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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

#41

Post by creshal »

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 stretched due to refugee inflows

Pfft. Get real.

Germany has survived an influx of 10 million refugees in the immediate aftermath of WW2 and created the Wirtschaftswunder in passing while rebuilding the whole country.

Germany has survived the reunification and integration of 16 million communists (going by the right-wing, the only worse subhumans than foreigners) with a dead industry, and became the economic powerhouse of and dominating power in Europe while eating up the reunification's 2 trillion Euro cost.

Half a million refugees are a rounding error in our budgets.

Re: Deutsche Bank: Germany's Financial Colossus Stumbles

#42

Post by dschiptsov »

vegabook wrote: post #16

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 geograph…

>derivatives contracts

This is the cause.

It is not mere speculation, like it is with commodities trading, it is "trading" of imaginary things with other people's money in a way that it will be other people's problems. Now there is no way to convert these imaginary things back to other people's money, so it became German people's problem.

Re: Deutsche Bank: Germany's Financial Colossus Stumbles

#43

Post by vetinari »

junto wrote: post #35
1ris wrote: post #14

Earlier quoted context omitted.

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.

> Germany does not have such a thing as a pension chest. Pensions are directly paid by the working generation. That's only the statutory part though. You are advised to contribute to an occupational and/or private arrangement alongside the statutory scheme. They operate differently. The underlying problem Germany has is the population dynamics. The population is an ageing one. Lots of people are living longer and not…

The economic migrants are not going to work and be a tax payers. Even if they wanted to work, there's no work for their qualification. They are going to drain the social support budget and increase the inner pressure in the society.

Re: Deutsche Bank: Germany's Financial Colossus Stumbles

#44

Post by kriro »

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.

1) I'd hardly call them stretched. 2) I wouldn't call it a "weird aversion". Weimar Hyperinflation (and the consequences) is still in the public's heads. Compared to other places I have lived people in Germany are indeed more reluctant to debt-finance things in general and "save before buying". I think it's a fairly healthy base attitude (but I'm probably biased being German). It's less valuable currently with near 0% credits everywhere but as a base mindset it helps avoid the trap of not finding a way to generate the expected revenue streams eventually.

Re: Deutsche Bank: Germany's Financial Colossus Stumbles

#45

Post by zmb_ »

JetSetWilly wrote: post #8
Hermel wrote: post #5

Earlier quoted context omitted.

I wonder why there isn't more resistance against the exorbitant fines the US charges European banks every year. These fines have become a significant business risk and should be regulated in free trade agreements, just like subsidies are limited in such agreements. For many European banks, the US business is a money drain, i.e. it costs them more than they get from it. However, they cannot escape US regulation and le…

US Regulators fine all banks in the US that they catch flagrantly breaking the law. They don't just fine European banks - have a look at how much they have fined the likes of JPMorgan or BoA over the last few years. Likewise, regulators in Europe dish out fines a-plenty. The FSA certainly did over the LIBOR scandal recently. European banks could mitigate risk in the US by trading legally or by ceasing trading there a…

It's not the regulators, it's the prosecutors in New York, who have jurisdiction over the European banks since USD transactions are cleared there.

The problem is that banks absolutely cannot afford to risk going to court, since losing a case could mean losing their ability to deal in USD, which would be the end for them. That means that the banks must settle any case brought by the prosecutors. The prosecutors in New York have used this leverage to squeeze billions in settlements from the European banks. The "justice"system has basically turned into what amounts to a protection racket.

Re: Deutsche Bank: Germany's Financial Colossus Stumbles

#46

Post by mohawk »

dschiptsov wrote: post #42
vegabook wrote: post #16

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 geograph…

>derivatives contracts This is the cause. It is not mere speculation, like it is with commodities trading, it is "trading" of imaginary things with other people's money in a way that it will be other people's problems. Now there is no way to convert these imaginary things back to other people's money, so it became German people's problem.

I would state it differently. Derivatives can be quite useful for the economy, because they allow people to offload risk, e.g. companies can hedge their commodity or exchange rate risks.

They become a problem in banks that have a lot of them ("weapons of financial mass destruction") because of their opacity on the balance sheet (DB has one line in their balance sheet for derivatives, ~ 500 billion Euros) and because banks offload their long-tail risks to their depositors and ultimately the taxpayer. The new bail-in rules mean that depositors in banks are essentially guaranteeing the bank's balance sheet. Think about that the next time you look at your bank account.

Re: Deutsche Bank: Germany's Financial Colossus Stumbles

#47

Post by Kristine1975 »

wobbleblob wrote: post #36
Sidon wrote: post #29

Earlier quoted context omitted.

Maybe your colleague from Greece should realize that when DB 'falls' tons of people will take the fall for it, regular people like you and me, people who are just trying to make a living, like all those poor fucks in Greece. The group of people taking the fall for it won't be limited to Germany, you can be sure Greeks will feel it as well. Tell him to just stfu and get back to work.

Put yourself in their shoes for a moment. For the past 8 years, day in day out you have to hear jokes about how dishonest and unreliable Greeks are, that they caused these problems for us with their cheating, how they should be strictly honest and reliable like Germans, how they shouldn't spend money they don't have and get their finances in order like Germans, and then the Volkswagen scandal happened, and now this.…

The anti-Greek propaganda in German mainstream media was disgusting.

Re: Deutsche Bank: Germany's Financial Colossus Stumbles

#48

Post by narrator »

zmb_ wrote: post #45
JetSetWilly wrote: post #8

Earlier quoted context omitted.

US Regulators fine all banks in the US that they catch flagrantly breaking the law. They don't just fine European banks - have a look at how much they have fined the likes of JPMorgan or BoA over the last few years. Likewise, regulators in Europe dish out fines a-plenty. The FSA certainly did over the LIBOR scandal recently. European banks could mitigate risk in the US by trading legally or by ceasing trading there a…

It's not the regulators, it's the prosecutors in New York, who have jurisdiction over the European banks since USD transactions are cleared there. The problem is that banks absolutely cannot afford to risk going to court, since losing a case could mean losing their ability to deal in USD, which would be the end for them. That means that the banks must settle any case brought by the prosecutors. The prosecutors in New…

Which is why the Chinese are trying to get out from under all this influence by creating their own parallel version of various aspects of the western financial system[1][2]:

[1] https://en.wikipedia.org/wiki/China_UnionPay

[2] https://www.rt.com/business/239189-china-payment-system-read...

Re: Deutsche Bank: Germany's Financial Colossus Stumbles

#49

Post by cturner »

Hermel wrote: post #5
_Codemonkeyism wrote: post #3

German media makes a point that Deutsche Bank has been hit hard with the fines from their (past) crimes. Investment bankers and CEOs took their bonuses and moved on. Spiegel reports Deutsche Bank used $15 billions since 2012 for legal disputes.

I wonder why there isn't more resistance against the exorbitant fines the US charges European banks every year. These fines have become a significant business risk and should be regulated in free trade agreements, just like subsidies are limited in such agreements. For many European banks, the US business is a money drain, i.e. it costs them more than they get from it. However, they cannot escape US regulation and le…

    > they cannot escape US regulation and legal exposure as
    > long as they want to have the ability to trade US dollars
You don't need to be in the US to trade USD. FX is more lightly regulated than almost all other asset classes. For most of the cold war there was a strong trade in USD based out of London-based banks that had no US presence. https://en.wikipedia.org/wiki/Eurodollar

Re: Deutsche Bank: Germany's Financial Colossus Stumbles

#50

Post by morsch »

vetinari wrote: post #43
junto wrote: post #35

Earlier quoted context omitted.

> Germany does not have such a thing as a pension chest. Pensions are directly paid by the working generation. That's only the statutory part though. You are advised to contribute to an occupational and/or private arrangement alongside the statutory scheme. They operate differently. The underlying problem Germany has is the population dynamics. The population is an ageing one. Lots of people are living longer and not…

The economic migrants are not going to work and be a tax payers. Even if they wanted to work, there's no work for their qualification. They are going to drain the social support budget and increase the inner pressure in the society.

In the past, 10% of regugees were employed after a year, 50% after 5 years, 70% after 15 years[0]. So it takes a while, unsurprisingly, but your predicitions are not borne out in reality. Of course extrapolating from past experience is just an approximation, so it might take longer; on the other hand there are probably ways to speed up the process.

[0] Figures released by a research institute of the federal government. http://doku.iab.de/aktuell/2015/aktueller_bericht_1514.pdf

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