Deutsche Bank “Is Probably Insolvent”

Deutsche Bank “Is Probably Insolvent”  by Tim Price

This is getting to be a habit. Previous late summer holidays by this correspondent coincided with the run on Northern Rock, and subsequently with the failure of Lehman Brothers. So the final crawl towards the probable nationalisation of Deutsche Bank came as no particular surprise this year, but it is tiresome to relate nevertheless.

The 2015 annual report for Deutsche Bank runs to some 448 pages, so one rather doubts if even its CEO, John Cryan, has read it all, or has a complete grasp of, for example, its €42 trillion in total notional derivatives exposure.

Is Deutsche Bank technically insolvent? We’d suggest that it probably is, but we have no dog in the fight, having never either owned banks, or shorted them. And like everybody else we assume that some kind of fix will soon be in – probably one that will further vindicate exposure to gold, both as money substitute and currency substitute. Professor Kevin Dowd, asking whether Deutsche Bank ist kaputt, suggests that the bank’s derivatives exposure is difficult to assess rationally; the value of its derivatives book

“is unreliable because many of its derivatives are valued using unreliable methods. Like many banks, Deutsche uses a three-level hierarchy to report the fair values of its assets. The most reliable, Level 1, applies to traded assets and fair-values them at their market prices. Level 2 assets (such as mortgage-backed securities) are not traded on open markets and are fair-valued using models calibrated to observable inputs such as other market prices. The murkiest, Level 3, applies to the most esoteric instruments (such as the more complex/illiquid Credit Default Swaps and Collateralized Debt Obligations) that are fair-valued using models not calibrated to market data – in practice, mark-to- myth. The scope for error and abuse is too obvious to need spelling out.”

[As Compass Point’s Charles Peabody exclaims “I defy any analyst to tell me what that {derivative} portoflio is worth.”]

Watching ‘The Big Short’ again over the weekend, it seems as much like the shape of things to come as a witty, if poignant, documentary about a historic failure of common sense. Nobody learns anything. It is eight years since Lehman Brothers failed, and the financial system, especially in Europe, would seem to be in no better shape now than it was back then, going by the health of some of the region’s major banks, and also Barclays. This also means that of this correspondent’s quarter century career to date in asset management, at least a third of that period, and probably closer to a half, has seen the industry in a state of acute crisis. The universal onset of crisis fatigue amongst market participants may, then, account for the mood of general complacency that has so far accompanied Deutsche Bank’s slide towards insolvency if not yet outright irrelevance.

“Never let a good crisis go to waste,” Winston Churchill allegedly said. But Europe, for one, squandered all of those eight years. This is just one of many reasons why we voted Out. With luck the UK will manage to extricate itself from the EU chamber of horrors before the roof finally falls in.

On the fifth anniversary of Lehman Brothers’ bankruptcy, itself six months after the bail-out of Bear Stearns cited in the transcript above, Michael Lewis, author of the original ‘Big Short’, was asked in an interview with Bloomberg BusinessWeek whether he thought the company had been unfairly singled out when it was allowed to fail (given that every other investment bank would then be quickly rescued, courtesy of the US taxpayer).

His response:

“Lehman Brothers was the only one that experienced justice. They should’ve all been left to the mercy of the marketplace. I don’t feel, oh, how sad that Lehman went down. I feel, how sad that Goldman Sachs and Morgan Stanley didn’t follow. I would’ve liked to have seen the crisis play itself out more. The problem is, we would’ve all paid the price. It’s a close call, but I think the long-term effects would’ve been better.

We happen to agree… and it appears so do the professionals… (See CDS chart above)

*  *  *

A month from now, we’ll publish our new book: ‘Investing Through the Looking Glass: a rational guide to irrational financial markets’. It covers en passant the Lehman crisis, of course, but also the much wider financial landscape: a multi-decade bubble in debt for which Deutsche Bank may yet serve as the terminal pin, the fundamental and seemingly intractable problems with bankers, central bankers, economists, fund managers, and the financial media. Few prisoners are taken. Few deserve to be. Lest this sound like a counsel of despair, ‘Investing Through the Looking Glass’ also offers practical and pragmatic suggestions for protecting and growing scarce investor capital amid the concurrent waves of deflation and inflation crashing against one of the most challenging financial environments that anyone alive has ever seen.

Tim Price is a London-based wealth manager and editor of Price Value International. This article was published on Sovereign Man and edited by Zero Hedge

Gold and Silver Bullion – News and Commentary

Pound Tumbles to Three-Decade Low as Angst Over Brexit Persists (Bloomberg)

Options market is betting on further declines for Deutsche Bank shares (CNBC)

Gold holds losses on firm dollar after positive U.S. data (Reuters)

Gold Holds Last Week’s Decline as Deutsche Bank Concerns Ebb (Bloomberg)

U.S. construction spending falls in headwind for third quarter GDP (Reuters)

Gold Might Rally By 50% (SeekingAlpha)

Deutsche Bank Stock Reopening Bounce Fades As CDS Hit Record Highs (ZeroHedge)

Summers Floats Idea of Sustained Government Stock Purchases (Bloomberg)

Coming: The Next Recession (MauldinEconomics)

Recession Is Coming — Heed This Advice From Mid-Market CEO Convention Speakers (Forbes)


Gold Prices (LBMA AM)

04 Oct: USD 1,309.15, GBP 1,026.90 & EUR 1,172.21 per ounce
03 Oct: USD 1,318.65, GBP 1,023.40 & EUR 1,173.99 per ounce
30 Sep: USD 1,327.90, GBP 1,025.01 & EUR 1,187.67 per ounce
29 Sep: USD 1,320.85, GBP 1,016.92 & EUR 1,177.14 per ounce
28 Sep: USD 1,324.80, GBP 1,020.10 & EUR 1,181.06 per ounce
27 Sep: USD 1,335.85, GBP 1,031.01 & EUR 1,187.84 per ounce
26 Sep: USD 1,336.30, GBP 1,033.23 & EUR 1,188.91 per ounce

Silver Prices (LBMA)

04 Oct: USD 18.74, GBP 14.68 & EUR 16.78 per ounce
03 Oct: USD 19.18, GBP 14.89 & EUR 17.07 per ounce
30 Sep: USD 19.35, GBP 14.92 & EUR 17.33 per ounce
29 Sep: USD 19.01, GBP 14.61 & EUR 16.95 per ounce
28 Sep: USD 19.12, GBP 14.69 & EUR 17.05 per ounce
27 Sep: USD 19.42, GBP 14.99 & EUR 17.26 per ounce
26 Sep: USD 19.44, GBP 15.04 & EUR 17.29 per ounce

Recent Market Updates

– GBP Gold Rises 1.3% as Sterling Slumps On ‘Hard Brexit’ Concerns, Up 36% YTD
– Why Krugman, Roubini, Rogoff And Buffett Hate Gold
– ECB Refused “To Answer Questions” – Deutsche Bank “Systemic Threat” Is “Not ECB Fault”
– Euro “Might Start To Unravel” If Collapse Of Deutsche Bank
– Do You Really Own Your Gold?
– “Gold Will Likely Soar To A Record Within Five Years”
– Savings Guarantee? U.N. Warns Next Financial Crisis Imminent
– Gold Up 1.5%, Silver Surges 3% – Yellen Stays Ultra Loose At 0.25%
– Trump and Clinton Are “Positive For Gold” – $1,900/oz by End of Year
– Gold Bugs Rejoice – Central Banks Think You’re On To Something
– ‘Hard’ Brexit Looms For Ireland
– EU Bail In Rules Ignored By Italy – Mother Of All Systemic Threats and World War?
– Buy Gold – Bonds Are ‘Biggest Bubble In World’ – Billionaire Singer Warns

Mark O'Byrne
Executive Director

  • Black Swan

    Probably insolvent?
    ” When you see that in order to produce, you need permission from men who do nothing. When you see money flowing to those who deal not in goods, but in favors, when you see that men get rich more easily by graft than by work, and your laws no longer protect you from them, but protect them against you. You may know that your society is doomed.” Atlas Schrugged: Ann Rand

  • Klaatu Fabrice Aquinas

    Probably Insolvent?

    I’m going to suggest it is much more than that ..

    It is a matter of owing someone money ..

    Money they (DB) received, that was quite frankly stolen ..

    Where did the money come from, that was — stolen?

    I believe when someone makes such an assertion ..

    They should be at the very least, allowed to support their assertion ..

    So please hear me out ..

    This is going to be lengthy ..

    To support my claim, this is what it will take ..

    Thesis: DB received stolen money. They shared this stolen money with other entities including the “Big 4” (top banks in the USA); Goldman Sachs, and AIG. The total sum of this “money” is owed to and belongs to one individual. He earned this money legally. It is his money. He will go down in history as one of the most important humans that ever lived.

    I warned that this will be long ..

    To begin with some context ..

    I initially formulated my thesis on my Facebook (FB) page, which for some time has been my primary blog ..

    Since I know not everyone has an FB account, I can’t simply refer to my FB page ..

    I will have to summarize here what goes on there, attempting to keep the proper context ..

    My thought process begins with having a good thorough background of two individuals ..

    Benjamin Fulford
    Amb Lee Wanta

    These two are working partners at Veterans Today (VT) ..
    VT is a website, but it is also and initially was a public access private open-source intelligence gathering and reporting portal ..


    I am a veteran (USMC). I do have a background in commuications and intelligence/counter-intelligence. I am a “cold [war] warrior.”

    Fulford is a reporter and an editor (worked at Forbes at one time) ..
    Wanta is many things; primarily a financial genius and a professional intelligence operative ..

    Fulford writes a paid subscription newsletter. For some reason(s), he allows his reports in full published at another private website. And he supports [financially] that “sister” site ..

    I will begin with his latest published report ..


    In the context of how I understand Amb Wanta (known of and have studied him since 2012), I first respond thus ..


    I have always complained about others ..

    Trying to explain things ..

    As though Amb Lee E Wanta does not exist ..

    They give examples that are almost verbatim ..

    Right out of the Wanta material available to the general public ..

    But, they exclude credit to Wanta ..

    And the DETAILS formed to fit another [false] narrative ..


    (Dr. Jim Willie is exceptionally guilty of this. Even the Trump Team has been caught doing this.)

    In the latest Fulford report ..

    I’ll quote ..

    “The 23 trillion dollars thus magically created were used by the owners of the Federal Reserve Board to buy on the cheap assets around the world whose value had crashed because of the engineered Lehman shock crash, the sources say. “This has amounted to the largest criminal theft of global assets in history using digital money created on computers, backed by nonexistent Gold,” was how one CIA officer described the scam. This huge fraud vastly increased the concentration of the Khazarian mafia’s ownership of the world’s corporations and assets.”

    Okay, allow me to make reference to one of my videos ..


    Halfway through this, I add an annotation ..

    This annotation continues through the entire video, with the option to close it at any time ..

    “The initial and original agreement (compromise) called for Wanta is accept a sum, at the time of the court hearing in May 2006, of some $4.5 TRILLION out of the accumulated total of $27.5 TRILLION. The remainder going to the U.S. Treasury, for the People. To reduce the national debt, trade deficits, and build new national infrastructure. The agreement was conditional upon all parties to deliver said amounts. In short, the USG breached the agreement and Wanta is now legally bound to receive the entire amount of his profits. Which to date is approaching $33 TRILLION ..”

    Okay, basic math here ..

    $27.5 trillion – $4.5 trillion = ?

    “The 23 trillion dollars thus magically………………………..”

    What? Appears?


    It’s part of the $27.5 TRILLION!


    Okay Ben ..

    Your theme ..

    Your gist ..

    Is correct ..

    Your details ..

    Are OFF!


    You completely blow the context here ..

    You were poisoned once ..

    You admitted that ..

    You’re afraid of something ..

    Like Willie, like [Bill] Holter, like [Jim] Sinclair, like [David] Stockman, like [Paul Craig] Roberts, et al ..

    You’re a Bureau Chief at Veterans Today ..

    You’re a former Bureau Chief at Forbes Magazine ..

    You’ve been vetted ..

    Something else is going on here ..


    That was my first reaction ..
    Then I though some more, and posited the following ..


    This gets difficult ..

    We now begin to understand ..

    Intelligence gathering and reporting ..

    It is …………. a “hall of mirrors.”

    It is an art and a science ..

    And, it is more than that ..

    Amb Lee E Wanta is a subscriber to Ben Fulford’s newsletter ..

    We know that, because of his comments in Ben’s closed forum ..

    Restricted to paid clients ..

    Wanta is also a “working partner” with Ben at Veterans Today ..

    Now Gordon [Duff] has described VT staff members in bar room brawls ..

    I don’t suggest that Fulford (50s/60s) vs. Wanta (70s) in a bar room brawl ..

    Just that, they don’t agree at times ..

    Anyone that frequents VT, is well aware of the diverse opinion ..

    Present there ..

    Well, post reading the latest Fulford ..

    I perused the comments sections ..

    Always some good meat there ..

    Lo and behold, I come across THREE (3) posts by Amb Wanta ..

    They’re quite lengthy ..

    All THREE of them ..

    They’re pretty juicy ..

    Wanta basically challenges Fulford’s — context ..

    Too long to post verbatim here ..

    I’ll give the link, and simply search for “leowanta”


    This is the most fascinating in Wanta’s first post @ 2:42 am (Tokyo) ..

    “Deutcha bank owes me the stolen money to include interest lost on my money….they must/shall pay it back…it was stolen from me without my knowledge …Thank God for a certain investigative reporter that made a video of the theft to explain what he found on about the 2008 bail-out September 17, 2008…i have a copy of that video, Goldman Sacs destroyed the truth of the video to remove the $23T given to them…. Goldman also took over AIG then Paulson/Bernanke/Geithner went to congress to get $700B TARP money to coverup the AIG bailout, making Geithner/us tresurey owner of AIG….the 5th amendment taking clause states that the government cannot TAKE possession of anything…therefor the complete 2008 bailout was total fraud/grand theft of my money. All of it has to be returned.”

    In previous paragraphs, Wanta calls DB — Douche Bank ..

    Wanta, the comedian ..

    Okay, stop and comprehend this ..

    Wanta mentions the “investigative reporter.”

    I believe that is Christopher Story; aka Edward Harle ..


    Story/Harle was a working partner with Wanta ..

    I’m going to make reference to this ..


    I’m going to quote from the above link ..

    “As reiterated above, the $4.5 trillion Settlement with Leo Wanta represented a compromise, which would have left the remaining original $23+ trillion, now worth about $58.5 trillion, uncollected – and would have let the co-conspiratorial banks in Europe and elsewhere that have long since assumed these resources to be uncollectable and usable as collateral for their own purposes, off the hook. But since The Wanta Plan has not been implemented, the entire original $27.5 trillion (now worth about $70+ trillion) is collectable; and since so much of this money has been stolen, Ambassador Leo Wanta will wind up owning a sizeable number of large financial institutions, if the funds are not disgorged as will be required. Alternatively, sizeable banks will go to the wall, and their supervisory central banks will be obliged to pay Wanta what these banks owe him, to authorise control to be passed to Leo Wanta, or else to nationalise the banks in question.”

    To reiterate a portion of the above ..

    “…and since so much of this money has been stolen, Ambassador Leo Wanta will wind up owning a sizeable number of large financial institutions…”

    The above is quoted from Story/Harle ..

    Let’s just cut to the chase here ..

    Deutsche Bank AG
    Total assets €1.629 trillion (~1.820 USD)

    The Goldman Sachs Group, Inc.
    Total assets $ 861 billion

    American International Group, Inc. (AIG)
    Total assets $ 515.6 billion

    Source: Wikipedia (over or UNDER stating here?)

    Above stated combined
    Total assets: $3.1966 trillion

    Less than $4 T total!

    Wanta is owed ..

    $23 TRILLION ..

    So the above totals are roughly ..

    $3.2 T ..

    We have a deficit still of ..

    ~19.8 T ..

    owed to Wanta ..

    Stolen money ..

    Gee, where else could it be had?

    Perhaps, JPMC was involved?

    JPMorgan Chase & Co.
    Total assets $2.424 trillion

    That still leaves a considerable deficit ..

    How about BofA?

    Bank of America Corporation
    Total assets $2.185 trillion

    Hmmm ..

    JPMC less than 3 T, BofA barely 2 T ..

    Call it 5 T combined ..

    Okay, still got a almost a 15 T deficit ..

    Let’s try Citi! (Where Wanta had his confrontation in NYC in ’06)

    Citigroup Inc.
    Total assets $1.801 trillion

    Less than 2 T; not even a dent ..

    How about Wells Fargo!

    Wells Fargo & Company
    Total assets $1.849 trillion

    Call it 4 T?

    We’re still at 10+ T shortfall ..

    Well that is the big 4; plus Goldman Sachs; plus AIG; plus DB ..

    So far ..

    WANTA ..

    OWNS ..

    Deutsche Bank AG
    The Goldman Sachs Group, Inc.
    American International Group, Inc. (AIG)
    JPMorgan Chase & Co.
    Bank of America Corporation
    Citigroup Inc.
    Wells Fargo & Company

    He’s still owed ..

    10 TRILLION!

    We have not even figured the interest yet ..

    So who else can we tap?

    For 10 T + interest (~40 TRILLION)

    Are we comprehending this now?

    So, Why can’t Fulford, Willie, et al simply report this?

    Not sexy enough?

    Do we need to add ..

    Dancing Girls? (To explain this; I do “other” things on the side: https://www.youtube.com/user/fooser77)