It looks like Deutsche Bank is heading toward failure. Why might we be concerned?
The problem is that Deutsche is too big to fail — more precisely, that the new Basel III bank resolution procedures now in place are unlikely to be adequate if it defaults.
Let’s review recent developments. In June 2013 FDIC Vice Chairman Thomas M. Hoenig lambasted Deutsche in a Reuters interview. “Its horrible, I mean they’re horribly undercapitalized,” he said. They have no margin of error.” A little over a year later, it was revealed that the New York Fed had issued a stiff letter to Deutsche’s U.S. arm warning that the bank was suffering from a litany of problems that amounted to a “systemic breakdown” in its risk controls and reporting. Deutsche’s operational problems led it to fail the next CCAR — the Comprehensive Capital Analysis and Review aka the Fed’s stress tests – in March 2015. Continue reading
Tag Archives: too big to fail
The Euro – Destined for 80 cents?
ANSWER: Yes. The Euro will make a new historic low under 82 cents which was the 2000 intraday low. The lowest annual closing came in 2001. My concern is two-fold. The Break-Line reaches 80 cents on the next 8.6 year wave. But the computer is showing an unbelievable series of Directional Changes for 4 years – the entire down-wave of the ECM. Then we see a Panic Cycle in 2021. This is NOT going to be a very easy period to grasp. We are in for a hell of a choppy period ahead that will swing wildly. Continue reading
Anyone That Believes That Collapsing Oil Prices Are Good For The Economy Is Crazy
Are much lower oil prices good news for the U.S. economy? Only if you like collapsing capital expenditures, rising unemployment and a potential financial implosion on Wall Street. Yes, lower gasoline prices are good news for the middle class. I certainly would rather pay two dollars for a gallon of gas than four dollars. But in order to have money to fill up your vehicle you have got to have an income first. And since the last recession, the energy sector has been the number one creator of good jobs in the U.S. economy by far. Barack Obama loves to stand up and take credit for the fact that the employment picture in this country has been improving slightly, but without the energy industry boom, unemployment would be through the roof. And now that the “energy boom” is rapidly becoming an “energy bust”, what will happen to the struggling U.S. economy as we head into 2015?
At the start of this article I mentioned that much lower oil prices would result in “collapsing capital expenditures”. Continue reading
Bank of International Settlements Forges ‘Simple Plan’ to Avoid Bank Bailouts in Market Crash
The Bank for International Settlements has crafted a plan to inject major lenders with more cash, in the event of financial failure, while avoiding market chaos and the need to use taxpayers’ money.
According to BIS’ paper, the central bank forum laid out blueprints on how to recapitalise banks quickly and easily, while also allowing authorities to give an ironclad guarantee that insured depositors would not lose savings. Continue reading