Is the Derivatives Market About to Implode the Big Banks Again?

Phoenix Capital Research's picture

The 2008 Crash was caused by the unregulated derivatives markets. And if you think that problem has been fixed, you’re mistaken.


Consider Deutsche Bank (DB).


DB sits atop the largest derivatives book in the world.


This one bank has over  $75 trillion in derivatives on its balance sheet. This is over 20 times German GDP and roughly the same size as global GDP.


At this size, if even 0.01% of these derivatives are “at risk,” you’ve wiped ALL of the banks’ capital.


The bank’s CEO was “very disappointed” when Moody’s recently downgraded its credit rating.


Personally, we’d be a lot more disappointed by the share price.


DB shares have gone effectively NOWHERE for nearly 20 years. Moreover, this might be the single largest Head and Shoulders topping pattern ever. As we write this, we’re right on the neckline.



DB is perhaps the best example of the derivatives problem, but it is by no means the only one. US banks alone have over $200 trillion in derivatives sitting on their balance sheets.


And over 77% of these derivatives are based on interest rates.


This comes to roughly $156 trillion in interest rate-based derivatives… sitting on the TBTF balance sheets.


If even 0.1% of this money is “at risk” it would wipe out 10% of the big banks equity. If 1% were “at risk” it would wipe out ALL of the big banks’ equity.


Suffice to say, the Fed cannot afford a spike in interest rates without imploding the big banks: the very banks it has funneled TRILLIONS of dollars to in an effort to prop up.


At some point this whole mess will come crashing down just as it did in 2008. The derivatives market remains a $600 TRILLION Ticking Time Bomb.


On that note, we are already preparing our clients for this with a 21-page investment report titled Stock Market Crash Survival Guide.


In it, we outline precisely how the crash will unfold as well as which investments will perform best during a stock market crash.


We are giving away just 1,000 copies for FREE to the public.


To pick up yours, swing by:


Best Regards


Graham Summers

Chief Market Strategist

Phoenix Capital Research



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dizzyfingers's picture

Of course! What are derivatives good for otherwise? They're a bank taxpayer-bailout tool.

Guillotines please.

TheRideNeverEnds's picture

If by implode you mean make record profits while the sheep lose their shirts then yes, yes that is exactly what is about to happen.

Kagemusho's picture

Explode? Naw...DB will sound like a giant deflating whoopee cushion.  One with a lot of hot, wet air in it.

Mr.Kowalski's picture

If things get really really bad, here's The Plan:

* Declare all CDS's null and void.

* Print trillions, give it to TBTF banks as needed.

* Guarantee all deposits up to $100K

* Print more trillions, give to people in some form of Basic Income Guarantee

* Forgive student loan and auto debts & cap all mortgage & rental pymts to 33% net income

* Forgive all government debt.


Squid-puppets a-go-go's picture

'forgive all govt debt'

you think the oligarchs that lent govt that money are going to let that happen without jacking interest rates up to 20% for the next 5 years?

Unless......Unless there's an agreement to rise gold to $50 k / oz thus compensating those oligarchs.WOW! OMG! WHY HASNT ANYONE THORT OF THIS BEFO- oh yeas, its frequently mentioned by those who understand gold's role in monetary history

NoBillsOfCredit's picture

LOL, sounds like an Obummer plan! Haha!

gdpetti's picture

I beg to differ, the Fed can afford to 'pull the rug out', when they are ordered to do so... like the president et al... no one here is really ignorant enough to believe they are the ones in charge, right? Some puppets may be led to believe they are 'masters of the universe', but we know they are really just self-delusional sheep... doing a different drug than most of the herd, but still sheep.... and we all know what their and our futures are. History repeats this lesson on a regular basis for our instruction... the question is how many ever learn in any one cycle. Class is almost over before 'summer' recess.

Pogo5187's picture

If it's perfectly OK for the Fed to "bail out" international banksters, just because they have been "deemed" (by the banksters) to be "too big to fail", and for the Fed to accomplish this with US$ that have been created out of thin electrons, WHY does any US citizen have to pay taxes?

My degree is in Economics, but I guess I should ask for my money back, as none of this was covered.

It's almost as though there was an unspoken agenda at work here, one which TPTB, far from MISmanaging the world economy, are actually steering PRECISELY where they want it to go.

"ORDO AB CHAO"?  (Google it, dudes & dudettes.)

NoBillsOfCredit's picture

Your school didn't even tell you the whole "money" system was a huge Ponzi scheme did they?

nibiru's picture

Look for the Bank for International Settlements. If something is able to coordinate and steer central banks' policies it would to be them.

Also to compare strength of entities they influence - this research comes in hand  

Conax's picture

So is it going to implode or explode? Blow up or suck it all in? Both?

Whatever it takes.

ebworthen's picture

Yes, just like 2008-2009; blow up the little folks, inflate the pig folks.

Osmium's picture

Possibly Esplode?  Won't happen.  FED will print a shit load of money at the first sign of trouble.