With Euro-zone banks showing renewed signs of crisis (Deutsche Bank deleveraging by a massive €425 billion over the past year- the fastest pace since the 2011 near-Euro collapse, and Barclays admitting a £12.8bn capital shortfall Tuesday) and fundamental indicators in the gold market screaming financial crisis (GOFO rates remain negative for nearly 20 days and massive inventory draw-downs at the COMEX & LBMA), The Doc spoke with Jim Willie Tuesday in an explosive MUST READ interview.
Willie, who recently stated that Deutche Bank is under major duress and could be the first major bank to collapse in the next stage of the banking crisis, informed The Doc that unlike the collapse of Lehman Brothers in 2008 which the Western Central banks were able to contain thanks to $13 T in bailout funds, a failure of Deutsche Bank would trigger a systemic banking contagion the likes of which the Western world has never seen.
When asked by The Doc how Deutsche Bank differs from Lehman Brothers in 2008, and what events could lead to a renewed banking crisis, Willie responded:
My best German source informs me that 3 major banks are in trouble, and these 3 banks are fighting every single night to fight off insolvency and failure. He says CitiGroup in New York, Barclays in London, and Deutsche Bank in Germany- every single night are in trouble.
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 3,4,5,6 or 10, or 15 other banks! It will be 1 or 2 quickly, then a 3rd and 4th a few weeks later, another, then before you know it, all of Italy and their major banks would be kaput.
My belief is that 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.
Believe it or not, 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 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.
For an example of how this works: Suppose you have a $250,000 bad business loan that is stinking up your credit report. So you call up your favorite Deutsche banker (or Goldman or Morgan- pick your criminal enterprise that is your personal favorite) and you tell him, look I have a $250,000 debt here and I want to make it go away. They say OK, we can do something clever here. We can pay off your debt so your credit report looks good, and we can establish this $250,000 Euro swap, and we’ll keep it off the books!
So you have this $250,000 bad loan stinking up your books, it goes away, and is replaced by something hidden- a euro currency swap! That’s precisely what was done on a larger macro scale by Greece and Italy- and Deutsche Bank is involved with several of these, and the total that is becoming disclosed is $400 Billion. Apply your typical ratios and you can conclude that they are $10, $15, $20 billion short for capital requirements!
The big banks are so criminal that they have converted fraud and criminal activity into a small cost of doing business!
MORE:
www.silverdoctors.com/jim-willie-if-deutsche-bank-goes-under-it-will-be-lehman-times-five/
One chart says it all:
More “Its all over town”
If “Europe Is Fine” Why Is Deutsche Bank Deleveraging At The Fastest Pace Since The Crisis of 2011?
www.zerohedge.com/news/2013-07-30/if-europe-fine-why-deutsche-bank-deleveraging-fastest-pace-crisis-2011
they’ve been recently downgraded, to a lower notch than lehman was right before it’s collapse…we won’t know if DB is the next LB until it happens of course, because it doesn’t become obvious until the spiral is extremely tight:
Is Deutsche Bank The Next Lehman?
www.zerohedge.com/news/2015-06-12/deutsche-bank-next-lehman
According to the Reserve Bank of India, “the traded amount of ‘paper linked to gold’ exceeds by far the actual supply of physical gold: the volume on the London Bullion Market Association (LBMA) OTC market and the major Futures and Options Exchanges was OVER 92 TIMES that of the underlying Physical Market.”
www.silverdoctors.com/the-coming-shortage-of-physical-gold-that-will-change-everything/
FP
If Deutsche Bank Goes Under It Will be Lehman Times Five!
Views:
Masterful, isn’t it? To back a medium of exchange with debt as it obligates the holder to perform debt service and still performs the task of currency velocity. We have replaced the backing of the state sanctioned medium of currency with an asset of intrinsic value with a promissory note of debt servicing performance all pledged by a performance of credit default swaps and collateralized debt obligations, upon which more derivatives were created to distribute risk without proper reserves to back a systemic collapse. According to FASB (and George Soros) we have derivatives to the 6th degree that creates a notional value of obligation of performance that exceeds 1 quadrillion US dollars in current value. Upon a systemic failure we will experience a jubilee to reset the value of all mediums of exchange (debt). What should be mindful of every person upon its collapse is to preserve the liberty and rights of each individual, lest we destroy one another out of paranoia and eclecticism. Failure to have faith. The ultimate leap in faith is to love and trust the one that fell from grace. Forgive your debtors as He forgives your debts.
Love your fellow human and honor them by your respect for life, as that is all that will prevent our self destruction. All your decisions should use the basis of reasoning of the golden rule; do un to others as you would want done to your self. That takes incredible courage.