Remember the financial crisis? And I mean from your own personal experience. Of course you do. Now, remember the recovery – again from experience and not what the media and politicians lied about. That ones a little harder, eh? There wasn’t much of a recovery honestly.
Now the recovery in name only is in crisis. Historically we’re due for another recession at this point. And the next one will be carrying the baggage of the last in addition to new problems.
At least the Joker had a plan – chaos.
Like the fun from 2008, this next round will center on the funny money-inflated banking industry. Deutsche Bank will be playing the part of Lehman Brothers or AIG (or both).
Europe’s biggest lender Deutsche Bank has lost more than half of its value since January, posing a threat to the stability of other banks across the continent. Some analysts are worried it could invoke a large-scale crisis, bigger than in 2008.
After a massive sell-off on Monday, Deutsche Bank’s market value shrank to €14.5 billion. In dollar terms it is only $2 billion more than the $14 billion penalty the bank faces from the United States Department of Justice over its mortgage-backed securities business before the 2008 global crisis.
Deutsche’s problems have raised questions about the health of other big European lenders. The share price of the Royal Bank of Scotland has plunged 13 percent and Italy’s UniCredit is down 12 percent this month. The Bloomberg Europe 500 Banks and Financial Services Index is down 4.2 percent for September. This is the worst result since June, when the Brexit referendum heavily hit the markets.
The problems of Deutsche Bank are putting the German government in a difficult dilemma, as it must decide whether to save the bank, whose assets are valued at about €1.8 trillion, half the size of the German economy.
Get that? A crisis bigger than 2008. That’s because this one is still tainted by the problems of 2008 which were never dealt with.
Germany is working on a rescue plan but that is just for and because of one bank. What about the others?
There was a secret rescue of sorts after 2008. The Federal Reserve printed up and gave away (loaned to be technical) about $16 Trillion. All of it went to the banks. The banks did nothing with the money; I’ve talked about this before. Maybe a third of the fake cash was gifted to foreign banks – mainly European. The same banks that are in trouble again. The numbers are hard to figure but Deutsche got hundreds of Billion$.
But that doesn’t mean it didn’t accept government rescue money during the financial crisis. Consider the following:
- As one of the largest counterparties of failed insurer AIG, Deutsche Bank received $11.8 billion of the funds used to bail out AIG. 
- The Federal Reserve made emergency low-cost funds widely available to foreign as well as US member institutions through its discount window. Deutsche Bank was the second heaviest user of such funds, borrowing more than $2 billion. 
- The Federal Reserve also created a program known as the Term Asset-Backed Securities Lending Facility, which allowed banks to use their assets, including troubled or hard-to-value assets, as collateral for short term loans. Deutsche Bank was the largest user of the program, sending the Fed more than $290 billion worth of mortgage securities.
To most people, who don’t make fine distinctions among the particular government programs that funneled their tax dollars to financial institutions, this probably looks an awful lot like a bailout.
This has been on my radar since at least 2013. I focused on the derivatives bubble then. It’s amazing that it has lasted this long.
And, it can’t last much longer. This crisis will probably be the main story of this fall, rather than the clown-show of the U.S. election.
Sadly, the people “in charge” have no idea how to combat these problems, which they created. Their only solutions will be more of the same. For us, that means more suffering. prepare now; this could get very rough.