Friday, July 8, 2016

All Hell Breaking Loose in Europe: Deutsche Bank Crashing Towards The Inevitable Lehman Moment, Italian Banks Face The Perfect Storm, Funding Crisis Accelerates, Stock Meltdown, Could Fall And Take Eurozone With It!

Deutsche Bank crashing.
All time low.
11,400 -0,820 -6,71%
Jim Willie: If Deutsche Bank Goes Under It Will be Lehman TIMES FIVE!
“Deutsche Bank Poses The Greatest Risk To The Global Financial System”: IMF

Deutsche Bank to Initiate the Next Financial Crisis? Stock Could Be Headed to Zero
Remember Lehman Brothers and the chaos that it created when it failed? If you think that the Worlds’ Central Banks are now wiser and consequently will not allow another similar event to occur, think again.
For two years in a row, the American unit of Deutsche Bank has failed the Fed’s stress test, which determines the ability of the bank to weather another financial crisis.
n 2007, Lehman had a leverage (the ratio of total assets to shareholder’s equity) of 31-to-1. At the time that Lehman filed for bankruptcy, it had $639 billion in assets and $619 billion in debt. Still, it caused a systemic risk worldwide.
In comparison, Deutsche Bank has a mind-boggling leverage of 40-times, according to Berenberg analyst, James Chappell.
Why Can’t the European Central Bank save Deutsche Bank? The nominal value of derivatives risk that Deutsche Bank holds on its books is $72.8 trillion. What is more alarming is that the market cap of Deutsche Bank is less than $20 billion. If the domino effect does occur, Germany with its GDP of $4 trillion or the EU with a GDP of $18 trillion will not be in a position to gain control over it.

Markets worry as Italian banks face the perfect storm

A rocky 2016 has gotten worse on the Brexit vote, and now bank bailout funds may have to grow bigger.
Italian banks are the new Brexit
Saddled with too many bad debts, Italy’s banks have the potential to drag Europe into yet another crisis. The country’s prime minister, Matteo Renzi, may defy EU rules and bail them out.
Italy Could Spark European Bank Crisis
Italian banks on edge, could fall and take Eurozone with it
According to Lorenzo Bini Smaghi is the entire banking system under pressure from unrest in Italy. Italian banks have to deal with hundreds of billions in bad loans and the Italian government is looking for ways to rescue banks

European banks lead equity markets down
Euro Stoxx banks index on course to its lowest ever close
Italy’s deepening banking crisis could RIP the eurozone apart, warn experts
ITALY’S banking crisis threatens to collapse the eurozone’s financial system and bankrupt the entire bloc, experts have warned.
Pound hits new low on Brexit nerves
It’s all collapsing. Of course it is when countries can’t print their own currencies…
Financials bore the brunt of the selling, with Commerzbank, Deutsche Bank, Credit Agricole, BNP Paribas and Societe Generale Group tumbling 2-6%.
The pan-European Stoxx Europe 600 index was down 1.8% in midday trading after declining 1.7% in the previous session.
The German DAX was tumbling 2.2% and France’s CAC 40 index was losing 2.3%. The UK’s FTSE 100 was declining 1.3%, erasing early gains.
A Look Inside Europe’s Next Crisis: Why Everyone Is Finally Panicking About Italian Banks
The result is that impaired loans at Italian banks now exceed €360 billion—quadruple the 2008 level—and they continue to rise.
In total, the financial sector in the country has roughly €300 billion of ‘bad’ debt, which needs to be addressed one way or the other. This might not be such an enormous problem if it was not for the fact that, as previously mentioned, Italy’s economy is chronically weak. This in turn affects the ability of the country’s government to provide a viable bailout package for the banking sector. Government debt in Italy now stands at almost 140% of GDP, second only to Greece in eurozone in gross terms.
Italian banks in big trouble!!
Video inside the link
Panic sets in over Italian banks and investors wonder whether the problem can extend all over Europe.
EU Banks Crash To Crisis Lows As Funding Crisis Accelerates

The signs are everywhere – if you choose to look – Europe’s banking system is collapsing (no matter what Draghi has to offer). From record lows in Deutsche Bank and Credit Suisse to spiking default risk in Monte Paschi, the panic in Europe’s funding markets (basis swaps collapsing) is palpable.
Tumbling to a fresh post-Brexit low, Europe’s Stoxx 600 Bank Index is testing EU crisis lows…
With Credit Suisse smashing to record lows…

and Deustche Bank crashing towards the inevitable Lehman moment…
Senior and Sub CDS are widening dramatically today with Italy’s short-sale ban…
Forget Brexit — Italy is poised to tear Europe apart
Italian ‘zombie’ banks put EU financial system at risk
Italy’s banking problems could lead to ‘Italeave,’–says/
Italy: Europe’s next domino to fall?
Ex-ECB Banker Stokes Europe’s Banking Panic: “People Are Starting To Withdraw From The Market”
A summary of Bini Smaghi’s key points:
  • “There is no rationality in the market”
  • People are starting to withdraw from the market and to go to very liquid assets
  • “The bail-in wil scare the markets and small investors”
  • Europe needs a credible back-stop for its banking system, EU banking rules need to be assessed, policy makers need to be pragmatic
  • European solution is needed for Italy; “in this situation, you need policy to step in”
  • Opportunity to consolidate Italian banking industry
  • Germany has too many banks that are not profitable
  • Market concern on Brexit is that we’re in for “very long” negotiations
  • U.K. economy is sitting on major imbalances’’
  • U.K. cutting corporate taxes creates risk of tax competition across Europe, leading to bigger deficits and debts

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