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“Moody's Downgrades Deutsche Bank; Now Two Steps From Junk - Another Lehman Crisis to Hit the World?”
Tuesday, May 24, 2016 1:09
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“Moody’s Downgrades Deutsche Bank; Now Two Steps From Junk-
Another Lehman Crisis To Hit The World?”
“Folks are literally starving to death in Venezuela from economic collapse, and if Deutsche Bank goes under, starvation will hit Europe and the USA too. Here’s the likely trigger: Deutsche Bank. Moody’s Investors Service has today downgraded the ratings of Deutsche Bank AG (DB) and affiliates, including:
• the bank’s long-term deposit rating, to A3 from A2,
• its senior unsecured debt rating to Baa2 from Baa1,
• its standalone baseline credit assessment (BCA) to ba1 from baa3, and
• its counterparty risk assessment to A3(cr) from A2(cr).
• Deutsche Bank’s short-term ratings and short-term counterparty risk assessments were also downgraded to Prime-2 from Prime-1 and to Prime-2(cr) and Prime-1(cr), respectively.
Today’s rating action reflects the increased execution challenges DB faces in achieving its strategic plan.
OK, So What Does This Mean to Me? What it means is there is likely financial Armageddon on the near horizon- again. The chart below shows what it means when a financial powerhouse finds its rating “downgraded” the way DB’s was today:
Lehman was downgraded in late April to early May, 2008. By the first week in September, it had triggered the Great Financial Collapse (GFC) of 2008. Lehman’s collapse had a staggering huge effect upon the entire financial system; it affected everything! Well, Lehman was “small change” compared to DB.
If Deutsche Bank goes under, and many financial people are fearful they will, the effects will make the Lehman collapse look like a sunny Summer Day. Deutsche Bank is huge. And they are strategically positioned in the Derivatives market, doing business with almost everyone. They buy and issue Credit Default Swaps, which act like insurance for other people’s debts. If DB goes under, all that “protection” is gone and the world goes right off a cliff into a financial abyss.
The trouble is, DB is far too big to save. No one in the world has enough money to prop them up. So if DB fails- and it is looking more and more as though they will- the end of the western banking and financial systems will be upon us within hours.
How this happened is simple: They engaged in speculative lending on projects and to Debtors of questionable value or creditworthiness. They also issued Credit Default Swaps to cover loans made by other banks to Debtors of questionable creditworthiness, a lot of which are now going bad. As loan after loan goes bad, it becomes tougher and tougher to balance the books at DB. For a Bank, the existence of a loan is considered to be an “asset” of the bank. The existence of Deposits (like your checking account, savings account and IRA) are considered to be a “Liability” of the bank. As “Assets” become worthless, less and less is backing-up the Liabilities that the bank has. It’s a numbers game and numbers don’t lie.
What happens if DB Fails? Credit will halt worldwide. Cash will not be available from banks. What little International Trade is still taking place will virtually halt. Numerous banks, Insurance companies, Credit Unions and other financial entities will fail. National Economies will collapse. Supply-chains for things like food and fuel will be “interrupted.” Store shelves will empty. There will be food shortages then food riots.
Those of you who do not have any cash at home in case the banks fail, will find that your credit and debit cards are all shut off. You won’t be able to buy food or fuel. Those of you who do not have reserves of food at home, will find empty store shelves and no way to feed yourself or your family, just like is taking place right now in Venezuela!
The government is so broke, it can’t help, and they long ago sold off the government food reserves, so they cannot ride to the rescue.
Suggested Preparation: If you haven’t already begun doing so, start buying long-term shelf-stable foods. Things like:
• canned soups,
• canned meats,
• canned vegetables,
• pasta and jarred sauces/gravies,
• 50 lb bags of rice.
• Flour (to bake Bread)
• Yeast (for the flour to bake bread)
• Gallons of Cooking oil (Canola, Corn, Olive oils)
•These foods do not have to be refrigerated and will last for years.
Stock-up on condiments:
• Be especially sure to save up any extra packets of such things you may get from fast food places that you patronize. They add up.
• Emergency water storage barrel(s)
• Gravity fed water filter.
All these things can be obtained now and are not all that expensive if you make a list and buy a few at a time every week over the next few months. But don’t wait. Those who wait will starve to death when a collapse takes place.”
“This is a must see! During an interview WAM’s Josh Sigurdson and author/economist John Sneisen conducted with derivatives expert Stephen Kendal, John asked Stephen, “Will Deutsche Bank and its 64 trillion dollar derivative exposure topple the 3.9 trillion dollar German economy?”
Deutsche Bank is currently crashing in 2008 style. In reply to John’s question, Stephen said, “In 2008 when Lehman Brothers collapsed, they had a book of derivatives. An asset book of derivatives. Deutsche Bank took the bulk of that on. A derivative has either 100 or nothing. Until the derivative actually expires, someone has to own it. What happened is Deutsche Bank thought they had a chance making a few quid because (they) believed the market had misunderstood the value of the bulk. So they took on highly toxic contract derivatives from 2008 and was the world’s vacuum cleaner when it came to all the things people didn’t want. What has happened is, the bets they made haven’t turned out the way they thought they would. The contracts they have now are practically worth nothing. The 75 trillion (dollar) derivatives bulk they have when compared to the world GDP which is 75 trillion, they have 30-40 times the GDP of Germany. They match the global GDP. They have no value.”
Stephen believes Deutsche Bank will fail and the reason why it’s still going is because it’s propped up and supported. Deutsche Bank is practically a bank on life support. “Effectively everyone knows the second they pull the plug out, that will be it, it will be gone.” Mr. Kendal said.
Josh then asked, “So do you think Deutsche Bank will be the next Lehman Brothers?” Stephen replied, “Yeah, 100%. When you listen to the Fed (Federal Reserve) speak, they say there will be no bail-ins this time. You can’t even attempt to bail out that kind of money. If you look at all the other banks in America, the derivatives that they sat on are phenomenal. Look at the amount of assets compared to the derivatives bulk. Goldman Sachs sat on it 70 times. They have just under 1 trillion in assets and they have a derivatives bulk of 70 trillion dollars. Just 10% out would mean goodbye to all of it.”
He went on to say, “If you take the 5 big banks in America and what they have as far as their assets and derivative exposure, you’re talking about 40 times. Because it’s leveraged, it’ll just be gone. When people say it’s not going to happen, they’re just trying to convince themselves because the results are unimaginable.”
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