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Deutsche Bank "Is Horribly Undercapitalized... It's Ridiculous" Says Former Fed President Hoenig

Tyler Durden's picture


Back in May 2012, when we were making fun at the latest iteration of the now fatally discredited European stress tests, we took the first of many jabs at the what may currently be the world's most systematically important, and undercapitalized, bank in the world:

Finally, if anyone is still confused where the pain is headed next, here is a list from Morgan Stanley of all Euro banks with a Core Tier 1 ratio that is so low, that the banks will soon regret not raising more capital in the period of calm that the ECB's LTRO bought them.



Also, one bank is missing from the list above: Deutsche Bank. CT1/TA: 1.68%. Oops.

That's right - Deutsche Bank was so bad that it wasn't even allowed to appear on a screen of Europe's most undercapitalized banks - and we helpfully pointed out its true capital ratio of just under 2%, and an implied leverage of 60x!

Fast forward 13 months to a Reuters interview with former Kansas City Fed president and FOMC dissenter and sole voice of reason at the Federal Reserve, and current FDIC Vice Chairman Tom Hoenig, who confirmed that once again Zero Hedge was just a year ahead of the curve.

A top U.S. banking regulator called Deutsche Bank's capital levels "horrible" and said it is the worst on a list of global banks based on one measurement of leverage ratios. "It's horrible, I mean they're horribly undercapitalized," said Federal Deposit Insurance Corp Vice Chairman Thomas Hoenig in an interview. "They have no margin of error."  Deutsche's leverage ratio stood at 1.63 percent, according to Hoenig's numbers, which are based on European IFRS accounting rules as of the end of 2012.

In other words, the slighest systemic shock in Europe and Deustche Bank gets it. And as Deutsche Bank goes, so does Germany, so does Europe, so does the world.

Immediately confirming Hoenig's (and Zero Hedge's) observations, was Deutsche's prompt repeat that "all is well" and that "these numbers" are not like "those numbers."

"To say that we are undercapitalized is inaccurate because if you look at the Basel framework, we're now one of the best capitalized banks in the world after our capital raise," Deutsche Bank's Chief Financial Officer Stefan Krause told Reuters in an interview, when asked about Hoenig's comments. "To suggest that leverage puts us in a position to be a risk to the system is incorrect," Krause said, calling the gauge a "misleading measure" when used on its own.

Of course, DB's lies are perfectly expected - after all it is a question of fiath. So let's go back to Hoenig who continues to be one of the few voices of reason among the "very serious people":

Hoenig pointed to the gain in Deutsche Bank shares in January on the same day it posted a big quarterly loss, because it had improved its Basel III capital ratios by cutting risk-weighted assets.


"My other example with poor Deutsche Bank is that they lose $2 billion and raise their capital ratio. It's - I don't want to say insane, but it's ridiculous," Hoenig said.


A leverage ratio is a better method to show a firm's ability to absorb sudden losses, Hoenig says, and he has floated a plan to raise the ratio to 10 percent. He said the 3 percent leverage hurdle under Basel was a "pretend number."


Opponents of using such a ratio say that it ignores the risk in a bank's loan books, and can make a bank with only healthy borrowers look equally risky as a bank whose clients are less likely to pay back their loans. It also fails to take into account how easily a bank can sell its assets - so-called liquidity - or whether it is hedged against risk.


Still, equity analysts said that while Deutsche Bank likely will meet regulatory capital requirements, its ratios look weak.

Ugh: terminology, ratios, numbers. It's gives a chap the belly-ache.

But just as we were about a year ahead with our warning of DB's "off the charts" leverage, so we wish to remind readers that some time around June 2014, the topic of Deutsche Bank's $72.8 trillion in derivatives, or about 21 times more than the GDP of Germany, will be the recurring news headline du jour.

Recall from April: "At $72.8 Trillion, Presenting The Bank With The Biggest Derivative Exposure In The World (Hint: Not JPMorgan)" which for those who missed it, we urge rereading:


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Sat, 06/15/2013 - 13:13 | 3660980 King_of_simpletons
King_of_simpletons's picture

Horrible = Bullish.

Sat, 06/15/2013 - 13:29 | 3661014 nope-1004
nope-1004's picture

Uh, what?  "They have no margin for error"?


WTF?  The entire Western banking system exists solely on lies and Federal cash infusions.  It's not that "there is no room for error", the whole fuckin gambit is one big error.

Call this shit what it is:  A failed growth experiment investing in nefarious "derivatives" (whatever the fuck that really is) at 100x plus leverage.

Now someone's gotta pay, and we all know who that will be.  Until that time the stupid lies and can kicking continues, ad nauseum, because the idiots in charge have no clue how to handle 'broke'.


Sat, 06/15/2013 - 13:44 | 3661039 Middle_Finger_Market
Middle_Finger_Market's picture

Derivatives = financial instruments ;) yield??

Sat, 06/15/2013 - 13:54 | 3661069 THX 1178
THX 1178's picture

I'm confident the 55 trillion will be paid off and it'll be 1955 again in no time..

Sat, 06/15/2013 - 14:01 | 3661081 Middle_Finger_Market
Middle_Finger_Market's picture

Hearing dark age. 

Sat, 06/15/2013 - 14:21 | 3661117 Ahmeexnal
Ahmeexnal's picture

for maximum enjoyment, use a DB account to short DB.

Sat, 06/15/2013 - 14:37 | 3661142 smlbizman
smlbizman's picture


Sat, 06/15/2013 - 15:02 | 3661169 NoDebt
NoDebt's picture

OK, so everyone has known this for a long time.  So what's up with a Fed president talking about it OPENLY in the press?  This sniffs all wrong.  Bankers don't do that to other bankers in the press.  I'm thinking maybe its a distraction from something else (yet to come, or just happened and we haven't heard about it yet). 

Love the ridiculously oversized bar graph, too.  That and the Swirlogram are definitely my favorite ZH graphics.

Sat, 06/15/2013 - 15:18 | 3661192 Son of Loki
Son of Loki's picture

Wir sind broke.

Sat, 06/15/2013 - 17:57 | 3661419 espirit
espirit's picture

Got collateral?

I do.

Sat, 06/15/2013 - 18:08 | 3661443 Haus-Targaryen
Haus-Targaryen's picture

Nie. Wir sind im Arsch.

Sat, 06/15/2013 - 15:19 | 3661195 RockyRacoon
RockyRacoon's picture

This whole thing is a non-problem.  The U. S. subsidiary of DB (or whatever they do here, maybe a backroom accounting office in a pizza parlor) will be eligible for Fed "assistance" in case there is any blow-up.  They've been subsidizing foreign banks for years now.  The brouhaha is in actuality a brouhohum.

Sat, 06/15/2013 - 19:15 | 3661585 Bendromeda Strain
Bendromeda Strain's picture

I thought the brohohum was the birth certificate?

Sat, 06/15/2013 - 16:06 | 3661271 Quinvarius
Quinvarius's picture

Deflecting eyes away from JPM.

Sat, 06/15/2013 - 17:20 | 3661368 garypaul
garypaul's picture

funny but don't try it... you'll probably get a 'force majeure' or some BS

Sat, 06/15/2013 - 14:09 | 3661101 Caviar Emptor
Caviar Emptor's picture

Derivatives: Banker chain letter whereby banker sells IOU paper to other bankers who sell to other bankers. At each step a fee is derived and the greater fool gets stuck with the worthless paper. This gives the semblance of doing lots of business and financializing the planet and all the little children

Sat, 06/15/2013 - 14:31 | 3661133 Colonel Klink
Colonel Klink's picture

Also known as a banker circle jerk.  We all know the public will get the face full.

Sat, 06/15/2013 - 15:21 | 3661198 RockyRacoon
RockyRacoon's picture

...soggy biscuit time.

Sat, 06/15/2013 - 19:17 | 3661587 CashCowEquity
CashCowEquity's picture

The wonderful world of negotiable instruments (promissory notes, bundled and sold at a discount for cash, transferring liability to a 3rd party)

What could go wrong?



Sat, 06/15/2013 - 20:16 | 3661662 supermaxedout
supermaxedout's picture

Yes. And in the end they have all one last adress to forward to. The Fed.

Thats why Hoenig knows about DB numbers so good. Its all insured and hedged in the US, just like it was the case in AIG. And then the Fed has to print. That makes him so angry. He would like to have DB a burden for the ECB but unfortunately the Fed once more has to print for the sour bets, while the ECB can hold the Euro clean.

Sat, 06/15/2013 - 14:00 | 3661079 TeamDepends
TeamDepends's picture

We are working 'round the clock in the lab in an attempt to discover a way to turn derivatives into a kind of tofu.

Sat, 06/15/2013 - 14:57 | 3661167 Things that go bump
Things that go bump's picture

Thank God! We're saved! At least we won't starve to death if you are successful. There must be enough of those to not only feed the entire planet and save the whales, but provide enough clean energy to power us for the next 100 years.  

Sat, 06/15/2013 - 15:44 | 3661173 francis_sawyer
francis_sawyer's picture


Sat, 06/15/2013 - 14:24 | 3661122 emersonreturn
emersonreturn's picture

banks are the casino the bankocracy has set up, which flows directly to them, if there happens to be a problem with the flow to them they simply have the puppets elected or appointed to print.  it all works.  don't worry, just keep on using your plastic.

Sat, 06/15/2013 - 14:31 | 3661130 alphamentalist
alphamentalist's picture

Basel risk weights are such a crock of crap. Especially in a world where sovereigns are broke. DB will die in flames. While the LEH of Europe will probably be French, DB will be the one that tips the globe over.

Sat, 06/15/2013 - 14:59 | 3661171 Everybodys All ...
Everybodys All American's picture

No one is going to pay off on those derivatives when they go sour. We've seen that play already.

Sat, 06/15/2013 - 15:23 | 3661202 RockyRacoon
RockyRacoon's picture

Like playing hot potato.  Problem is, the tater is getting bigger and hotter with each toss.  Somebody's gonna fumble and it won't be a pretty sight.

Sat, 06/15/2013 - 13:56 | 3661074 FlipFlop
FlipFlop's picture

Derivative exposure is nominal value?

I worked at Deutsche in risk management. They have a pretty advanced system to analyse counterparty risk and also means to to analyse respective derivative exposure. Usual mtm is a small fraction on nominal, which is netted out and depends on ability of various counterparties to honor collateral agreementa.

But yes. Number is horrible. His majesty Hugo Banziger is out.

Sat, 06/15/2013 - 14:07 | 3661097 Middle_Finger_Market
Middle_Finger_Market's picture

Poom = the sound of implosion. 

Sat, 06/15/2013 - 15:20 | 3661197 malek
malek's picture

Notional becomes real value in case of default.

No more netting out. Does their model also (seriously) consider the implications of such a case?

Sat, 06/15/2013 - 15:52 | 3661257 FlipFlop
FlipFlop's picture

No. Only mtm becomes effective and it is collateralized. Nominal values have very little to do with risk.

Nominal is just for calculating mtm exposure. With many big cps, trades go both ways. Therefore they get netted out. So nominal exposure in terms of notional may look big, but in reality risk is quite small.

Surprisingly small as I have seen myself. Numbers would disapponit if presented here.

But it is true, balance sheet is huge and it needs to be refinanced regularly. Especially since deutsche pissed off other banks by refusing any funding more than a week. So they are actually in very short end of funding curve.

I sometimes compared to deutsche funding to someone in a room running out of air, liquidity being the air to stay well for deutsche.

Sat, 06/15/2013 - 15:59 | 3661264 malek
malek's picture

You're dancing around the elephant in the room. If Only mtm becomes effective, then how big does mtm become in case of default (of the underlying and/or the counterparty).

Sat, 06/15/2013 - 16:18 | 3661289 FlipFlop
FlipFlop's picture

Mtm is exactly the same as before default. It depends on underlying, not cp. Underlying being fx, irs, equity etc, they are all covered by ISDA and get netted out.
Mtm has nothing to do with a default unless it is cds. But no one accepta cds on itself from issuing bank.


Sat, 06/15/2013 - 17:53 | 3661404 alphamentalist
alphamentalist's picture

i think what they are driving at is what happens when big cps go tits up (think AIG without a bailout)? it sets off a daisychain of defaults, collateral calls, and funding issues. eventually a link in that collateral chain will break, which will break another, and another, etc.

i gamed this out a few years ago. a spanish default will smoke a french bank. which, in turn, will smoke a british bank. which, in turn, will smoke a--ahem--german bank. and that is just for cash exposures. when you pile on the derivatives the german default causes pain all the way in the good old US of A.

DB is a ticking bomb.  

Sun, 06/16/2013 - 13:14 | 3662827 Rick64
Rick64's picture

 There are many different types of derivatives, its misleading to say that their total exposure is all risk. You would need to assesss the types and amounts of each catagory of derivatives. The banks aren't truthful about their risk and downplay their exposure as seen over and over throughout history. Lehman and Bear Stearns collapse was probably an attempt to balance out some of the other bank's derivative positions. IMO

Sat, 06/15/2013 - 23:37 | 3661954 Urban Redneck
Urban Redneck's picture

Unless the entire derivative book is made up of standardized contracts, a spreadsheet (or database) can't quantify risk properly because the power is hands of the lawyers, not the bean counters.  The gorilla (even though he didn't weigh 800lbs) had lots of spreadsheets to justify Lehman's positions but some his counterparties had heavier weight legal teams.

Sat, 06/15/2013 - 14:21 | 3661116 PontifexMaximus
PontifexMaximus's picture

Exactly, who cares, ultra bullish, esp. because a "former" whatsoever and whosoever said so.....

Sat, 06/15/2013 - 17:22 | 3661369 Sir Humphrey
Sun, 06/16/2013 - 00:23 | 3662022 StychoKiller
StychoKiller's picture

They'll NEVER catch me, Bwahahahahaha!

Sat, 06/15/2013 - 23:27 | 3661939 Devils Advocate
Devils Advocate's picture

Why is the June 2014 called out?

Sat, 06/15/2013 - 13:12 | 3660981 JeremyWS
JeremyWS's picture

lol at that bar chart. Gonna be fun.

Sat, 06/15/2013 - 13:25 | 3661010 kliguy38
kliguy38's picture

The problem is that only about 5% of the population understands this number mathematically.... 1.63%.....they've been purposely (and willfully) dumbed down to brain mush. Give them a joystick and put them in front of a drone monitor and tell them they're saving humanity.......



A top U.S. banking regulator called Deutsche Bank's capital levels "horrible" and said it is the worst on a list of global banks based on one measurement of leverage ratios. "It's horrible, I mean they're horribly undercapitalized," said Federal Deposit Insurance Corp Vice Chairman Thomas Hoenig in an interview. "They have no margin of error."  Deutsche's leverage ratio stood at 1.63 percent, according to Hoenig's numbers, which are based on European IFRS accounting rules as of the end of 2012.

Sat, 06/15/2013 - 14:24 | 3661120 James_Cole
James_Cole's picture

The amusing thing about this is Deutsche bank = the European union.

Anyway, the population understands what 60x leverage is I bet, but just what exactly does that mean to any of us really? So, they moved around a bunch of numbers on a computer (aka derivatives) and now they're hopelessly undercapitalized. We are supposed to obsess over this why?

It's like in the olden days when the king went deep into the red, end of the day population can't do much about it except foot the bill.

Sat, 06/15/2013 - 13:18 | 3660988 bank guy in Brussels
bank guy in Brussels's picture

Alfred Herrhausen, at the time head of Deutsche Bank, was killed by a car bomb in Frankfurt on 30 November 1989.

A couple of years ago, then Deutsche Bank head Josef Ackermann was asked about a possible 'debt jubilee' of haircuts to wipe out a lot of the bad debt in Europe, and Ackermann responded by 'joking' that if he came out publicly in favour of such debt write-offs, he might suffer the same fate as Herrhausen.

Even for the bankers, it is sometimes a life and death game

Rich and powerful, they yet face the question... Which is the deadlier risk

Too much corruption ... or too much 'truthiness' ?

Sat, 06/15/2013 - 13:43 | 3661038 ParkAveFlasher
ParkAveFlasher's picture

Fuck 'em.  If they didn't want pressure, they should have been ice cream men.  I'm sure monstrous payoffs wash their bitter pills down adequately.

Sat, 06/15/2013 - 13:54 | 3661071 kliguy38
kliguy38's picture

There were several options with Herrhausen offered as a solution. He decided his own fate and ultimately had to made an "example" of.......

Sat, 06/15/2013 - 14:43 | 3661152 Colonel Klink
Colonel Klink's picture

We can only hope that some motivated individuals help the bankster class see the light once again.

Sat, 06/15/2013 - 23:04 | 3661902 RaceToTheBottom
RaceToTheBottom's picture

What risk do Banksters have?  Why woul dthey be different than US Banksters who have far less career risk than public utilities, which is exactly what the scumbags should get paid like.

Sat, 06/15/2013 - 13:18 | 3660991 stinkhammer
stinkhammer's picture

choom! they are all on drugs!!

Sat, 06/15/2013 - 18:06 | 3661439 DosZap
DosZap's picture

Ya think?, Benny has already sent them a HUIGE amount of clownbux.(at least 2 yrs ago).

Sat, 06/15/2013 - 13:26 | 3661007 syntaxterror
syntaxterror's picture

Just borrow 50 trillion from the Fed at 0.0%. Problem solved.


Sat, 06/15/2013 - 13:36 | 3661026 Gringo Viejo
Gringo Viejo's picture

Hoenig knows that to shake that booger off your finger you first point at somebody else as a distraction.

Sat, 06/15/2013 - 14:05 | 3661092 Seasmoke
Seasmoke's picture

I always say hello and pat them on the back.

Sat, 06/15/2013 - 13:25 | 3661008 Atlantis Consigliore
Atlantis Consigliore's picture  Is it Safe?   Mein Herr?  

c-c-cant they do the D'Troit Shuffle nickel or 2 on the dollar?  or just lower rates on the commodity las vegas room market to 69.95 a nite to payoff the $ 4 B in debt 

on the hotel they own/run,  giggle giggle giggle.  Its really Hysterical, El Deutcho running a Vegas Casino, worth $ 800 m in debt $ 4 Billion.  Hysterical.

Sat, 06/15/2013 - 13:25 | 3661009 GreatUncle
GreatUncle's picture

I have read a bit of this elsewhere and a point missed in the article.

From now to 2018 or the like all Deutsche bank's profits would need to be directed at recapitalising to reduce the leverage by a puny 1 or 2% and the lower level.

Sat, 06/15/2013 - 19:29 | 3661605 Bendromeda Strain
Bendromeda Strain's picture

Kyle Bass was talking about Germany's failure to recap the lying banks years ago. Check it out at 24:15 in the AC2011 Session:

Sat, 06/15/2013 - 13:28 | 3661015 fonzannoon
fonzannoon's picture

I like how the chart was from Morgan Stanley who Hoeonig also said was in deep shit.

Sat, 06/15/2013 - 13:29 | 3661019 ChaosEquilibrium
ChaosEquilibrium's picture

The acceptable definition of 'black swan' is that it is unknown or not possible to know/predict.


I predict that the specific technical definition will be revised......inherent within the model framework....that premise alone is supposedly impossible!!!


Kudos to the Hedge for jumping on the DB......It will be the fulcrum in the coming months......make Lehman look 1st inning!

Sat, 06/15/2013 - 13:43 | 3661037 Atomizer
Atomizer's picture

Stroll in the park. :)

Sat, 06/15/2013 - 14:46 | 3661154 Colonel Klink
Colonel Klink's picture

Ah but in the grand scheme of things, Lehman was just the first out.

Sat, 06/15/2013 - 13:37 | 3661025 Caviar Emptor
Caviar Emptor's picture

I think we gonna need a bigger bad bank

....and and place all the worst "assets" of the bad bank into a Really Bad Bank . Which could hire the unemployed!

Sat, 06/15/2013 - 13:41 | 3661031 fonzannoon
fonzannoon's picture

why did this guy just come out and throw DB and 4 or 5 other ones under the bus? Anyone wondering that? What's going on behind the scenes that made him make that statement now?


Sat, 06/15/2013 - 13:52 | 3661064 Bay of Pigs
Bay of Pigs's picture

Safe to assume that eventually some major banks, like DB and MS, will be led to the altar and sacrificed.

Trial balloons?

Sat, 06/15/2013 - 13:54 | 3661070 ChaosEquilibrium
ChaosEquilibrium's picture

The FED knows it is royally FUCKED!...True and accuarate inflation/growth figures can only be manipulated so long.....There MUST be some precipitating event to explain the market failure.


The failure is the Capitalistic/Market system and the faith in a fiat backed currency.  There is NO alternative model acceptable to a free democratic society.


I'm no Marxist.....but the inherent instabilties within free markets will with a 100% probability destroy itself from the inside.....aka human nature of fear and greed.  The only conclusion that can be reached is increasing income/wealth inequality in a closed system.

Sat, 06/15/2013 - 14:02 | 3661083 Bay of Pigs
Bay of Pigs's picture


This isn't capitalism.

Sat, 06/15/2013 - 14:08 | 3661099 ChaosEquilibrium
ChaosEquilibrium's picture



but I DO NOT define the 'RULES'!


I just "observe" and use reason to its logical outcome---POWER and CONTROL!:)

Sun, 06/16/2013 - 19:41 | 3663582 honestann
honestann's picture

I hope you realize that "free" and "democratic" are opposites.

Sat, 06/15/2013 - 15:05 | 3661176 NoDebt
NoDebt's picture

That's exactly what has me scratching my head, too.  I posted the same comment, above but before I read this far down.

Sumpin's up.


Sat, 06/15/2013 - 15:37 | 3661236 css1971
css1971's picture

The more accurate the attack, the lower the collateral damage.

BTW, didn't Reggie come up with this like a  year ago?

Sat, 06/15/2013 - 17:36 | 3661388 negative rates
negative rates's picture

Because he just found out that Christ doesn't drive a volkswagon.

Sat, 06/15/2013 - 20:32 | 3661691 Mentaliusanything
Mentaliusanything's picture

Yes I did... It's because he cannot for the love of life sleep any more without waking up with sweat dripping off him and through the mattress, onto the floor.

Sat, 06/15/2013 - 13:42 | 3661033 Atomizer
Atomizer's picture

Somehow, our two sets of books became castrated. We need to run another round of bank stress tests to keep the separate accounting books in check.


Children Of The Sun

Sat, 06/15/2013 - 13:45 | 3661043 Joebloinvestor
Joebloinvestor's picture

If Deutsche bank fails it will be game over.

Sat, 06/15/2013 - 13:53 | 3661067 yogibear
yogibear's picture

It won't, Bernanke and the rest of the ruling Fed doves will print more money to bail out overseas banks.

The Fed is likely not even listing the debt on their balance sheet. It's mark to fantasy accounting with this Fed.

Sat, 06/15/2013 - 14:24 | 3661123 Bay of Pigs
Bay of Pigs's picture

Kind of like the $11T that went out the back door in 2008/9 instead of the reported $700B?

But isn't Dick Fisher a Fed hawk?


Sat, 06/15/2013 - 14:31 | 3661131 PiratePawpaw
PiratePawpaw's picture

I'm beginning to think it will never be "game over", they wont let it.

They will print, borrow, lie, cheat, steal, leverage, and rehypothecate until its " game doesnt freakin matter anymore" and we are all peasants digging in mud.

But then again, maybe im just getting jaded and cynical.

Sat, 06/15/2013 - 15:47 | 3661251 syntaxterror
syntaxterror's picture

More 'Implied GDP' for the Muppet Class.

Sun, 06/16/2013 - 19:39 | 3663575 honestann
honestann's picture

Don't forget.  Now they can simply steal all assets held by their bank.  If you put all assets of all their customers on the plus side of their sheet (rather than the minus side), their numbers don't look so bad.

And if that isn't sufficient, they can simply steal all the principle of loans paid by their mortgage holders.  I mean, that is no more protected than cash deposits, right?

And make no mistake.  That's how those executives think.  And plan.


Sat, 06/15/2013 - 13:49 | 3661055 jubber
jubber's picture

Who iareCASA on that list?

Sat, 06/15/2013 - 14:02 | 3661084 ChaosEquilibrium
ChaosEquilibrium's picture

Credit Agricole!

Sat, 06/15/2013 - 13:50 | 3661056 PaperBear
PaperBear's picture

I will rejoice when DB goes pop.

Sat, 06/15/2013 - 13:51 | 3661058 yogibear
yogibear's picture

LOL, Dudley of the NY Fed  and Evans of the Chicago Fed are probably lighting their cigars with $100 bills knowing that's all the currency will be good for.

Bernananke, Evans, Dudley and Yellen know they will just keep printing and throwing ever-worthless US dollars at overseas banks like Dusch bag Bank.

The sham goes on until the US dolar blows up. Expect even a greater QE amount as $85 billion/month is not enough to keep the sham going.

Sat, 06/15/2013 - 13:55 | 3661065 williambanzai7
williambanzai7's picture

And that chart is a summary explanation of the motives behind the Troika agenda in a nutshell.

Yet all is well, right Ghordius?

Sat, 06/15/2013 - 14:04 | 3661089 ChaosEquilibrium
ChaosEquilibrium's picture

The ONLY AGENDA.....has been since Goldman and Morgan Stanley 'became' bank holding companies!:)

Sat, 06/15/2013 - 15:57 | 3661258 falak pema
falak pema's picture

Ghordius is on a long vacation; rewriting the new treaty of the revised EU, where confederation and federation, fiscal union and nation state disunion add up to the same thing.

Democracy is demoncracy; its just a play on words, as life is but a game and we are just actors. All the world's a stage and we live "as you like it".

Sat, 06/15/2013 - 13:53 | 3661066 timbo_em
timbo_em's picture

I'm sure they're well-hedged and all those collateral chains are well-fed and monitored. So they would instantaneously know who owns what even if it's a 1000 times re-hypothecationed. Too big too jail banksters would never risk the economic well being of an entire continent just for a bonus cheque.

Deutsche Bank Total Derivative Exposure - The main driver for bigger computer screens and higher resolution.

Sat, 06/15/2013 - 14:02 | 3661078 Seasmoke
Seasmoke's picture

So that's why DB has come to these shores and foreclosed on Americans property without even having an ounce of standing and skin in the game.

It also makes me want to see Geithner to be 1st person hanged for treason for allowing the Treasury to be taken over.

Enemies Foreign AND Domestic.

Sat, 06/15/2013 - 14:09 | 3661093 yogibear
yogibear's picture

"Too big too jail banksters"

Like Corzine, they get a free pass to keep their loot and sip nice tropical drinks on the yacht(s).

The best way to bob a bank is to own one. 

Divert your reserves offshore and lever it up. When it blows the taxpayer bails you out.

Nobody was prosecuted so now it's on to larger and more profitable financial capers. 

"Thomas Hoenig"

He's old school. This current band of Federal Reserve heads are PhD super money printers. They are making the old Fed heads look fiscally prudent.

Sat, 06/15/2013 - 14:08 | 3661098 machineh
machineh's picture

Hoenig can point and snicker at Deutsch Bank's 1.63% capital ratio, since the Federal Reserve's capital ratio is so much stronger at 1.85%.

Sat, 06/15/2013 - 14:12 | 3661109 ChaosEquilibrium
ChaosEquilibrium's picture

Apples and Oranges----DB has a finite balance sheet!  The FED theoretically/model does not, BUT I believe the 'market' technically limits the FED balance least while the music is playing and EVERYONE "wants to dance":)

Sat, 06/15/2013 - 14:35 | 3661137 PiratePawpaw
PiratePawpaw's picture

As long as there is a gun to their head, most people will "want" to dance to whatever is playing.

BTW: the "market" has a gun to its head.

Sat, 06/15/2013 - 14:09 | 3661102 q99x2
q99x2's picture

Too bad Jamie Dimon sold their gold Bitchez.

Sat, 06/15/2013 - 14:29 | 3661127 Caviar Emptor
Caviar Emptor's picture

Can Germans miscalculate? I thought they are always precise and never take vacation...

Sat, 06/15/2013 - 15:07 | 3661179 BurningFuld
BurningFuld's picture

Miscalculation is not possible.

Sat, 06/15/2013 - 14:30 | 3661128 Schmuck Raker
Schmuck Raker's picture

OT: I just read a very good essay titled, WHEN MEN BECOME RATS(Longterm effect of inflationary monetary policy on society), by Linus Huber[Who is unknown to me].

It was posted a few days ago in the comments section of Michael Pettis' latest article:How much investment is optimal?

Give it a read. I don't think anyone here will be disappointed.

Sat, 06/15/2013 - 19:26 | 3661590 Cthonic
Cthonic's picture

Thanks for sharing that.  Growing structure, shrinking agency.  Link to the actual comment:

Sat, 06/15/2013 - 14:32 | 3661134 whoopsing
whoopsing's picture

Perhaps Greece can lend them some money ?

Sat, 06/15/2013 - 14:41 | 3661148 Karl von Bahnhof
Karl von Bahnhof's picture

Just who is f,ckin owner of DB? Is it Thurn-taxis or Hohenzollern family?

Sat, 06/15/2013 - 15:09 | 3661180 ebworthen
ebworthen's picture

Hitler's clone, from deep within Brazil.

Sat, 06/15/2013 - 16:01 | 3661255 Black Forest
Black Forest's picture

Just who is f,ckin owner of DB? Is it Thurn-taxis or Hohenzollern family?

Neither of them. Some guys from N.Y.

"BlackRock Inc., New York, which holds 5.14 % of our shares, is the only large shareholder whose holdings at the end of 2012 are subject to the statutory reporting threshold of 3 %."

Sat, 06/15/2013 - 17:36 | 3661373 reload
reload's picture

I have always thought that the holders of publicly traded bank equity were not the real owners - just providers of capital.

The real owners who stand first in line of all the creditors are the bond holders. Not the fools holding subordinated 'savings bonds' but the likes of the Rothschild, Baring, Rockerfeller family offices--they have serious capital in play and enjoy yields and security the rest of us can only dream of.

Sat, 06/15/2013 - 17:24 | 3661374 Karl von Bahnhof
Karl von Bahnhof's picture

Sure BlackdickRock owns everything but this is just a public veil. But thanks for reply!

Sat, 06/15/2013 - 14:54 | 3661164 Satan
Satan's picture

" Please, do not worry ".

Sat, 06/15/2013 - 15:04 | 3661175 ebworthen
ebworthen's picture

No wonder Germany wants their gold back from the U.S., eh?

Sat, 06/15/2013 - 15:10 | 3661182 SillySalesmanQu...
SillySalesmanQuestion's picture

Warning, WARNING! Danger Will Robinson and Dr. Smith....Warning.

Sat, 06/15/2013 - 15:12 | 3661185 ebworthen
ebworthen's picture


Wasn't it 30X leverage that sunk Lehman and Bear Stearns?

60X leverage for Deutsche Bank?  Wow.

Sat, 06/15/2013 - 15:34 | 3661228 css1971
css1971's picture

This is relatively normal in Europe. Reserve ratio is 100:1 for example. Euro notes are going to get real scarce when more banks start falling over.

Sat, 06/15/2013 - 15:13 | 3661186 BurningFuld
BurningFuld's picture

So if my little company goes out and borrows 100 Trillion USD (assume some retard lends it to me) and then I blow it can I bankrupt my country?



Sat, 06/15/2013 - 15:13 | 3661188 CHX
CHX's picture

Weiter, weiter, hier gibt's nix zu sehen.

Sat, 06/15/2013 - 15:24 | 3661206 MichaelNY
MichaelNY's picture

Wir nehmen keine Gefangenen.

Sat, 06/15/2013 - 18:40 | 3661515 jldpc
jldpc's picture

Given the quantum of pain and suffering caused by Germans in the last Century, it to be legal to kill them on sight anywhere they are found nowadays, by any means immediately available. They are thr real scum of the earth..

Sat, 06/15/2013 - 15:25 | 3661211 Son of Loki
Son of Loki's picture

Anyone watch The Pianist?

I watched it again last night and thanked the Gods for our 2nd Amendment.

"In September 1939, W?adys?aw Szpilman, a Polish-Jewish pianist, plays on radio in Warsaw when the station is bombed during Nazi Germany's invasion of Poland at the outbreak of World War II. Hoping for a quick victory, Szpilman rejoices with family at home when learning that Britain and France have declared war on Germany. But Germany defeats Poland quickly and its troops enter Warsaw, where life for Jews deteriorates as the Nazi authorities prevent them working or owning businesses, and force them to wear Star of David armbands." (Wiki)


If you want to make it a double-header, then watch,

"The Flowers of War."


"The Nanking Massacre or Nanjing Massacre, also known as the Rape of Nanking, was a mass murder and war rape that occurred during the six-week period following the Japanese capture of the city of Nanking (Nanjing), the former capital of the Republic of China, on December 13, 1937 during the Second Sino-Japanese War. During this period, hundreds of thousands of Chinese civilians and disarmed soldiers were murdered by soldiers of the Imperial Japanese Army.[1][2] Widespread rape and looting also occurred.[3][4] Historians and witnesses have estimated that 250,000 to 300,000 people were killed.     also wiki

Sat, 06/15/2013 - 17:42 | 3661395 KTV Escort
KTV Escort's picture

City of Life and Death, a darker version of the Nanjing atrocities: ~ both are great films

Hiroshima could be viewed as relatively instant karma for that, but when the highest-on-the-food chain banksters get theirs is anyone's guess, not so instant it seems

Sat, 06/15/2013 - 16:07 | 3661274 Quinvarius
Quinvarius's picture

Im just waiting for their final excuse.  "The paper money system is flawed, not our banks.  We must replace it".

Sat, 06/15/2013 - 16:12 | 3661277 Atomizer
Atomizer's picture

Another bait & switch program in the works.. If we don’t do this, our entire financial system will collapse --- Crisis Actors ---

Paulson July 16 2009

Sat, 06/15/2013 - 16:14 | 3661279 trader1
trader1's picture

and that, ladies and gentlemen, is what you call a poison pill

Sat, 06/15/2013 - 16:14 | 3661281 Quinvarius
Quinvarius's picture

Need more QE, which will help nothing but gold, despite the tom foolery on current pricing.  The derivative market and leverage will absord every drop of liquidity we feed to it like a sponge in the Sahara.  Money will be created.  None will hit the economy.  Super stagflation.  All the money they print will just sit at the house bank (Fed) to back outrageous credit lines at the casino. 

Sat, 06/15/2013 - 16:31 | 3661309 The Swedish Chef
The Swedish Chef's picture

Funny to find Swedish bank Nordea on that list... They just slashed mortgage rates by .2% and the least expensive bank for newcomers to the soon-to-be exploding Swedish real estate bubble. Has their ridiculously low capital anything to with it or do they just want to go out with a bang?

Sat, 06/15/2013 - 16:43 | 3661321 pitz
pitz's picture

They don't call it Douche Bank for nothing, after all... 

Sat, 06/15/2013 - 16:44 | 3661322 debtor of last ...
debtor of last resort's picture

Fed sponsoring EU based banks in the US. BoJ buying periferie EU bonds, BoI buying Facebook, chemical weapons used by Syria against 'rebels', Abenomics facetransplant experiments, Germany as a goldbeggar, Cyprus template, DB under the bus. Fiath is fading in exactly the right direction. Patience is a great good.

Sat, 06/15/2013 - 16:53 | 3661336 pitz
pitz's picture

Canada's CMHC, a rogue bank operating in Canada's housing market is just as bad as Douche Bank.  50X leverage against its portfolio of subprime mortgage guarantees.

Sat, 06/15/2013 - 17:06 | 3661352 newworldorder
newworldorder's picture

Deutsche Bank may be undercapitliized by International GAAP standards, but is NOT undercapitalized by FED standards.

Having access to the FED allows them to siphen off any amount of capital they need from the FED open fountain.

Sun, 06/16/2013 - 07:19 | 3662267 WojtekSz
WojtekSz's picture

yes, FED can sponsor DB but who will then own the DB? will it be still German?

Sat, 06/15/2013 - 17:10 | 3661360 Peter Pan
Peter Pan's picture

This is what happens when you over compensate bankers for short term brilliant results which in the light of day end up being not so brilliant.

Sat, 06/15/2013 - 17:11 | 3661361 Triffin
Triffin's picture

F*cktards getting your knickers in a twist over nothing. Trying looking at CT1 to NET Assets, or CT1 + Tierone collateral pledged against bank liabilities to TA. You will find that ANY securities financing operation looks miserable on Hoenig's dumb metrics because they exclude the collateral the IBs hold as margin. This scare-piece is just plain dumb.

Sat, 06/15/2013 - 18:04 | 3661435 Tyler Durden
Tyler Durden's picture

Right on. And that doesn't even include repo 105, 110, 115, 120 and so on ad inf. After all the only thing better than collateral is re-re-re-re rehypothecated collateral

Sat, 06/15/2013 - 18:35 | 3661501 jldpc
jldpc's picture

just a god-damn pyriamid of "promises to pay" collateralized by the serpent's tail (loop); by the time you get to the last re-hypothication -hypothecator- he is using the same colalteral as someone else. This is why a house of card in a strong wind is more sturdy than the shit faced banking business - the world does not have an updating public access inventory of assets tha tare collateralized like a title report in the realestate business for when you buy or loan against a residence or commercial property. without that hard data collected and maintained and regularly updated by a trustworthy system - you are screwed. and don't tell me a bou UCC filings. They are easily defeated by shytersand banksters - the most di9shoinest people on earth are bank loan officers and their superiors - except maybe cdo salesmen.

Sat, 06/15/2013 - 20:02 | 3661646 Atomizer
Atomizer's picture



Just take a deep breath. You’ll become desensitized in time. Once you cross the red line, you’ll never go back. My Marco Island LIBOR meltdown anniversary is approaching. I completely destroyed a beautiful evening at our home. She was in complete fear on my unhinged roars of LIBOR. Today, she understands why my elevated anger unfolded.  About a month later, we returned to the house. She says, “you’re not going to have another LIBOR meltdown again?” I gave her a hug. Assured her that I won’t repeat that scenario.  As I pinch her butt, I told her that each & every one of these bastards will end up in jail.  Winks

Sat, 06/15/2013 - 17:33 | 3661384 Nue
Nue's picture

Why is this bank still open? Oh thats right! To big to fail. Well until it does.

Sat, 06/15/2013 - 17:42 | 3661397 Atomizer
Sat, 06/15/2013 - 17:50 | 3661406 resurger
resurger's picture

Everything is great untill it's not.

The second undercapitalized market is Credit Agricole.

Excellent Analysis .. btw, Goldman Sachs is the US version of DB in Europe.


Sat, 06/15/2013 - 18:03 | 3661434 g'kar
g'kar's picture

Douche Bank

Sat, 06/15/2013 - 19:11 | 3661579 Pseudonymous
Pseudonymous's picture

My "Krause" says that all my gold and silver coins still have their proper precious metal content and that their value is not at risk of going below BV.

Sat, 06/15/2013 - 22:48 | 3661790 news printer
news printer's picture

Fuck me

Fuck me

And this is only One bank !

Sun, 06/16/2013 - 08:02 | 3662295 El Hosel
El Hosel's picture

Cockroachez, Bitchez.

Sun, 06/16/2013 - 01:09 | 3662059 johnlaw1971
johnlaw1971's picture

Please remember, under our current paradigm, the savers/creditors always pay.


Who are the savers/creditors?


Pension Funds

Mutual Funds

Insurance companies

Bank depositors

Endowment funds

Creditor Nations (BRICS, OPEC, Germany).

The Creditor Nations are busy converting worthless paper promises of wealth to real wealth (shiny yellow stuff, mines, oil wells, land, commodities).

Western savers/creditors in the institutions above: not so much.

The Western Middle classes are going to be wiped out in the coming financial Holocaust


Sun, 06/16/2013 - 07:51 | 3662289 supermaxedout
supermaxedout's picture

Derivatives: Banker chain letters whereby banker sells IOU papers to other bankers who sell to other bankers. At each step a fee is derived and the greater fool gets stuck with the worthless paper.

And in the end they have all one last adress to forward to. The Fed.

Thats why Hoenig knows about DB numbers so well. Its all insured and hedged in the USA, just like it was the case with the AIG breakdown following the Lehman event.   At that time the Fed had to cough-up many billions to save not only the TBTF banks of the US but also from other countries such as Deutsche Bank.

Now its the same again. Given the case the ECB is not stopped in its work to oversee the European banks (Euroland) as a whole, then it can easily be predicted that a wave of claims based on the derivatives is going to arrive at the shores of the TBTF US banks.  And then the choice is simple for the Fed. Print and pay out or let the whole system go down.

And then the Fed has to print. That makes him so angry. He would like to have DB a burden for the ECB, forcing the ECB to print. But the ECB wont do it. And this is correct. 

Deutsche Bank and other big European banks have bought insurance in the USA. They will present their claims there. And then the Fed pays out or not. Its the choice of the Fed, and its the business of the Fed.

Under the FED supervision the big US banks have sold this kind of insurance well knowing, that in case desaster strikes the banks do not have the money to pay for possible future claims arising from these insurance policies (derivatives) .  Its a thing what is called "insurance fraud". Cashing in unlimited high premiums while forwarding the risks to the public (USA population) - via the Fed.  

Unregulated derivative business = Insurance fraud.  And this was done by Greenspan, Summers, Rubin, et al.

Its another question, if Dt. Bank and others knew about it while signing the contracts. For sure they knew - but DB pretended that everything is fine - just as the Fed still does today. One might say, one criminal made business with another criminal while both sides knew the bill is going to be paid by a unrelated "third party", unfortunately this "third party" is the US public and only now the "third party" finds out, that somebody signed this contract for them. The FED signed it when allowing such criminal behaviour of the banks.

Dont blame it on The Europeans. The FED was the "master of the financial universe" in the past and when the FED blessed such deals it had to be fine for the rest of the world.

And now crunch time is arriving. Slowly but steadily. The ECB is going forward rigidly inspecting the Euroland banks and forcing them to clean-up their balance sheets over time.  And this means desaster for the western bankings system. Not more and not less. 

The choice of the Fed is whether to let the European banks go down - and with them the whole western financial system. Or Benny is cranking up once more the printing presses in his basement to high speed mode. I heard he just ordered 10 more Speedmaster printing presses in Germany.

Sun, 06/16/2013 - 08:35 | 3662327 supermaxedout
supermaxedout's picture

Unregulated derivative business = Insurance fraud.  And this was done by Greenspan, Summers, Rubin, et al. 

This link works better: See how Greenspan (FED) and Rubin, Summers, Geithner et al. sold the US

Sun, 06/16/2013 - 12:40 | 3662755 luckylongshot
luckylongshot's picture

So even backed by the completely fraudulent fractional reserve banking ponzi scheme Deutsche Bank has managed to go bust....Wow!.

Sun, 06/16/2013 - 18:06 | 3663376 jubber
jubber's picture

Every Bank on that list including DB is up 50% - 100% bar Commerz, so if you had tried to short them you got killed...

Sun, 06/16/2013 - 18:45 | 3663460 WallowaMountainMan
WallowaMountainMan's picture

no big deal. everybody knows that the world is gonna divy up all banks into 'good' and 'bad', and tuck the 'bad' onto a usb stick.

there is no other choice.


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