Which is the next bank to fail?
CitiGroup in New York, Barclays in London, or Deutsche Bank in Germany these 3 banks are fighting every single night to fight off insolvency and failure.
I think Deutsche Bank and its constant overnight risk of failure is somewhat tied to derivatives related to LIBOR, and also a risk related to their FOREX derivatives. In other words, derivatives that the banks use to balance off the currencies.
The important thing to keep in mind about Deutsche Bank is that it won’t go down alone if it goes down at all. If it fails, it will take along with it as many of the other banks it can! It will be 1 or 2 quickly, then a 3rd and 4th a few weeks later, another, then before you know it, all the major banks would be kaput.
The big immediate threat for Deutsche Bank though has to do with their problems in hiding debt for the Sovereign nations applying for the Eurozone. For example, Greece and Italy couldn’t have their debt ratios over certain levels, so what Deutsche Bank did was they turned nice big chunks of Sovereign debt into currency swaps.
The big banks are so criminal that they have converted fraud and criminal activity into a small cost of doing business!
We had events in April, May, and June in which 5,000 metric tons of gold were lifted out of London. In the derivatives world, gold is treated like a currency. Isn’t that ironic? The FOREX derivatives that the banks are involved in are very much tied to gold. The London banks used the Easterners’ gold as equity for futures contracts that went bad- like in Spanish, Greek, and Italian debt.
Fast forward to July 2013, and now we are seeing several Deutsche Bank Vice Presidents being indicted under various fraud charges, and they are almost all cooperating with Interpol! They’ve flipped to cooperate with the serious fraud division of Interpol.
Deutsche Bank is involved very closely with all of the Eurozone currencies and bonds, and they have massive swaps interwoven with all the major Western banks. Deutsche Bank has their fingers in a lot of different pies! Lehman Brothers was involved in numerous mortgage instruments.
Deutsche Bank owns $25 trillion in OTC swaps with the Central banks and other major banks, so expect a daisy chain of derivative failures for the $1.6 quadrillion derivative market if it were to fail! Deutsche Bank cannot break down by itself. It would result in the complete breakdown of the European Monetary Union!
In today’s world when a big bank dies, they merge them with another big bank, as seen by Merrill Lynch becoming Bank of America Merrill Lynch which was pointless as both Bosses lost their jobs [John Thain - Ken Lewis].