Greg Hunter – Financial writer Bill Holter says if you want to know how bad the global financial problems are in the world, start with Germany’s Deutsche Bank (DB). The problems keep mounting, and it’s been all downhill since June when the International Monetary Fund (IMF) deemed DB as the most systemically dangerous bank in the world. Holter warns, “Deutsche Bank is dead. It’s a walking dead institution. . . .Just the fact that there is a debate, whether or not there’s a problem, means they’re dead. Once you start talking about a financial institution and whether or not they are solvent or not, it doesn’t matter. The sharks are going to come into the water.”
There is much more wrong than just the one global mega bank in trouble. Holter goes on to point out, “The markets need to be and pretty much have been locked down. We’ve seen virtually zero volatility in the stock market, and even the credit markets have been nonvolatile for the last two or three months. The reason being when volatility picks up, then margin calls happen. When you’ve got an illiquid system, you can’t allow margin calls to occur because margin calls can’t be met.”
Holter, who has decades of financial and broker experience, circles back to DB that he estimates has a $15 billion market cap. This may seem like a lot of money, but Holter contends it is not much with trillions of dollars in derivative exposure.
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Holter explains, “$15 billion would not even cover a 1% move in their book. A 1% move would be something like $50 billion. So, they (DB) are so undercapitalized that any type of margin call turns them upside down. Deutsche Bank is one of the biggest links in the derivatives chain. If they break, the whole thing goes. . . . This is not a Bill Holter opinion. This is math.”