Deutsche Bank’s brutal overhaul is sign that global financial system is in trouble – Jim Rogers

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…from Russia Today, Moscow

[ Editor’s Note: There was not a lot of commentary on the Deutshce Bank announcement of laying off 18,000 employees. Everyone was expecting a retrenching there but we have not seen a big bank layoff like this in some time.

I think writers like myself were holding their cards to learn a little more of where the cuts were to focus on trying to figure out what the new bank would look like.

Surprisingly there has been little talk of who could be next, and the context for this is not banks going under but retrenching. For Germany, Deutshce Bank is too big to fail, and we have all been there before.

We have not been thinking of one big bank going down to take a number of others with it. We have expected that domino chain to be set off by a major shooting war in the Persian Gulf where the spike in oil prices would start triggering payment defaults in the short term money markets, particularly the overnight market. We have been there before, too.

If that happened Trump’s 2020 chances would go down with the banks, the economy and the stock market, hence you see his carrot and stick game continuing on with Iran but making the bullet in the head mistake of thinking he can force Iran into negotiations at gunpoint. Instead Iran is retrenching itself, cutting $5 billion from its budget.

Iran might even prefer a shooting war at that point as the planet would be screaming for Trump’s head. Trump has to be aware of that so a really big and bad false flag attack would have to be used to trigger a war, which is harder to do and get away with when everyone is expecting it.

Trump is already the most despised American president in history. But adding an endless number of people and businesses wiped out in a world recession could find American embassies under siege, a sad thing to seeJim W. Dean ]

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Shearing the sheep and bringing in the cash

First published … July 8, 2019

When traditionally stable institutions like Deutsche Bank find themselves in trouble, it’s a signal that the world’s financial system will face big problems down the road, legendary investor Jim Rogers has told RT.

On Monday, the German multinational investment bank –and the world’s 15th largest bank by total assets– started cutting thousands of jobs as part of an $8.3 billion overhaul announced one day earlier.

The bank’s workforce is set to be reduced by 18,000 to around 74,000 employees by 2022, as Deutsche Bank scraps its global equities and trading operations. The move has already impacted the bank’s shares, which started to fall after initial 4 percent gains on Monday.

“The financial system is in trouble and this is just one sign of what is going on. This has happened in previous financial problems in the 1930s or the 1960s or the 1990s,” Rogers said in a phone interview with RT. He explained that central banks around the globe drove interest rates “to crazy levels,” and now we have to pay the price for that.

This led to what “we think is a stable and sound [bank] start making speculative loans… and then what used to be strong banks get in trouble.”

Deutsche Bank’s major overhaul does not mean it will not survive, according to Rogers. However, the bank will never be the same and “this is serious trouble” for the lender as well as the entire financial system, the investor believes.

Rogers offered a reminder that some stable banks went bust when nobody expected it, as was the case with Lehman Brothers in 2008 or with another old bank, British Northern Rock.

“And it is happening again. If you go to Scandinavia you see some of those banks that have been around for years are in trouble now. This is nothing more than a sign of the times and we’re going to have a lot of problems down the road,” the investor said.

However, according to Rogers, Deutsche Bank is unlikely to collapse due to multiple warnings and enormous government efforts to support it. Rogers went on to explain that collapses occur unexpectedly and it’s when the global markets can crash.

“If Deutsche Bank were to collapse it would be a surprise. It would cause the global market to start to decline,” he said, adding that it would create a “snowball” that would see other major banks follow the same path.


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2 COMMENTS

  1. If DB’s equity trading business collapse was predictable, by deduction we can then predicate that the rest of the equity trading QE welfare userers will soon close shop. What’s left? Organ harvesting, human trafficking for the brain initiative?

  2. I’ve always kept on eye on real estate markets. I used to check the filed closings each week and sometimes go to auctions to see who is buying and how the process changes. There are some bizarre facets to the laws here in NY and how the banks get around them also fascinating at times. I was watching a house in my neighborhood, going through the motions and offering the place at the ridiculous price of the original mortgage plus all the fees, nobody ever buys these at this point in the process. It is 3 times what it is worth. but, low and behold Deutsche Bank, bought it for the asking price. This was but a few years ago, and I said, wow, that’s interesting, they are buying toxic assets from other banks. Interesting strategy.