If you have been waiting for “the next Lehman Brothers moment” which will cause the global financial system to descend into a state of mass panic, you might want to keep a close eye on German banking giant Deutsche Bank. It is approximately three times larger than Lehman Brothers was, and if the most important bank in the strongest economy in Europe were to implode, it would instantly send shockwaves rippling across the entire planet.
The following comes from Zero Hedge...
“A month after admitting to rigging precious metals markets, Deutsche Bank has been hit with a double-whammy of more alleged fraudulent behavior today and the stock is sliding. First, Reuters reports that the bank took a charge of 450 million euros for “equity trading fraud,” and then Bloomberg reports that The SEC is looking into Deutsche’s post-crisis mortgage positions.”
This is a bank that is steadily bleeding money, and so the last thing that it needs is for government agencies to be putting immense pressure on it.
But even if there were no scandals and no government investigations, the truth is that Deutsche Bank would be a deeply troubled bank anyway. At one point, it was estimated that Deutsche Bank had 64 trillion dollars worth of exposure to derivatives contracts. That is an amount of money that is approximately 16 times the size of the GDP of the entire nation of Germany. So nobody wants to see Deutsche Bank fail. It would be a financial disaster unlike anything the world has ever experienced before.
Earlier this year, Deutsche Bank’s stock price set a new record low, and since that time it has been hovering just above that record low. Clearly it is no secret that Deutsche Bank is having big problems, and the outlook for the immediate future is not good.