Deutsche Bank - Is it going to collapse?

skywanderer wrote: »

Deutsch Bank has a $72 TRILLION exposure, it cannot be saved nor should it

Deutsche isn't 72 trillion in exposure, not here on planet earth anyway. The large fine ($14 bn) to settle claims over mortgage securities from the 2007/2008 crisis has caused uncertainty, that uncertainty coupled with DB issues meant that it's share price has slipped (started to rebound just in the last few hours). Recently it's been rumoured that the fine will be dropped to at least $5.4 bn

HensVassal wrote: »

That's how it works. Crash the economy, drive asset prices down so they can be snapped up by private funds at fire sale prices, gut social programs because the primes will say "well you know, we all have to tighten our belts" rinse..repeat.

Intriguing, are you suggesting politicians deliberately caused the crash, who exactly and how was it done?

we need Aonghus Von Bismarcks' insightful commentary to enlighten us...doesn't he operate in the Deutschen Finanzdienstleistungen

the dark phantom wrote: »

Politicians don't control banking. But bankers control politics.

During the crisis, the Fed and treasury largely dictated the terms. Many politicians were strongly against bailouts, they even crossed party lines to sabotage initial votes for e.g. TARP.. it's only when the crisis went beyond Wall Street and started threatening main street.. that politicians acted in a bipartisan way, they are far more scared of their voters (who were on the brink of losing more jobs, savings, etc) than the floundering banks

Many politicians are smart enough to see that a healthy banking system is good for the economy, banks know this, but when the **** hits the fan, they become quite powerless in the face of panic and full runs. Lehmans tried and failed. Welmu, New Century, Bear Stearns, Countrywide - basically sold for a fraction of their worth. AIG was forced to take harsh terms and the CEO was axed, like thousands of high level bankers during the crisis. Even the stronger banks had to go hand-in-cap to investors like Warren Buffet to keep them afloat

Banks are still paying record fines. Frank-Dodd easily passed much to the protests of Wall St. Regulators have reformed, tightened up. Were forced to pay huge interest on bailout funds during the crisis (TARP managed to return a profit to the taxpayer)

Indeed banks like any large companies have influence, but when their risky actions are part of a full systemic crisis affecting people's jobs, mortgages, pensions, the wider economy, the global economy.. yup, they lose that influence pretty quickly, and due to huge public anger few dare to get on their side.. especially politicians

Capt'n Midnight wrote: »

Compared to that the derivatives market is just insane.

About the worth of the derivatives market.

I don't know if this is a good analogy but I'll try (someone else who is far more knowledgeable can correct me) If you a put a 10 euro bet on a 300 to 1 horse, that's 3000 euros potential outcome

If you take the potential max outcome of all the bets in the world on everything, you'll come up with a fantastically high figure. The real money that changes hands is just a fraction of that.

Derivatives is roughly the same thing. A certain way of calculating makes it look far bigger than the realistic size of the market.

Giacomo McGubbin wrote: »

Lets see if ordinary German taxpayers and their children's children are made to pay off the private debts of German billionaires and bondholders.

To offer an alternative view, it's likely ordinary German taxpayers would suffer more if the bank went down (it's a very large one). It would prob drag a few smaller banks with it, create a domestic banking crisis (in Germany) and negatively affect the system in Europe

That would affect the economy of Germany and of Europe negatively. Jobs, pensions, housing, etc.

smurgen wrote:

For example say i bet 100 eur hillary clinton will win the us elections with one person and 100 that trump will with another my exposure as you're reporting it is 200 but my net exposure is 0.

The net exposure can have a larger affect if it's done on a large scale though. Not $72 trillion worth, but definitely a massive chunk. For example: A farmer takes out €1000 in insurance in California and suffers €1000 in damage from a drought, his net exposure is 0. But if that insurance company goes bankrupt because every other farmer in California also took out a policy with them and they can't cover it, then he's up shít creek, isn't he?

I'm not saying DB is in that position right now, but they're hardly in the best of shapes - some estimates are placing their leverage ratio at anywhere between 29:1 and 40:1... Goldman Sachs traded at 30:1 and a 3% change in their portfolio was enough to essentially bankrupt them.

DB probably aren't going down now, but they're not in a good position. Not after the Eurogroup President told them if they're going down, they're going down and nobody is going to step in to save them.

AnGaelach wrote: »

The net exposure can have a larger affect if it's done on a large scale though. Not $72 trillion worth, but definitely a massive chunk. For example: A farmer takes out €1000 in insurance in California and suffers €1000 in damage from a drought, his net exposure is 0. But if that insurance company goes bankrupt because every other farmer in California also took out a policy with them and they can't cover it, then he's up shít creek, isn't he?

I'm not saying DB is in that position right now, but they're hardly in the best of shapes - some estimates are placing their leverage ratio at anywhere between 29:1 and 40:1... Goldman Sachs traded at 30:1 and a 3% change in their portfolio was enough to essentially bankrupt them.

DB probably aren't going down now, but they're not in a good position. Not after the Eurogroup President told them if they're going down, they're going down and nobody is going to step in to save them.

There's counterparty risk in all aspects of life, that's why the bank will charge a margin maintenance figure and ask for additional collateral to be deposited to offset a greater risk. DB has the highest level of quality liquidity in Europe and it's liquid assets are higher than some American banks.I believe the market is jittery at the moment and it will stabilise.i think that sentiment about european markets in general is manifesting itself in the db share price.