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Help me understand what the hell is going on with Deutsche Bank.
Posted on 9/29/16 at 8:48 pm
Posted on 9/29/16 at 8:48 pm
So, the DOJ is trying to reach a settlement with Deutsche Bank for $14 Billion, which would put one of the world's most important banks dangerously close to insolvency. Do I have that right? Is this not utter extortion on the part of the DOJ? Why is DB seemingly going along with it? Is this the point we are at in the world economy where the German government is probably going to bail out DB so they can turn around and pay the DOJ? Can someone who is much more educated than I am explain WTF is going on?
4
Posted on 9/29/16 at 9:33 pm to LSUTigersVCURams
Deutsche bank basically has $16B of equity and $160b+ of debt, they also have a gigantic derivatives book like $75 trillion dollars. Merkel has been a total beeyotch about bailing out the other banks in europe in italy and greece so if she bails out deutsche bank shes a giant hypocrite, if she doesnt then it could fail and bring down global markets. The bank says theyre fine, but of course they would. It will be interesting to watch unfold but they are a ticking time bomb and proof that banks should not be allowed to achieve that size without even more oversight. Today some big hedge funds bailed on them so thats why the sudden big dip today. Personally Id love to see them fail, im tired of this notion of too big to fail.
Also id like to throw in a side piece that europe in general is a complete POS and i personally think the muslim migrants ruin it and turn it into a 3rd world continent in the next 20-30 years.
Also id like to throw in a side piece that europe in general is a complete POS and i personally think the muslim migrants ruin it and turn it into a 3rd world continent in the next 20-30 years.
This post was edited on 9/29/16 at 9:35 pm
Posted on 9/30/16 at 7:28 am to LSUTigersVCURams
You'd probably get a better, more detailed answer from Doc in his thread, but basically the DOJ says DB owes $14 billion for selling bad mortgage backed securities before the financial crisis. They can't afford to pay that much, and they've been having some rough times these past two years. They'll either have to heavily dilute their shareholders or need a bailout (both will likely happen). That's a problem because Germany has been reluctant about bailing out other EU member's banks, instead preferring debt negotiations and dilution of shareholders. Now the shoe is on the other foot, and while she may have said she won't bail out DB, she most likely will.
There's also speculation that this is a response to the EU claiming thay AAPL owes about the same amount in taxes to Ireland. Our Treasury secretary advised them not to do it, but they ignored him and Ireland's protest of the decision. So we hit the biggest EU member in their biggest weakness. If this happened, I'm honestly quite impressed with our government for pimp slapping the EU.
There's also speculation that this is a response to the EU claiming thay AAPL owes about the same amount in taxes to Ireland. Our Treasury secretary advised them not to do it, but they ignored him and Ireland's protest of the decision. So we hit the biggest EU member in their biggest weakness. If this happened, I'm honestly quite impressed with our government for pimp slapping the EU.
Posted on 9/30/16 at 9:46 am to LSUTigersVCURams
Just out of curiosity, does this mean much for National Bank of Greece?
Posted on 9/30/16 at 10:04 am to LSUTigersVCURams
quote:
Can someone who is much more educated than I am explain WTF is going on?
DB did some bad stuff with the MBS and other stuff back in the middle part of the last decade. Other banks did as well. Many of the other banks including all of the US HQ banks have either gone under or taken their medicine and paid their fines. DB has not... they still have a huge potential fine hanging over them.
In addition, DB has has been hurt by the general economic malaise in the Euro Zone.
Those two things have led to a point where they are potentially very undercapitalized. Like most things economic... the threat of bad news can send things tumbling, not necessairly waiting for the bad news to happen. People are starting to get anxious about their overexposure to EU issues and this pending fine, and you can start to see a run. Financially, they are OK today, but just barely... if a run happens, it won't take long for things to get from bad to really bad.
Doc's thread is awesome but it's pretty high level.
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