Can Deutsche Bank survive?
Thus, it is a fallacy to believe that governments and central banks are the only money printers. Most of the false wealth is created by commercial banks that blow up their balance sheets 10 to 50 times. And if derivatives are included the bank’s exposure can be over 100 times the equity. Take Deutsche Bank for example; the total balance sheet exposure is 25 times equity. Adding their derivatives exposure of €68 trillion, Deutsche’s leverage is 100 times share capital and reserves. This means that a depositor hoping to get his money back from the bank should be aware that any loss above 1% of Deutsche’s assets would make them bankrupt. There is obviously no question that Deutsche will lose only 1%. They are virtually guaranteed to lose more than 10% and probably at least 50% of total assets which means that if you are a depositor you will definitely not get your money back. Most European banks are in a similar position and so are many US banks including JP Morgan, Bank of America and Citigroup. And don’t believe that Japanese, Chinese or Emerging Market banks are in a better position. This is of course the reason why most major banks’ share prices have fallen 75-95% since 2006. |
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