Chinese Firm Makes Huge Investment in Deutsche Bank

[Ba-ba-Ra]

Joseph Farrell's take on this announcement:


http://www.youtube.com/watch?v=nN1alqwS1-s

[Foxie Loxie]

Thanks, so much, Dear Lady.....This is YUUUUUUGE! :faint:

[Cara]

For some background on this, James Corbett wrote a good article on Deutsche Bank in 2016.... he referred to the bank as a Ticking Time Bomb....

Here is the start and some parts of his article:


Deutsche Bank: Europe’s Ticking Time Bomb
Corbett10/05/2016
https://www.corbettreport.com/wp-content/uploads/2016/10/nif_deutsche.jpg
by James Corbett
corbettreport.com
October 5, 2016

You have no doubt heard by now about the precarious situation that Deutsche Bank finds itself in, including the impending US government fine (http://www.reuters.com/article/us-germany-deutsche-bank-idUSKCN1220NA) for selling faulty mortgage-backed securities in the run up to the financial crisis. The lamestream media is busy running stories about German bailout rumours (http://www.reuters.com/article/us-germany-banks-idUSKCN11Y1FH), and bank’s uncanny ability to not quite die (http://www.theaustralian.com.au/business/opinion/alan-kohler/the-amazing-survival-so-far-of-deutsche-bank/news-story/89259f106d190ea059ece1f83421e10c) …yet. But in case anyone is tempted to draw comparisons with the 2008 financial crisis, rest assured that the failure of Deutsche Bank would be no “Lehman Bros. moment.” It would be incomparably worse.

Deutsche Bank is not just one of the largest banking and financial services companies in the world (although it is that). It is also one of the most inter-connected banks in the world. As the IMF helpfully pointed out (https://www.imf.org/external/pubs/ft/scr/2016/cr16191.pdf) earlier this year:


“Deutsche Bank is also a major source of systemic risk in the global financial system. The net contribution to global systemic risk is captured by the difference between the outward spillover to the system from the bank and the inward spillover to the bank from the system based on forecast error variance decomposition. Deutsche Bank appears to the most important net contributor to systemic risks in the global banking system, followed by HSBC and Credit Suisse. Moreover, Deutsche Bank appears to be a key source of outward spillovers to all other G-SIBs as measured by bilateral linkages.”

And here is the handy dandy diagram they provided to demonstrate those “bilateral linkages” that could contribute to “outward spillovers” to the other “G-SIBs” (that’s “globally systemically important banks” to all of you not versed in Bankster-speak):

https://www.corbettreport.com/wp-content/uploads/2016/10/Screen-Shot-2016-10-04-at-3.47.43-PM.png

But more to the point, this doesn’t just mean that their CEOs play golf together every year or two. These linkages include derivatives counterparties. What this diagram is really showing us is that when/if Deutsche Bank goes under it will create a derivatives black hole that threatens to draw in most of the largest financial institutions in the world…each one of which would then create its own black hole of derivatives debt.

Now you’ll remember that derivatives are bets on the performance of some other thing, like an asset, index, interest rate, etc. Like any bet, it can happen between two or more people and things can get very messy when one of the people involved doesn’t have the money to pay up in the end. But derivatives can get even more wild, since the amounts in question can add up to trillions of notional dollars (http://www.investordictionary.com/definition/notional-amount), i.e. money that does not actually change hands…unless everything falls apart and someone is left holding the bag.

This is why Warren Buffett famously referred to derivatives as “weapons of mass destruction” (http://www.fintools.com/docs/Warren%20Buffet%20on%20Derivatives.pdf).
https://www.corbettreport.com/wp-content/uploads/2016/10/wmfd.png

This is also why the 2008 crisis was so severe. ...

..., what are we looking at with Deutsche Bank?

Well, in 2013 its notional derivative exposure was 55.6 trillion euros. Let’s put that in perspective with a graphic (http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2013/04/German%20GDP%20vs%20DB%20Derivatives_1_0.jpg) from ZeroHedge comparing DB’s derivative exposure to the Gross Domestic Product of Germany.

https://www.corbettreport.com/wp-content/uploads/2016/10/German-GDP-vs-DB-Derivatives_1_0.jpg

Does that look frightening? Well, don’t worry. Deutsche’s derivative black hole has been pared back to a much more modest 46 trillion or so euros, a mere 15 times German GDP.

Does that make you feel any better? I didn’t think so.
....


Continues here: https://www.corbettreport.com/deutsche-bank-europes-ticking-time-bomb/

So, as per Dr Farrell’s speculation, the Chinese may well be buying a stake in the EU economic policy game but it certainly comes with a hefty price tag given the various “liabilities” Deutsche Bank comes with.

I wonder how they will mitigate and handle all this....
Amortise it through some of the One Belt One Road projects?
Securitise it into another financially tradeable commodity á la mortgage loan securities?
Perhaps they’ll do a debt swap with the US? (I’m only half joking with this last one).

And we can speculate for ages but will probably never know....

[Cardillac]

I wonder what David Icke would have to say about this if he's aware of this trend; he's always stated that China has a major role in "global unrest"-

if one has read Farrell's "Hidden Finance, Rogue Networks and Secret Sorcery" (incredible book) which, among other things, addresses all the financial insider tradings going on with the Deutsche Bank on 9/11- were the Chinese involved as far back as then?- Farrell doesn't address that issue in his book probably because that element wasn't known back then; question: is this something new or has it quietly been going on in the background for some time now?- I don't have the answer- any ideas?

Larry

[shaberon]

I saw a brief note that in Germany, Hamburg Schleswig-Holstein bank is breaking up.

One billion of its assets to Cerberus, an international arms dealer. Seven billion of its debts to the taxpayers in those German states.

Does this seem accurate??