Wednesday, February 10, 2016

Wow, someone sure doesn't like Deutsche Bank

I've just noticed that this exploding Deutsche Bank CDS story is making the rounds, especially on the Russian propaganda websites.

(As an aside, it's interesting that Jeff Berwick has decided to give up fighting for liberty and freedom, and is now instead writing puff pieces for Russian propagandist Max Keiser. I guess it's true that liberty and freedom are only for the young, and that old people eventually gravitate towards the safe and gentle embrace of neo-Nazi statist confiscatory totalitarianism.)

Anyway, there's a lot of Deutsche Bank crap that's so worthless you can just avoid reading it. But then there's Frances Coppola. As she notes, Deutsche is haemmorhaging money because they have no clue how to run a business.

Which is to be expected, since their business model involves exploiting corrupt linkages with the German government, as opposed to making money the honest way.

So Frances is constantly leaning into them, mocking John Cryan for trying to downsize DB down to its "core business", without even knowing what the hell Deutsche's core business really was.

For a normal bank, their core business involves borrowing money from savers, lending it out to lenders, and earning a profit on the vig. That's it. Most boring business model in the world.

But for Deutsche, it seems their "business model" of the past 15 years has been money laundering, tax evasion and sanctions breaking, with a side order of market fixing. Which was profitable for a while, but as it turns out saddled DB with a massive unfunded liability in the form of billions of dollars of potential fines still coming down the pipe. It turns out their "core business" was only profitable so long as they could hide behind the jackboots of Reichskanzler Wolfgang, and with criminality no longer an option they're revealed to be just another bunch of incompetent fools who bleed billions on failed currency trades.

So, everyone can see right now that DB's only lifeline is to dilute their shareholders like some sort of junior miner, which means everyone's running for the exits.

The argument right now is that DB is a prime target for takeover - its market cap is down to $19B, which would make it a charming afterthought for, say, Barclay's wishing to expand into Europe by acquiring an inept clusterfuck with 60-year-old IT, a culture of illegality and corruption, and a prop desk that may as well be taken out to a field in lower Silesia and gunned down.

But the counter to that is that the Germans would never want to see some "foreign company" take over DB, because DB is such a symbol of German business.

Which freaks me out, since that means the Germans are proud of their national bank's record of enabling kleptocrats, mass murderers and drug dealers.

I guess all the Germans who believed in honestly, ethics and legality emigrated the fuck out of that dump in the 19th century, eh?

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