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

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.

War - Good for Business in America

Is there any possibility that America really wants peace in the world? Not as long is there is money to be made.

‘An intangible lift’: Defense contractors assure investors of Middle Eastern wars’ profitability

A U.S. Air Force version of the F-35 Lightning II. © Lockheed Martin / Reuters

Top defense contractors reassured investors at a conference in Florida that they are poised to benefit financially from the escalating conflicts in the Middle East and Africa, according to a leaked tape.

Last week, Lockheed Martin Executive Vice President Bruce Tanner gave a speech at a Credit Suisse conference in West Palm Beach where he praised the “indirect benefits” that defense contractors and their shareholders would see as the result of the escalation of the conflicts in Syria, such as Turkey’s recent shooting down of a Russian jet. The Intercept obtained a recording of the speech.

That incident would lead to a greater potential for US involvement and would cause “an intangible lift because of the dynamics of that environment and our products in theater,” Tanner told investors. He also said that the Russian activities against Islamic State (IS, formerly ISIS/ISIL) with the US would stimulate demand for Lockheed Martin’s F-22 and new F-35 jets.

He added that the demand for “expendable” products like rockets has increased from Saudi Arabia and the United Arab Emirates because of the involvement of those countries in Yemen’s civil war.

The Intercept reported that Oshkosh president Wilson Jones, in another speech at the conference, said that with the threat of IS growing, “there are more countries interested in buying Oshkosh-made M-ATV armored vehicles.” He said that a recent business trip to the Middle East showed that many countries had expressed an interest in mechanizing their infantry forces.

Raytheon CEO Tom Kennedy added his voice to the chorus, saying that his company was seeing a significant uptick in demands for “defense solutions” from several countries in the Middle East.

“It’s all the turmoil they have going on, whether the turmoil’s occurring in Yemen, whether it’s with the Houthis, whether it’s occurring in Syria or Iraq, with ISIS,” Kennedy said, noting that he had met with King Salman of Saudi Arabia.

While terrorist attacks usually lead to bad results for the stock market, defense contractors’ share prices soared following the November terrorist attacks in Paris that left 130 people dead. On the Monday after the attacks, Lockheed Martin traded 3.5 percent higher, Northrop Grumman was up 4.4 percent, and Raytheon saw a 4 percent boost.

At this point I would normally make a smart-alec remark, but I think the article speaks loud enough on its own. What an up-side-down world we live in!

What's Behind the Extraordinary Number of Recent Deaths in High Finance?

Ryan Henry Crane became the 5th banker fatality in just the last few weeks alone. Crane was an Executive Director in JPM’s Global Program Trading desk based in New York and had been with the firm for 14 years. He died on Feb. 3 at his Stamford, Connecticut, home.

The cause of death will be determined when a toxicology report is completed in about six weeks, said a spokeswoman for the state’s chief medical examiner.

Gabriel Magee, a 39-year-old senior manager at JP Morgan’s European headquarters, jumped 500ft from the top of the bank’s headquarters in central London on January 27. Magee was a vice president in the corporate and investment bank technology department.

'It was bonus week at JP Morgan last week so I hope it wasn't to do with that', a co-worker said. A source close to Mr Magee said he was in 'good standing with his bosses and colleagues. He was well liked.'

JP Morgan's headquarters
in Canary Wharf, London

'No arrests have been made and the incident is being treated as non-suspicious at this early stage', a Met spokesman said.

Russell Investments
Seattle's Chase Center

A few days later, Mike Dueker, the chief economist at Russell Investments, fell down a 50 foot embankment in what police described as a suicide. Dueker was reported missing on January 29 by friends, who said he had been “having problems at work.”

On January 26, former Deutsche Bank executive William Broeksmit was found dead at his South Kensington home after police responded to reports of a man found hanging at a house. According to reports, Broeksmit had “close ties to co-chief executive Anshu Jain.”

Mr Broeksmit worked in investment banking - specifically risk and securities - and lived on exclusive Evelyn Gardens in South Kensington, which has an average property value of £1.9million.

Deutsche Bank, London

Mr. Broeksmit, an American, retired from Deutsche Bank last February. He had been slated to become the bank's chief risk officer, but his appointment was vetoed by the German banking regulator, which regarded him as lacking adequate experience, people familiar with the matter said at the time.

Co-CEO Jürgen Fitschen, described Mr. Broeksmit as "an instrumental founder of the investment bank" who was "considered by many of his peers to be among the finest minds in the fields of risk and capital management."

Richard Talley, 57, founder of American Title Services in Centennial, Colorado, was also found dead last week after apparently shooting himself with a nail gun. A family member found the 57-year-old dead in his garage, the Denver Post reported.

Richard Talley's Home

A CEO has committed suicide by shooting himself multiple times with a nail gun, a coroner reported on Friday. Talley, was found Tuesday with up to eight wounds to the torso and head.

Of course, there is something very odd about the method of death. It certainly could not have been a planned suicide, nobody's that stupid, are they? Most suicides don't get a second shot let alone eight. But it is possible, I guess, that in a fit of despair he tried to shoot himself in the chest several times, not landing a fatal wound, before finally shooting himself in the head.

On the other hand, murder by nail-gun is not very bright either.

The Department Of Regulatory Agencies confirmed that an investigation was focused on Talley and the company to the Post but gave no additional information.

Swiss Re AG, London

“We can only hope this disturbing chain of deaths within the financial industry – one of which involved a nail-gun induced suicide – is purely accidental,” writes Zero Hedge, a financial blog. Are you kidding? You can’t possibly shoot yourself 8 times with a nail gun accidentally.

Tim Dickenson, a U.K.-based communications director at Swiss Re AG, also died last month, although the circumstances surrounding his death are still unknown.

Swiss Re AG  is The Swiss Reinsurance Company of Zurich. It is the world’s second-largest reinsurer, and 150 years old. A reinsurer insures insurance companies.

The Swiss Reinsurance Company was the lead insurer of the World Trade Center during the September 11 attacks.

Swiss Re AG Headquarters, Zurich

The death last summer of a Bank of America Corp. intern in London whom colleagues said had recently been working exhaustive hours in the office. An inquest last November found that the 21-year-old intern died of an epileptic seizure that might or might not have been caused by the long hours.

Last August, Pierre Wauthier, the finance chief at Zurich Insurance Group committed suicide. He left a note blaming the company's chairman, Josef Ackermann, for creating an unbearable work environment. Mr. Ackermann resigned days later, acknowledging in a statement that Mr. Wauthier's family thought he "should take my share of responsibility, as unfounded as any allegations might be." He has declined further comment.

In November, Zurich Insurance said a probe found that Mr. Wauthier wasn't subjected to undue pressure from the insurer's leadership.

The effect of stress has reached senior levels. Last year, Barclays' head of compliance, Hector Sants, resigned from the bank due to what the bank described as exhaustion and stress.

Sir Hector Sants, is being lined up by the Archbishop of Canterbury to lead a new financial taskforce.

(The Most Rev Justin Welby has approached Sir Hector, who also led the Financial Services Authority throughout the financial crisis, to drive payday lenders such as Wonga out of business and create a new way of thinking about finance.)

In response to the resignation of Sants, international firms including Goldman Sachs Group Inc., Credit Suisse Group, J.P. Morgan Chase & Co., Bank of America and Merrill Lynch are introducing new measures to alleviate stress, particularly for up-and-coming employees. In Canada, the Bank of Montreal is following suite.

It's a remarkable string of deaths in high finance. It's certainly possible that they were stress induced, however, it's difficult to accept that they were all stress related. It will be interesting to see what the various investigations into their recent work turn up, hopefully, nothing too frightening.

Is the Stock Market About to Crash? Will History Repeat Itself?

(Washington, D.C.) -- I hope there is nothing to this. But I thought I ought to share it with you anyway.

"There are eerie parallels between the stock market’s recent behavior and how it behaved right before the 1929 crash," says a columnist writing for the Wall Street Journal's Market Watch. "That at least is the conclusion reached by a frightening chart that has been making the rounds on Wall Street.

The chart superimposes the market’s recent performance on top of a plot of its gyrations in 1928 and 1929. The picture isn’t pretty. And it’s not as easy as you might think to wriggle out from underneath the bearish significance of this chart."

"I should know, because I quoted a number of this chart’s skeptics in a column I wrote in early December," notes Wall Street analyst Mark Hulburt. "Yet the market over the last two months has continued to more or less closely follow the 1928-29 pattern outlined in that two-months-ago chart. If this correlation continues, the market faces a particularly rough period later this month and in early March. (See chart, courtesy of Tom McClellan of the McClellan Market Report; he in turn gives credit to Tom DeMark, a noted technical analyst who is the founder and CEO of DeMark Analytics.)"

"One of the biggest objections I heard two months ago was that the chart is a shameless exercise  in after-the-fact retrofitting of the recent data to some past price pattern," Hulburt notes. "But that objection has lost much of its force. The chart was first publicized in late November of last year, and the correlation since then certainly appears to be just as close as it was before.

To be sure, as McClellan acknowledged: 'Every pattern analog I have ever studied breaks correlation eventually, and often at the point when I am most counting on it to continue working. So there is no guarantee that the market has to continue following through with every step of the 1929 pattern. But between now and May 2014, there is plenty of reason for caution.' Tom Demark added in interview that he first drew parallels with the 1928-1929 period well before last November. 'Originally, I drew it for entertainment purposes only,' he said—but no longer: 'Now it’s evolved into something more serious.'"....