Economic warning: Why everyone should be following Deutsche Bank

June 17, 2019

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Can you remember the economic crisis of 2008 and how you felt when the news broke that Lehman Brothers had collapsed? I have found an economic threat that everyone needs to be aware of, so you can prepare yourself in case we see another 2008 type collapse. I am going to present the evidence to you and I urge you to verify everything and to form your own opinion.

What is that threat?

It is a bank called Deutsche Bank. They are by far the most dominant bank in Germany which is the world's fourth-largest economy. In 2018 they had €2.08 Trillion worth of assets and the second-placed bank (DZ Bank) had €506 Billion worth of assets. To show you how dominant this bank is, they have more assets than the 2nd, 3rd, 4th, 5th and 6th sized banks combined.
When we review a business there are three key parts to analysis:

Market sentiment
Business numbers
Technical Analysis

Market Sentiment

Deutsche Bank has a long history of potential scandals including going all the way back to World War 2 and dealing in Nazi gold. Below are five recent stories which have increased the negative sentiment around Deutsche Bank.

In 2007, they purchased a portfolio of loans worth $7.8 billion and purchased insurance from Warren Buffets Company. It was discovered they did not set aside enough capital to cover any potential losses. Over the course of the ten years, they lost $1.6 billion, and when they sold the loan they did not update their financial statements to include the big loss
The Panama Papers are an ongoing investigation looking for many things including offshore tax havens. These investigations have resulted in several heads of state resigning including in Iceland and Pakistan. Last November, 170 police raided 6 different offices in Frankfurt looking for evidence of money laundering.
Estonia is a small country in Eastern Europe. It has a population of 1.3 million people and a GDP of €26 billion. In January, it was discovered Deutsche Bank got involved with a Danish bank called Danke Bank and processed over $230 billion worth of cross country payments (including from Soviet Russia) through one bank in Estonia.
There have been rumors of issues with Deutsche for a while now and one of the solutions put forth was a merger with a bank called CommerzBank. The leaders of both companies met and they even got support from politicians. In April, news broke that the merger talks had failed because over worries the risks and costs would be too great.
Last week in France, Investment banking boss Garth Ritchie and others were arrested in France over illicit tax transactions.

Business Numbers

Deutsche Bank is already struggling as they are losing staff, losing market share, and bonuses are expected to be down at least 10% and further rounds of cost-cutting to come. Now imagine the impact if business costs start going up.

The banking industry works in a very simple way. They raise funds through large bonds at low-interest rates and then sell those funds to business and individuals thru products like loans and credit cards at a higher interest rate which results in a potential profit.

Earlier this year, Deutsche Bank tried raising money through several bonds. They paid 180bp (basis points) on a two-year bond and 230bp on a seven-year bond. Let me put this in context for you. There is a small bank in Spain called Caixabank which paid 225bp on a five-year bond and one of the larger banks in Spain, BBVA paid 130bp on a five-year bond.

How and why is a small bank in Spain getting a better deal on bonds than a huge bank in Germany?
Why is a large bank in Spain getting a bond 100bp cheaper than a German bank?
What does the market know that we do not?

Stock Price

Deutsche is also missing revenue projections which further hurt the business ability to survive and prosper. As you can imagine all of this news has a deep and lasting impact on its stock price which is in deep trouble. Before I share the stock price, I need to put this into the context of the market and the industry compared to the big economic crash of 2008. Below you will see a chart of some banking stocks from around the world with their peak price prior to the 2008 crash, the low of the 2008 recession and the price today:

As you can see from the above chart the banks in America have recovered from the 2008 recession by anywhere up 375% and JP Morgan has not only recovered its price in full but is constantly setting new high's. Ireland went bankrupt and had to be bailed out by the EU/IMF following the 2008 crash and even our national bank has more than doubled its price since 2008. The worst performing bank I could find was Societe Generale which has issues but is still hovering around its 2008 low price levels.

Now let's put that into the context of Deutsche Bank. Not only has the stock not rebounded but it is over 65% below its 2008 low at $6.75.

Technical Analysis

When you are dealing with the stock market, you also have people who study pricing through technical analysis. Experts look at things like FIB sequences, trend lines, and support levels. Support levels are a key metric for a stock failing because are looking to find where it will find support and potentially bounce higher.

We are very close to a key support level ($6.40) and if the price goes below this level, there is no saying exactly how low the price could go. At least one company expects Deutsche to fall below this support level, as several weeks ago UBS downgraded the stock to a sell order. This news was compounded last Friday when rating agency Fitch, downgraded their credit rating to BBB or two levels above JUNK status.

Other Information

I know you are likely reading this and thinking "this bank must have smart people in charge and surely they have a plan, right?" I am sure there is a plan and while they have kept their cards close to their chest, they have spoken in the past about the areas they foresee having growth for the company – they include business in Saudi Arabia, UAE, and Egypt. Do they strike you as countries which are stable and will offer steady and reliable growth? Do you have to think really hard to imagine how this could go potentially very wrong?

Questions

I believe there is at least a solid case Deutsche is in a LOT of trouble. So what are possible scenarios for the future? I will lay out the key questions below but I must stress that it's impossible to say for sure what exactly will happen. One of the key numbers to remember here is they have roughly €50 billion worth of derivatives.

How likely is it that the bank can turn things around and survive?
How likely is it the bank continues to run into trouble, its stock price fails and eventually fails?
If you think it is likely it will fail, the question becomes what will the fallout be? Who will be affected?
Will they be bailed out?
If so, by whom? The German government, ECB, IMF, the Federal Reserve?
What will the German government think? Some members recently spoke out saying they would block public money for the proposed merger? Will they block funds if it failed?
Will other banks be exposed and affected? Will they have to take losses?
Will those losses be spread around or will one or more bank be mainly affect?
Will this affect the sentiment of the banking sector and cause a panic?
If there are issues and it starts affecting the stock prices, what will be the impact on other industries?

Last Question

The last question revolves solely around the banks and the regulators? How secure are the other banks? We all hear about how banks are now put through "stress tests" but how much trust do you put in those results? How much trust do you have in the regulators?

I know this may make me sound like a conspiracy theorist to some but it's an honest question. The Fed is on public record saying they want to keep this economy strong as long as possible. If a bank did not perform strongly in a stress test or even barely failed one, do you think they would report it?

Can you imagine the pressure that body would come under to stay silent? Can you imagine the rhetoric they would face with questions like, "Are you really going to fail one bank? Do you know how many people will lose their jobs if you do that?" Am I saying this is happening? No, but can you really rule it out 100% as a possibility?

I urge you to ponder on these questions, do your own research and find YOUR answers.

Update: The most freaquently asked question I have received from this column / show is how much time do we have to prepare. This is an impossible question to answer, as it could fail tomorrow, next week or might be next year. However I want to provide you a potential date for your diary – July 24^th. That is when Deutsche will release their next earnings report and if it comes in below expectations, it could cause a further drop in price casting more doubt over the future viability of the bank.

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The case for mass deportation

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Unchecked illegal immigration into America may be the most dangerous issue our country faces today, and with every day it goes unsolved, the risk of a terrorist attack of 9/11 proportions only increases.

Despite the risk, we can't even touch the subject without the Left and the mainstream media having a meltdown. Even suggesting that the tide of undocumented immigrants may pose some sort of national problem will quickly get you labeled as a racist, stumping intelligent conversation before it can even begin. But as any right-minded Conservative will tell you, calls to close the border and deport the people who stole into our country have nothing to do with race.

In his most recent TV special, Glenn described in detail what sorts of dangers we have let into our countries, with facts and figures that prove that if we don't act soon we will be in deep trouble. Glenn made it clear: we need to conduct a mass deportation or risk being torn apart from within. Here are three reasons that make the case for mass deportations:

Islamic terror cells are forming in South America.

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Congressional testimony from the Committee on Homeland Security in 2011 revealed that Hugo Chavez held a "Secret Summit" involving the Supreme Leader of Hamas, the Chief of Operations for Hezbollah, and the Secretary General of Palestinian Islamic Jihad in Caracas, Venezuela. It is clear that ever since (and possibly before) there has been a Radical Islamic Terrorist presence in Venezuela. Right now there is an Iranian beachhead off the Venezuelan coast on Margarita Island, where the Iranian government is running criminal activities and recruiting and training Venezuelan gangs. These gangs have used our border crisis to infiltrate the U.S. The most infamous of these gangs, Tren de Aragua, has been declared a terrorist organization by the State of Texas.

Terrorist-backed gangs are smuggling in weapons and tearing through the country.

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What are these Iranian-trained and backed gangs doing in America? As you can imagine, nothing good. Just this year alone an estimated million rounds of ammunition, 1.2 million gun parts, 3,000 body armor vests, and thousands of pieces of other military paraphernalia have been smuggled across the border. On top of that, they have already taken over an apartment complex in Aurora, Colorado, and are now terrorizing the remaining residents.

It's noteworthy that the gang managed to move into the apartment in the first place because they received subsidies through an NGO that was assisting the Colorado asylum seekers program, using money given to the state by the Biden administration in 2021.

Gangs have attacked military bases.

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It hasn't stopped at apartment complexes either. A leak from the U.S. Army revealed that the gangs have launched probing attacks on military facilities within the U.S. Members have been sighted taking surveillance photos of Lackland Air Force Base, as well as firing multiple shots into the facility. Another military base in Texas, Fort Sam Houston, caught a gang member attempting to gain access to the facility. This coincides with suspicious activity documented within the Permian Basin, the largest oil field in the U.S.

They are smuggling in vast quantities of military equipment, probing and surveying military facilities and key energy locations, and taking over residential areas. What exactly is going on and why isn't the federal government taking it more seriously?

VP debate recap: A Vance victory

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This might have been the most consequential VP debate in recent memory.

For those of you who missed the debate, it was a decisive victory for J.D. Vance and the Trump-Vance team as a whole. Vance presented a calm, collected, and considerate side of the Republican party that compliments Trump and helps to make their platform more palatable. Meanwhile, Tim Walz had a lackluster, though certainly not catastrophic, night. He had a few embarrassing gaffes and came across as overly nervous, but like Vance, kept it civil.

Both VP candidates entered the stage as relative unknowns to most Americans, and by the end, both men had given an accurate representation of their characters. Here is a brief recap just in case you missed the debate:

J.D. Vance looked great

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Vance came out of the gate swinging, with a stellar opening statement that helped set the stage for the rest of the debate. He delivered a concise yet compelling recap of his life, which framed him as everything Walz claims to be: a relatable veteran from humble beginnings who earned his position through hard work and service. He then went on to deliver a clear and palatable defense of Trump's platform and mission while cooly drawing attention to the failures of the Biden-Harris administration.

Overall, J.D. Vance looked incredibly presidential. He presented himself not just as a capable vice president, but as a strong successor to Trump and as a valid replacement if anything should happen to the former president between now and the end of his hypothetical second term. Vance also successfully dispelled the notion that he is "weird" as Walz called him, and if anyone looked strange during the debate, it certainly wasnot Vance.

Tim Walz's gaffes

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While Tim Walz certainly didn't have an awful night, he did not stack up well against Vance. Walz had a major gaffe around halfway through the debate when asked to explain the change in his position on assault weapon bans. Walz then claimed that he had befriended school shooters during his time in office. While that was clearly not the intention of what he was saying, it was embarrassing nonetheless.

Another weak moment was when the moderators asked Walz to explain a claim he had made regarding being in Hong Kong during the infamous Tiananmen Square protest in 1989, which has since been proven false. Walz gave a long-winded, rambling answer about taking students to visit China and how Trump should have joined in on those trips, before being called out by the moderator for dodging the question.

Vance fact-checked the fact-checkers

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One of the conditions of the CBS debate was that the moderators would not fact-check the debaters live, but instead rely on after-the-matter fact-checking. But, CBS couldn't keep to its own rules. While Vance was describing the migrant crisis that has swelled during the Biden-Harris administration, one of the CBS moderators, Margaret Brennan, chimed in with a "fact check." She claimed that the Haitian migrants in Ohio have legal status, to which Vance clapped back by calling Brennan out for breaking the rules of the debate, then proceeded to correct her, explaining that they only had legal status due to overreach by the Biden-Harris administration.

Dockworker strike: Everything you need to know

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At midnight on September 30th, dockworkers across the East Coast went on strike, effectively cutting the country's import and export capabilities in half.

Don't go out and panic buy a pallet of toilet paper and instant ramen just yet. It's going to take some time for the full effects of the strike to be felt and hopefully, the strike will be good and over by then. But there are no guarantees, and this election cycle could get significantly more insane as we draw near to the election. And even if the strike is settled quickly, it shows growing cracks in our infrastructure and industrial capacity that needs to be addressed if America wants to maintain its global dominance.

Here is everything you need to know about the dockworker strike:

What do the dockworkers want?

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As with most strikes, pay is the driving factor behind this situation the country now finds itself in. The longshoremen want more pay, and with rising inflation who can blame them? After all, working the docks is hard and dangerous business, and fair compensation only seems... fair. But when you compare the wage of a dockworker, which is around $100,000 to $200,00 a year to the average income in America of $56,000, suddenly they seem significantly less sympathetic.

How much money are they asking for? For most Americans, a three percent raise is considered high, but the unions are asking up to 15 percent, depending on location. On top of that, they are asking for a 77 percent raise over the next six years. The West Coast dock workers recently made off with a 36 percent raise and were considered lucky. These increases in costs are just going to be transferred to the end consumer, and we'll likely see a jump in prices if these terms are accepted.

The other major ticket item is protection against automation. Autonomous ports are quickly becoming a reality, with major ports in China that are capable of handling vast amounts of cargo being run by a single office, not an army of dock workers. Naturally, the longshoremen are concerned that their jobs are at risk of being replaced by machines that can work harder, longer, for cheaper, and without risk of injury.

How will it affect Americans?

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Don't panic yet!

It is going to take some time for consumers to feel the effects of the strike and it is possible that a resolution could happen at any time.

Week one should be pretty much business as usual. It might be a good idea to stock up on fruit and other perishables, but there is no need to go COVID-lockdown-crazy yet.

Week two is when you'll first start feeling the pinch. Fresh fruits and veggies will become scarce, along with other imported goods like shoes, toys, and TVs. Prices will start to creep up as the shelves will start to look a little sparse. The supply of tools, lumber, and other hardware materials will also begin to dry up.

By week three, the cracks in the system will really start to show. Entire industries will begin to slow down, or even stop. Factory workers will get furloughed and sent home without pay. Stores will have to ration items, prices will be sky-high, and online orders will come to a standstill. At this point, the strike will have escalated into a full-blown crisis, and even if it was resolved immediately, it would still take weeks to restore everything to working order.

At the four-week mark, the situation will have developed into a national security crisis, and as Glenn describes, a poly-crisis. Small business will be closing their doors, entire brands will be out of stock, and everything that remains will be so expensive it is unaffordable. By this point, the holiday season will be drawing near and there will be a rush on any sort of gift or decor items left. At this point, irreparable damage to our economy will have occurred and it will be months if not years before it can be mended.

While that sounds bleak, with the election just around the corner, it seems unlikely that the Biden-Harris administration will let it get that bad. That being said, their administration has not been characterized by good decision-making and reasonable policy, so there are no guarantees.

What can be done?

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The big question is "Why hasn't Biden already done something?"

President Biden, who ran on the image of a blue-collar, union-worker, has been uncharacteristically absent from the issue. Despite his earlier involvement in a train strike, Biden has declared that involvement in union fights is not a presidential issue unless it getsreally bad.

So where's the line? At what point will he step in? He has to understand that an economic crisis right before the election will reflect poorly on Kamala.

Join Glenn TONIGHT for BlazeTV's exclusive VP debate coverage!

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Join Glenntonight for Vice Presidential debate coverage you do not want to miss!

Tonight is the first (and only) Vice Presidential debate, and it will be hosted by CBS News. But don't be reliant on CBS News or any other mainstream media channel for their biased coverage. Join the BlazeTV live stream tonight to get the uncensored truth alongside top-quality commentary from Glenn and the rest of the world-class panel.

Glenn is joined by Megyn Kelly, Liz Wheeler, Allie Beth Stuckey, Steve Deace, Jill Savage, Dave Landau, and more to cover the CBS News Vice Presidential Debate. Blaze Media subscribers gain access to live chat with the fantastic panel of hosts! If you subscribe today by visiting BlazeTV.com/debate you will get $40 off of your annual subscription with code DEBATE. This is the largest discount ever offered, so take advantage NOW!

See you TONIGHT at 8 PM ET for an event you do NOT want to miss it!

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