I’ll Go With “Systematic Issue”

Specifically, it’s a systematic decline caused by systematic dishonesty and corruption.

Deutsche Bank

The simultaneous decline of Volkswagen, Deutsche Bank (DB), and Bayer has been nothing short of stunning. It raises the question as to whether it is merely coincidence, or if there is a larger systemic issue in play.

At Harvard’s 368th Commencement this past Thursday, German Chancellor Angela Merkel spoke of her life experiences growing up during the Cold War in post World War II Europe.

On this cool and overcast day, she also gave advice to the graduates on how to live their lives. She obliquely mentioned the trade war and indirectly criticized President Donald Trump — which got a round of applause. She even quoted the German poet, Hermann Hesse, saying “in all beginnings dwells a magic force for guarding us and helping us to live.”

There was one topic, however, that Merkel didn’t broach, perhaps not surprising given the celebratory nature of the day. Merkel made no mention of the economic dysfunction and even decay that seems to be infecting Germany — particularly when it comes to Germany’s largest and most prominent companies. The simultaneous decline of Volkswagen, Deutsche Bank (DB), and Bayer has been nothing short of stunning. It raises the question as to whether it is merely coincidence, or if there is a larger systemic issue in play. Either way, something is rotten in the state of Germany.

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Deutsche Baaaank

It looks like it’s going to be a long fall.

Deutsche Bank

Sorry, I mean it already has been a long fall. But at least this fall is free.

It would be an understatement to say Deutsche Bank AG is going through a difficult period. It chalked up its third straight annual loss in 2017. The new chief executive officer, Christian Sewing, has unveiled the bank’s fourth turnaround plan in as many years, yet its shares have fallen to a record low…

How much time does the bank have? Not a lot.

Der Aktienkurs der Deutschen Bank ist auf ein neues Allzeittief gefallen. Am Mittwochmorgen notierte das Papier bei 8,76 Euro – ein Trauerspiel mit Vorgeschichte.

Bargain Basement Time!

Looking for a stock steal? Try the Deutsche Bank. Those stealing bankers are a steal of a deal!

Deutsche Bank

The Federal Reserve has designated Deutsche Bank AG’s sprawling U.S. business as being in a “troubled condition,” a rare censure for a major financial institution that has contributed to constraints on its operations, according to people familiar with the matter.

The Fed’s downgrade, which took place about a year ago, is secret and hadn’t previously been made public. The “troubled condition” status—one of the lowest designations employed by the Fed—has influenced the bank’s moves to reduce risk-taking in areas including trading and lending to customers…

The shares closed down 7.2% in Frankfurt, at €9.16, their lowest close on the Xetra exchange, according to data going back to 1991.

Bei der Deutschen Bank reißen die Negativ-Meldungen nicht ab: Am Donnerstag war die Aktie mit 9,157 Euro und damit dem niedrigsten Schlussstand seit Anfang der Achtzigerjahre aus dem Handel gegangen.

German Of The Day: Deutsche Bank

That means German Bank.

Deutsche Bank

And it’s getting hard to find a financial scandal that this bank is not involved in. When it comes to corruption and criminal activity, it’s the Volkswagen among the banks, you could say. Or the Audi, if you prefer.

Today’s criminal activity: U.S. authorities have tried to seize millions of dollars associated with several companies that deal with North Korea, including the country’s military, from eight large international banks, according to court filings made public on Thursday. Deutsche Bank is among them.

Some of the transactions were processed for Dandong Zhicheng Metallic Material Co and four affiliated “front” companies that prosecutors said tried to evade sanctions through transactions that would benefit North Korean entities, “including the North Korea military and North Korea weapons programs,” according to the filings.

Amerikanische Staatsanwälte haben die Deutsche Bank und sieben weitere Banken im Visier. Der Grund: Sie sollen Geschäfte mit nordkoreanischen Tarnfirmen gemacht haben.

German Government Fears Trump Would Ravage American Economy

But I happen to have access to a German code breaking machine here called the Enigma-Not and it tells me that what this actually means is that the German Government fears Trump would ravage the German economy.

Trump

When I ran “shrinking gross domestic product, fewer jobs and higher unemployment in the United States” through the Enigma-Not, for instance, it gave me  “NATO countries like Germany, Trump has said, have to pay more of the costs for their own security in the future. Otherwise, the US would withdraw its troops.”

Meanwhile… Trump’s biggest lender is Deutsche Bank. He owes about $300 million to the bank, nearly half of his outstanding debt.

German Of The Day: Albtraum

That means nightmare. You know, like Nightmare on Elm Street? Or Nightmare at Deutsche Bank?

Deutsche Bank

Read my lips, the usual suspects are saying: Everything is fine, the German government is not preparing a bailout, there have been no secret talks with the chancellor and there is nothing here that needs to be rescued in the first place. Now say that ten times really fast.

The German government denied it was working on a rescue of Deutsche Bank as Germany’s biggest lender boosted its balance sheet by selling its British insurance business on Wednesday.

Deutsche is facing a $14 billion fine from the Department of Justice, and concerns over its funding pushed its shares to a record low on Tuesday and heightened concerns about the health of the financial sector in Europe’s largest economy.

“Die Situation des Konzerns ist viel besser, als sie von außen wahrgenommen wird.”

Brilliant “Master Solution” Falling Apart

When “good guys” like the Deutsche Bank get raided after being suspected of incorrectly claiming some €211 million in tax rebates from the trade in carbon tax certificates, then it’s time to also suspect that the days of this nonsensical European emissions trading have finally reached their end.

Cap-and-trade

In case your were wondering: Emissions trading or cap-and-trade is a market-based approach used to control pollution by providing economic incentives for achieving reductions in the emissions of pollutants.  A central authority (usually a governmental body) sets a limit or cap on the amount of a pollutant that may be emitted. The limit or cap is allocated or sold to firms in the form of emissions permits which represent the right to emit or discharge a specific volume of the specified pollutant. Firms are required to hold a number of permits (or allowances or carbon credits) equivalent to their emissions. The total number of permits cannot exceed the cap, limiting total emissions to that level. Firms that need to increase their volume of emissions must buy permits from those who require fewer permits.

Well, it turns out that the European “carbon market” is now flooded and recent EU efforts to fix the system have only served to highlight how lame it is, yada, yada, yada, thus further eroding the price of a ton of carbon dioxide emissions permitted. Government intervention at its best again, in other words.

You know how that old saying goes: “The nine most terrifying words in the English language are ‘I’m from the government and I’m here to help.’

EU-Klimakommissarin Connie Hedegaard will den Preisverfall der CO2-Zertifikate stoppen, der nach ihrer Meinung ein System unterminiert, das einst als Meisterlösung für die weltweite Klimaverschmutzung gepriesen wurde.

Good Bank Bad Bank

Amerikanische Banken sind böse, deutsche sind gut.

Deutsche Bank AG, whose bets against subprime mortgages helped it weather the financial crisis, pressed to sell a $1.1 billion collateralized debt obligation to clients in 2007 as the co-head of its CDO team foresaw a market slump, a U.S. Senate panel found.

Lippmann (not the co-head but then-top CDO trader), whose bets against the housing market were also described in Michael Lewis’s “The Big Short,” had repeatedly tried to warn co-workers and clients in 2006 and 2007 about the poor quality of the mortgage securities underlying many CDOs, according to the report. The return on his bets against mortgages “was the largest profit obtained from a single position in Deutsche Bank history.”

“Keep your fingers crossed but I think we will price this just before the market falls off a cliff.”

So how do German financial experts react to the big short CDO scam and the crisis that followed? How else? American banks have to take the responsibility for what happened.

“Im Nachgang der Finanzkrise müssen sich amerikanische Banken verantworten.”