Deutsche Bank’s Brutal Overhaul is Sign that Global Financial System is in Trouble – Jim Rogers

A statue next to the logo of Germany's Deutsche Bank in Frankfurt © Reuters / Kai Pfaffenbach

When traditionally stable institutions like Deutsche Bank find themselves in trouble, it’s a signal that the world’s financial system will face big problems down the road, legendary investor Jim Rogers has told RT.

On Monday, the German multinational investment bank –and the world’s 15th largest bank by total assets– started cutting thousands of jobs as part of an $8.3 billion overhaul announced one day earlier. The bank’s workforce is set to be reduced by 18,000 to around 74,000 employees by 2022, as Deutsche Bank scraps its global equities and trading operations.

The move has already impacted the bank’s shares, which started to fall after initial 4 percent gains on Monday.

“The financial system is in trouble and this is just one sign of what is going on. This has happened in previous financial problems in the 1930s or the 1960s or the 1990s,” Rogers said in a phone interview with RT. He explained that central banks around the globe drove interest rates “to crazy levels,” and now we have to pay the price for that.

This led to what “we think is a stable and sound [bank] start making speculative loans… and then what used to be strong banks get in trouble.”

Deutsche Bank’s major overhaul does not mean it will not survive, according to Rogers. However, the bank will never be the same and “this is serious trouble” for the lender as well as the entire financial system, the investor believes.

Rogers offered a reminder that some stable banks went bust when nobody expected it, as was the case with Lehman Brothers in 2008 or with another old bank, British Northern Rock.

“And it is happening again. If you go to Scandinavia you see some of those banks that have been around for years are in trouble now. This is nothing more than a sign of the times and we’re going to have a lot of problems down the road,” the investor said.

However, according to Rogers, Deutsche Bank is unlikely to collapse due to multiple warnings and enormous government efforts to support it. Rogers went on to explain that collapses occur unexpectedly and it’s when the global markets can crash.

“If Deutsche Bank were to collapse it would be a surprise. It would cause the global market to start to decline,” he said, adding that it would create a “snowball” that would see other major banks follow the same path.

James Beeland Rogers Jr. is an American businessman and financial commentator based in Singapore. Rogers is the Chairman of Rogers Holdings and Beeland Interests, Inc. He was the co-founder of the Quantum Fund and Soros Fund Management. He was also the creator of the Rogers International Commodities Index. - Wikipedia

German Economy Heads for Worst Growth in Six Years

By Arne Delfs, Bloomberg

The German economy is turning into Europe’s underperformer, with the government now predicting 2019 will see the weakest expansion in six years.

Amid slowing global momentum and concerns over Brexit and trade disputes, the economy ministry on Wednesday cut its estimate to 0.5 percent, half the pace previously forecast. It’s the latest in a series of downward revisions from a 2.1 percent projection a year ago. Growth for next year is seen at 1.5 percent.

German Pain

Europe’s biggest economy is heading for its worst year since 2013

While there’s been a small improvement in business confidence, manufacturing in Germany remains mired in a deep slump. Based on European Commission forecasts for the rest of the euro area, the government’s latest prediction would leave Germany as the region’s worst performer this year, bar Italy, which is stagnating.

What Bloomberg’s Economists Say

“We think the risks to these forecasts are skewed to the downside. That’s because, just as the worst of the storm seemed to have passed, fresh gloom has now appeared on the horizon. The manufacturing PMI plummeted in March -- to levels not seen since the euro-area’s sovereign debt crisis -- and factory orders plunged in February as well.”

--Jamie Murray, Chief European Economist

Click here to view the research

The International Monetary Fund last week cut its global growth outlook on indications higher tariffs are weighing on trade. Economy Minister Peter Altmaier said in an emailed statement that the “current weak phase in Germany’s economy must be a wake-up call.”

Not a Good Look

Germany’s economy is on track for a bad year

The extent of the slowdown has prompted appeals for Germany to use its financial cushion to boost spending. Altmaier said Germany is investing into infrastructure, education and research at record levels.

The chancellor’s spokesman, Steffen Seibert, earlier this week denied the need for a package of measures to boost growth.

IMF Scales Back 2019 Global Economic Forecast Again

Conditions similar to just before the Great Recession of 2009

By Clyde Hughes

Chinese shoppers explore the "imported" section of a supermarket Tuesday in Beijing, China. The U.S.-China trade conflict was a major factor in the IMF again downgrading its global economic growth forecast. Photo by Stephen Shaver/UPI | License Photo

UPI -- For the second time this year, the International Monetary Fund on Tuesday downgraded the economic outlook for 2019 -- warning of a slowing global economy and urging leaders to be careful in what it called a "delicate moment."

The body's updated forecast calls for 3.3 percent growth this year -- down from 3.5 percent in January. The projection is the same as it was in 2009, just prior to the Great Recession.

IMF chief economist Gita Gopinath said ahead of the World Economic Outlook in Washington, D.C., indicators show slowing momentum for the global economy.

"The global expansion continues to weaken," she said in a statement. "For 70 percent of the global economy, we are projecting weaker growth for 2019 relative to 2018. We expect a recovery in 2020. However, we do see significant downside risks."

The IMF previously downgraded the 2019 outlook in January, noting particularly the trade conflict between the United States and China. The World Trade Organization downgraded its growth forecast last week. Tuesday's was the IMF's third downgrade in six months.

Gopinath pointed to uncertainty surrounding U.S.-China trade as a significant factor.

"We've seen an improvement with respect to trade talks between the U.S. and China," she said. "However, we are concerned that the trade tensions could escalate and it could show up in other sectors like the auto sector, which could be very damaging for global growth."

The IMF said last month, in its most recent outlook update, Britain leaving the European Union without an agreement could further upset growth, along with persistently weak economic data and prolonged fiscal uncertainty and elevated yields in Italy.

British Prime Minister Theresa May will meet Wednesday with European Union leaders to ask for another deadline extension. Britain now faces an April 12 deadline to leave the alliance, with or without a deal. May said Sunday she hopes cross-party talks will lead to a compromise in Parliament and an approved agreement.

No mention of Boeing's woes; I suspect that is of concern.

Is The Global Economy Imploding?

21 New Numbers That Show That The Global Economy Is Absolutely Imploding

By Michael Snyder

Earth At Night - Public Domain

After a series of stunning declines through the month of January and the first half of February, global financial markets seem to have found a patch of relative stability at least for the moment.  But that does not mean that the crisis is over.  On the contrary, all of the hard economic numbers that are coming in from around the world tell us that the global economy is coming apart at the seams.  This is especially true when you look at global trade numbers.

The amount of stuff that is being bought, sold and shipped around the planet is falling precipitously. So don’t be fooled if stocks go up one day or down the next.  The truth is that we are in the early chapters of a brand new economic meltdown, and I believe that all of the signs indicate that it will continue to get worse in the months ahead.  The following are 21 new numbers that show that the global economy is absolutely imploding…

#1 Chinese exports fell by 11.2 percent year over year in January.

#2 Chinese imports were even worse in January.  On a year over year basis, they declined a whopping 18.8 percent.

#3 It may be hard to believe, but Chinese imports have now plunged for 15 months in a row.

#4 In India, exports were down 13.6 percent on a year over year basis in January.

#5 In Japan, exports declined 8 percent in December on a year over year basis, while imports plummeted 18 percent.

#6 For the sixth time in six years, Japanese GDP growth has gone negative.

#7 In the United States, exports were down 7 percent on a year over year basis in December.

#8 U.S. factory orders have fallen for 14 months in a row.

#9 The Restaurant Performance Index in the United States has dropped to the lowest level that we have seen since 2008.

#10 This month the Baltic Dry Index fell below 300 for the first time ever.

#11 It is now cheaper to rent a 1,100 foot merchant vessel than it is to rent a Ferrari.

#12 Orders for Class 8 trucks in the United States dropped by 48 percent on a year over year basis in January.

#13 Due to a lack of demand for trucks, Daimler just laid off 1,250 U.S. workers.

#14 Even though Saudi Arabia and Russia have agreed to freeze oil production at current levels, the price of U.S. oil has still fallen below 30 dollars a barrel.

#15 It is being reported that 35 percent of all oil and gas companies around the world are at risk of falling into bankruptcy.

#16 According to CNN, 67 oil and gas companies in the United States filed for bankruptcy during 2015.

#17 The number of job cuts in the United States skyrocketed 218 percent during the month of January according to Challenger, Gray & Christmas.

#18 All over America, retail stores are shutting down at a stunning pace.  The following list of store closures comes from one of my previous articles…

-Wal-Mart is closing 269 stores, including 154 inside the United States.

-K-Mart is closing down more than two dozen stores over the next several months.

-J.C. Penney will be permanently shutting down 47 more stores after closing a total of 40 stores in 2015.

-Macy’s has decided that it needs to shutter 36 stores and lay off approximately 2,500 employees.

-The Gap is in the process of closing 175 stores in North America.

-Aeropostale is in the process of closing 84 stores all across America.

-Finish Line has announced that 150 stores will be shutting down over the next few years.

-Sears has shut down about 600 stores over the past year or so, but sales at the stores that remain open continue to fall precipitously.

#19 The price of gold is enjoying its best quarterly performance in 30 years.

#20 Global stocks have fallen into bear market territory, which means that about one-fifth of all global stock market wealth has already been wiped out.

#21 Unfortunately for global central banks, they have pretty much run out of ammunition.  Since March 2008, central banks have cut interest rates 637 times and they have purchased a staggering 12.3 trillion dollars worth of assets.  There is not much more that they can do, and now the next great crisis is upon us.

Without any outside influences, the global economy and the global financial system will continue to rapidly fall apart.

But if we do have a major “black swan event” take place, that could cause the bottom to fall out at any moment.

In particular, I am deeply concerned about the possibility that World War III could be sparked in the Middle East.  In an article that I published earlier today entitled “Turkey Is Asking The United States To Take Part In A Ground Invasion Of Syria“, I included a quote from Turkish Foreign Minister Mevlut Cavusoglu that reveals just how eager Turkey and Saudi Arabia are for war to begin…

“Some countries like us, Saudi Arabia and some other Western European countries have said that a ground operation is necessary,” Turkish Foreign Minister Mevlut Cavusoglu told Reuters in an interview.

However, this kind of action could not be left to regional powers alone. “To expect this only from Saudi Arabia, Turkey and Qatar is neither right nor realistic. If such an operation is to take place, it has to be carried out jointly, like the (coalition) air strikes,” he said.

The Turks and the Saudis very much want the United States to take a leading role in any ground invasion of Syria, but the Obama administration is not likely to do that.

So we shall see if the Turks and the Saudis are willing to go ahead without us.  Let us hope that they do not decide to invade Syria, because that could start the biggest war in the Middle East that any of us have ever seen.

Unfortunately, Turkey is already attacking.

Turkey has been shelling Kurdish and Syrian military positions in northern Syria for four days in a row even though the Obama administration has been urging them to stop.

The first month and a half of 2016 has already been quite chaotic, and the stage is set for global events to greatly accelerate during the months ahead.

Sadly, the mainstream media in the United States is largely ignoring the preparations for a ground invasion of Syria, and they keep telling us that the global economy is going to be just fine, so most ordinary Americans are going to be absolutely blindsided by what is about to happen.

With the last serious economic crash there were several large economies that were still strong and growing - China, India, Brazil. These countries helped pull the rest of the world out of recession. This year, one is hard-pressed to find any countries with strong, growing economies. There is no-one to throw a life-line. Even the Gulf States are suffering from low oil prices. 

Americans have printed money with shameful abandon and borrowed excessively since 2008 raising their debt to GDP ratio to serious levels. With China working hard to replace the dollar with the yuan as global currency, the American greenback may collapse precipitously. 

2016 should be a very interesting, if not frightening year. There is a lot more going on than just the primaries.

Keiser: Deutsche Bank ‘Technically Insolvent’, Running a ‘Ponzi Scheme’

Oh dear, here we go again

© Luke MacGregor / Reuters

Max Keiser hit out against Deutsche Bank in the latest episode of his RT program Keiser Report, saying the bank was “technically insolvent” despite assurances from German Finance Minister Wolfgang Schaeuble that he had “no concerns” over his country’s biggest bank.

Deutsche Bank shares are down 40 percent since the beginning of the year, falling below their price at the time of the 2008 financial crisis. The bank suffered record losses of €6.8 billion in 2015.

With a balance sheet now eclipsing JP Morgan’s, Keiser warned that the bank will sooner or later have to admit to insolvency and say “we need either a huge bailout or we gotta close up shop.”

However, German Finance Minister Wolfgang Schaeuble dismissed concerns over Germany’s biggest lender, telling Bloomberg he was not worried about its future.

Deutsche Bank CEO John Cryan also played down the concerns in a published letter to staff on February 9, describing the bank as “absolutely rock-solid” and “strong”.

“On Monday, we took advantage of this strength to reassure the market of our capacity and commitment to pay coupons to investors who hold our Additional Tier 1 capital,” Cryan wrote. “This type of instrument has been the subject of recent market concern. The market also expressed some concern about the adequacy of our legal provisions but I don’t share that concern. We will almost certainly have to add to our legal provisions this year but this is already accounted for in our financial plan.”

The bank’s contingent convertible (CoCo) bonds also plunged in value this year. CoCo bonds are designed to be converted to equity when the bank gets into trouble. They have no maturity date and come with no promise to investors that they will get their money back.

Coupon payments on the bond are contingent on the bank’s ability to keep its capital above certain thresholds. If the bank does not make a coupon payment, investors cannot call for a default.

Deutsche Bank said last week that they would likely be able to make its coupon payment for 2016, after telling investors last month that it couldn’t make its 2015 payments.

Keiser described the move as a ponzi scheme saying, “You can’t just miss coupon payments. It’s called insolvency.”

Goldman Sachs' "Now You See It, Now You Don't", Recession

Despite being “too big to fail”, America’s “most important bank” Goldman Sachs may have done so this week, at least for a few minutes, when it possibly tipped off a new economic recession.

A graphic in the “Markets do not ‘Take it Easy’ to start the year” report posted online showed the US in a recession according to Goldman’s Current Activity Indicator.

“Although EM assets remain in the cross-hairs – and the outlook there remains tenuous in spots – growth concerns have impacted the market’s view of US and European growth as well, pushing our market-based measure of US growth risk to new post GFC lows,” the report read.

GFC = Global Financial Crash


Shortly after the financial watchdog website Zero Hedge tweeted their response, Goldman Sachs posted an altered graphic, moving the dark blue line from zero to closer to two.

CAI = Current Activity Indicator

So if Goldman Sachs changed the chart, there’s no recession, right?

Well, that’s where we get into a gray area.

Economist Paul Samuelson once said “the stock market has predicted nine out of the last five recessions”, according to the Washington Post, which asked “Is the stock market telling us we’re headed for a recession?” on Wednesday.

Andrew Levin, a Dartmouth professor and former adviser to Federal Reserve Chair Janet Yellen, pointed out in this document posted Monday that the “jobs boom doesn't look like it will last” and “industrial production is falling as fast as it does when there's historically been a recession”, according to the Washington Post.

Art Cashin, Director of Floor Operations at UBS, told CNBC Tuesday: "If corporations start to pull back and say 'I don't want to advance anything; I don't want to hire anybody,' we could slide into a recession."

Former Treasury Secretary Larry Summers, who’s been spinning through the revolving door between Washington and Wall Street since the Clinton administration, wrote in the Financial Times earlier this month that “markets understood the gravity of the 2008 crisis well before the Federal Reserve” and cited a report by The Economist which found the International Monetary Fund (IMF) failed to recognize any of the 220 recessions in major countries in the April before the recession started.

Last week, portfolio strategist Michael Pento wrote in his CNBC commentary ominously titled “A recession worse than 2008 is coming”: “The unscrupulous individuals that dominate financial institutions and governments seldom predict a down-tick on Wall Street, so don't expect them to warn of the impending global recession and market mayhem. But a recession has occurred in the US about every five years, on average, since the end of WWII; and it has been seven years since the last one - we are overdue.”

Goldman Sachs has long been criticized, but rarely punished, for its role in the global financial crash, aka GFC.

As portrayed in the new Oscar-nominated film “The Big Short,” the $40 billion company sold investments they knew to be "crap" and "junk," and took out insurance policies against them.

“Investment banks such as Goldman Sachs were not simply market-makers, they were self-interested promoters of risky and complicated financial schemes that helped trigger the crisis”, Michigan Democrat Carl Levin from the Senate Permanent Subcommittee on Investigations said.

Despite multiple revelations published by the Subcommittee, the Obama administration announced it was ending the investigation into Goldman Sachs for its manipulation of the sub-prime mortgage market in 2012.

Ironically, Republican presidential candidate and Texas Senator Ted Cruz loves nothing more than telling Republicans how Obama brought the country to its knees, failing to mention that his wife is a managing director for Goldman Sachs and regional head of the bank’s Houston office.

The government has been able to squeeze a few bob out of Goldman Sachs. Last week, it settled a joint lawsuit for $5 billion, specifically for Goldman Sachs’ role in selling mortgage-backed securities between 2005 and 2007.

It reached a $1.2 billion settlement with the Federal Housing Finance Agency in 2014 and in 2010, Goldman Sachs paid $550 million to the Securities Exchange Commission.

In all cases, the settlements allowed them to avoid prosecution or jail time.