Collapse of the World: Deutsche Bank (1 Viewer)

[General Malaise]

Errrrrrr, Lenny Bruce is not afraid.

I'm not the brain.

 

[SaintsInDome2006]

Doesn't Trump owe this bank a whole lot of money? 

He does, but that's not an issue here.

 

[SaintsInDome2006]

I'm a little perplexed why this is happening in DE where I thought lack of regulation was not a problem. Why is this really happening?

 

[RedmondLonghorn]

And I said yield is available on highly rated corporate debt and REITS.

It's available, but it is greatly compressed. Which means investors have to take more units of risk to get the same yield as they used to or, more likely, less than they used to.

Pension plans that used to target an annual return in the upper single digits (7.5-9%) are mostly now realizing somewhere between half and two thirds of that. And that is a direct result of yield compression.

 

[RedmondLonghorn]

I'm a little perplexed why this is happening in DE where I thought lack of regulation was not a problem. Why is this really happening?

European banking regs aren't especially tough. And they are balking at complying with Basel III.

 

[NREC34]

http://www.bbc.com/news/business-37496268

 

[FishTacoTuesday]

Seems like we are back to cobblestone roads and bad hair covers for women. 

 

[RedmondLonghorn]

http://www.bbc.com/news/business-37496268

Under the rescue plan, Die Zeit said, if the bank really could not pay the fine by itself, then it would be able to sell parts of its business to other financial institutions at prices set at such a level that the burden on Deutsche was eased and it would not make any significant losses.

That could happen, said the newspaper, if the businesses were going to have to be sold at clearly less than their value. In an emergency, those transactions could be supported by state guarantees, it added.

The colloquial term for this is "smoke and mirrors". Or, if not explicitly sanctioned by the government, fraud.

 

[GroveDiesel]

That thing is interest rates.  Unfortunately, negative interest rates really wreck the business models of most banks.

And this is why there is a huge push all of a sudden by banks and the Fed to move to a cashless system. In a cashless system, a lot of people would be forced into keeping their money in the bank even with negative interest rates. 

 

[fantasycurse42]

Negative rates are a joke.

Kuroda basically admitted BoJ's policies are not working (without actually saying it) at their last meeting by taking a new stance and trying to steepen the long end of the curve.

 

[Riversco]

That thing is interest rates.  Unfortunately, negative interest rates really wreck the business models of most banks.

Don't higher interest rates wreck the business model of colleges?

 

[AAABatteries]

http://images05.oe24.at/1065_merkel_apa_jpg_283002a.jpg/620x388/1.198.808

Please to cross post this in the Women you find oddly attractive thread?  TIA

 

[SaintsInDome2006]

http://www.bbc.com/news/business-37496268

The US is assessing a $14 billion fine for pre 2008 activity and now this is rocking the stability of one of the world's key financial institutions? That's what's happening here? This is wise?

 

[Slapdash]

If you believe I am zerohedge fool you are mistaken, but are you calling for negative rates or not?

Wasn't referring to you really, just the general doomers

 

[baymen]

Wasn't referring to you really

Thanks.  Apologies if I came across the wrong way.

 

[Slapdash]

There are people flooding into negative interest rate bonds because they can't think of anywhere else to put their money. It's craziness.

Corporations are sitting on billions in cash and can't even think of anywhere to put it, that's how bad it is.

The government could fund billions in worthwhile public works and infrastructure repairs easily, just by collecting on the rush to negative-rate bonds, and they're not doing it. Madness.

Seems like this condition is one of the cheaper lunches you can imagine, but didn't expect you to be the one agree with.

Good summation of the bind:

 So what are the solutions to safe asset shortage problem? One solution is for the government to issue more safe assets. That the 10-year U.S. treasury is now 1.73% seven years after the crisis suggest there is still strong appetite for treasury securities. This is the solution proposed by folks like Stephen Williamson and Paul Krugman. Another solution is for policymakers to 'shock and awe' the public into believing a robust recovery is coming and thereby decrease their demand for safe assets. QE was supposed to do this but was not that effective. Scott Sumner andMichael Woodford's call for NGDP level targeting would also fall under this option. The final option is that policy makers could try to work past the ZLB via negative interest rates. Under this option policymakers would help the safe asset market clear by pushing interest rates and prices to their market-clearing levels.

As  noted by Narayana Kocherlakota, the difficulty of doing the first two options seems to be making negative interest rates the default option.  I am not convinced it will be very effective given how it is being implemented (very different than Miles Kimball's suggested approach). But it is a response--a groping in the dark by central bankers--to the deeper safe asset shortage problem. And that is something we all need to better understand. 

http://macromarketmusings.blogspot.com/2016/04/the-safe-asset-problem-is-back-negative.html

 

[Quez]

I'm curious what kind of deal we made to settle this 14 billion dollar fine.

 

[jonessed]

Very little of this money even goes to the people screwed by Deutsche Bank.

The whole thing is rather pointless.  It's a pittance that's going to glide from government coffer to government coffer that will be paid back in another fashion at a later date.

 

[skol asylum]

There's currently too much capital and too few places to put it. Something has to give.

I can supply my paypal account if needed. I'll take one for the team.

 

[STEADYMOBBIN 22]

I think a greater sign of the end of the world is that I cant read an internet article about the end of the world without a Pantene ad playing annoyingly over the text.

If it makes you feel anybetter your hair has never looked healthier.