Monday, February 08, 2016

Deutsche Bank The Bagholder

The American system relies on kinetic and financial weapons. This is the importance of the BRICs trying to build a world bank, IMF, rating agency structure to compete. It is not just to compete but to lessen the power of America's different financial weapons. America attempts to destroy any competitor. Brain-draining other countries plays into this, and so does financial interconnectedness. Germany is facing a major problem and should be hitting the "PANIC" button. Deutsche Bank is now the bagholder for Wall Street.

Zero Hedge has a great essay up on Deutsche Bank being in trouble. The derivatives game is not like you or I playing with stocks or bonds with losses. If you actually look at derivative exposure, it is a game played by the big boys with very few banks holding the vast majority of derivatives. This was their economic moat. This is why Rubin pushed for them to be unregulated. It could become a playground for the big boys, and they would never have to deal with competition reducing their gains from working with them unlike traditional banking or even investing. The other catch is the nature of them. With derivatives, there is a winner and loser. This was part of the MF Global scam: if MF Global lost millions or billions in derivative trades, who were the winners? If DB is set to lose, who are the winners.

Knock on effect of euro banks were big buyers of American muni debt. They have been recycling those credit lines from the US FED and buying up those munis, keeping rates low when there should be NO reason for them to be this low. I have thrown it out there before that Deutsche Bank looked to be the next AIG, and were on the other side of some big trades. If JPMorgan has set up DB on the other side of many of its precious metals derivatives trades, just how comical will it be to see JPMorgan via its puppet USG allow for gold to rise quickly again and screw over DB. If Wall Street has set them up as the bagholder, this will have many consequences.

If DB gets in trouble, will other EU banks follow them down? How much more stress does the German sociopolitical system come under? Germany can keep some of the cucks and native hostages fine with their economy humming along, but a crisis plus 90,000 Muslim migrants a month is a recipe for immediate disaster. If the EU banks are in trouble, what assets do they sell to raise capital? That would end the FED's backdoor bailout and subsidy of American state, city and county governments. If they start selling those American muni bonds, munis will see their bonds fall, interest rates rise and borrowing costs skyrocket. Will they finally face the day of reckoning that Meredith Whitney predicted? Maybe. This would be a horrendous event if combined with a rollover in the American real estate market that provides so many municipalities with property taxes. If they all do come together, then the slow motion collapse will enter a new phase.

Cops pulled back in 2015 and crime rose in many cities. Combine cops pulling back and social services being cut or money transfers being squeezed, and it will get worse.


Alexandros HoMegas said...

I'm sort of convinced that the US Deep State wants WWIII in Europe, it's all set: massive 3rd world immigration combined with a confrontation wit Russia.

Laguna Beach Fogey said...

LOL @ that DB chart. I doubt they will let it fail. But it's going to be one hell of a bongo party.

Also, negative interest rates. What could go wrong?

peterike said...

"Brain-draining other countries plays into this"

A recent story in New York on this front. A construction crane came down the other day and killed one David Wichs. Wichs, 38, came to America from Prague when he was 14. He then managed to get a seat at Harvard where he studied math. From there, he went to Tower Research Capital and was making who knows how much doing the math for the Masters of the Universe. The rabbi at his congregation called him "a supreme mensch."

So a Jew from Prague finds his way to America and receives an object worth more than gold: a seat at Harvard. And another white American gets bumped.