LETTER
Brexit? How about imminent global bank failure
Amongst all the Brexit hyperbole, few people have noticed the accelerating deterioration of the state of Deutsche Bank. Its share price on the German and international stock exchanges continues to tank. Seems obscure, doesn't it? But if Canadians knew of the dire straights of this German bank, many would rush to get to their own bank before the tidal wave of disaster hits. However much damage the failure of Lehman Brothers did in 2009, it is as nothing compared to what Deutsche Bank will do, should it fail.
Using massaged figures, one recent, highly conservative estimate put the assets of Deutsche Bank at NEGATIVE $200 billion; however, using more realistic accounting, based on the sort of figurework that normal businesses use, suggests that Deutsche Bank is already in the hole for more than $600 billion (roughly twice the national debt of Greece). Even this, however, fails to take into account the bank’s exposure to derivatives - should these go wrong, and all indications are that these too are heading south - that could leave the bank with a debt exposure somewhere in excess of $73 TRILLION. That is almost exactly the same as the asset value of the entire world.
It is hard to see how the bank can claw its way out of this mess when it has already been busted as a leading light in the LIBOR rigging scandal and has just agreed to settle out of court over allegedly rigging the London Gold Market with the assistance of other banks, with whom it seems to have a deeply unhealthy close relationship.
Worse still are ideas by the European Union and the German government potentially to bail out Deutsche Bank -- it would be the equivalent to attempting to rescue the sinking SS Titanic by attaching it by rope to an elephant on a nearby cliff top: the hole at the centre of Deutsche Bank is so vast it will swallow any Government that tries to rescue it.
Without anything big enough to rescue it short of a mass landing by alien spaceships laden with gold bullion, failure is almost inevitable, setting in motion not only a colossal domino collapse of western banking, but since Deutsche Bank has forked out wads of money holding the gold price down artificially, it will also result in the price of gold (and silver) powering into the stratosphere, $3,000, $6,000 or more an ounce, just for starters, and the consequential soaring interest rates, well into double figures that will bankrupt the vast majority of home-owners in Canada and reduce land prices to levels comparable to the change from a cup of coffee at Tim Hortons.
Robert L Thompsett
Aylmer
