of derivatives contracts (about 65 trillion USD). I worked for 3 years on its trading floor. It was Sales-a-gogo. "Print as much as you can". It's one of the very biggest counterparties to derivatives. Imagine if there was basis risk of only one tenth of one percent on those books (ie hedge imperfection usually due to a third factor such as credit quality or geographic mismatch). That would mean a P&L of 32.5 billion dollars. For risk on only one thousandth of the notional value of its derivatives books. Deutsche Bank is only worth 22 billion dollars.

Now of course such P&L could be positive too, but inevitably, when the wolves of the markets start hunting, they'll seek out the positions that are "wrong way". Let alone if DBK starts to try to unwind some of these derivatives. I bet it wouldn't be able to unwind even 2% (1.3 trillion!) of the books without blowing itself up.

I think this bank is Exhibit A to the catastrophic excesses of the past 20 years.

Re: Deutsche Bank: Germany's Financial Colossus Stumbles

#17

Post by wobbleblob »

Kristine1975 wrote: post #13
wobbleblob wrote: post #11

Earlier quoted context omitted.

My colleague from Greece has been giddy as a schoolboy about this story all week. Not quite the roaring, thunderous fits of laughter as with the Volkswagen scandal, but this is still developing.

I'm from Germany and the troubles of the Deutsche Bank please me to no end. The only thing I'm scared of is that it will be declared "too big to fail" and bailed out with tax money, while at the same time there's no money for schools, police, refugees etc because Wolfgang Schäuble is obsessed with his "black zero".

Maybe he can propose to sell some of the German islands to cover the bailout.

Re: Deutsche Bank: Germany's Financial Colossus Stumbles

#18

Post by DangerousPie »

chvid wrote: post #12

Germany led by Merkel has set itself up for trouble. Cyprus and Greece have created a precedence for creditor bail-ins. Public finances are stretched due to refugee inflows and opposition to Merkel is growing even internally in her massive coalition government. This setup may lead to something not predicted (ie. DB not getting the guarantees it needs or even a creditor bail-in) or more predictively the rise of left o…

Public finances are only stretched because the German government (and the electorate) has a weird aversion to taking on new debt. If she wanted to, Germany could essentially borrow money for free thanks to extremely low or even negative interest rates.

Re: Deutsche Bank: Germany's Financial Colossus Stumbles

#19

Post by chvid »

DangerousPie wrote: post #18
chvid wrote: post #12

Germany led by Merkel has set itself up for trouble. Cyprus and Greece have created a precedence for creditor bail-ins. Public finances are stretched due to refugee inflows and opposition to Merkel is growing even internally in her massive coalition government. This setup may lead to something not predicted (ie. DB not getting the guarantees it needs or even a creditor bail-in) or more predictively the rise of left o…

Public finances are only stretched because the German government (and the electorate) has a weird aversion to taking on new debt. If she wanted to, Germany could essentially borrow money for free thanks to extremely low or even negative interest rates.

The money still would have to be paid back.

Secondly interest rates are low due to low inflation masquerading a higher real interest.

Re: Deutsche Bank: Germany's Financial Colossus Stumbles

#20

Post by kuschku »

Kristine1975 wrote: post #13
wobbleblob wrote: post #11

Earlier quoted context omitted.

My colleague from Greece has been giddy as a schoolboy about this story all week. Not quite the roaring, thunderous fits of laughter as with the Volkswagen scandal, but this is still developing.

I'm from Germany and the troubles of the Deutsche Bank please me to no end. The only thing I'm scared of is that it will be declared "too big to fail" and bailed out with tax money, while at the same time there's no money for schools, police, refugees etc because Wolfgang Schäuble is obsessed with his "black zero".

> while at the same time there's no money for schools, police, refugees etc because Wolfgang Schäuble is obsessed with his "black zero".

Schleswig-Holstein just decided to drop any plans for the black zero, and doubled the funding for new police recruits. Additionally, we decided to also build more schools. And fix the infrastructure.

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