Holy shit. The green bar above is the entire GDP of Germany. The blue is the entire GDP of the Eurozone. The red is Deutsche Bank’s current derivative exposure. Isn’t that nice?

Let’s put this in perspective. Germany is considered, probably correctly, Europe’s strongest economy. Deutsche Bank is the largest bank in Europe, and the argument could be made that it’s the largest bank in the world, since it has more derivative exposure than even America’s most exposed bank, JP Morgan. Europe’s economy is problematic to say the last, and Deutsche  Bank keeps dumping stock to keep up with everything.

If anything major goes wrong in Europe, Germany, the U.S., or Deutsche Bank, that $75 trillion of derivatives will be called in…and all hell will break lose.

Who will pay for all of this crap? The bankers? Nope. The politicians? Nope. The answer is you will, at least if you live in Europe (but possibly even if you live in the U.S.!). The government will put a gun in your face and make you pay up, and hand the money over to your banker overlords.

But I’m sure, as Deutsche Bank (and all the banks) keep saying, everything will be fine. You Europeans just keep right on voting for those same parties and politicians you’ve always voted for. Nothing to see here. Move on.

7 thoughts on “Germany’s Biggest Bank Owns More In Derivatives Than 20X The Size Of Germany

  1. Shit, not only I live in Germany but my main bank is the deutsche bank. What does that mean for me, individually? I actually have an overseas account from a bank in my native country, should I keep my savings there instead?

    A while ago a friend of mine said jokingly that it would be safer to buy gold coins with your life savings and keep them in a safe somewhere than to have it in the bank. After what happened in Cyprus, it may not be such a crazy idea.

  2. My overall advice to everyone has always been to never keep ANY money in a bank except what you need for day-to-day expenses. Everything else should be in an investment firm or in hard assets (gold, etc). Especially after what happened in Cyprus.

    More than likely though, if/when Deutsche Bank needs help, it will scream at the EU government to bail it out, which it will, using your tax dollars. So the real solution is to make plans to move out of the EU.

  3. Yup. This is just another potential source of deflationary pressure. This along with all the loans in Chinese ghost cities, loans for US corporate mergers, and not to mention my friend’s credit card bill, is all credit that will disappear once the markets get fearful. Deflation is the destruction of money, which is all credit these days. I’m invested in the US dollar tremendously.

  4. See, most of my investments are based around the dollar crashing (though I’m hedged against this and I’m very diversified).

    I agree with the deflationary argument that “most money in circulation is credit”, but I also can’t deny that at some point in the next 7-10 years, either the stock market will crash, real estate will crash, or the dollar will crash, or 2 or 3 of those things will occur. Thus my inflationary investment strategy.

  5. My goal is to leave Germany for good this year.

    And a bit off topic: first I wanted to point out the typos, but then I thought about them and in this case they fit perfectly into the context.
    In the beginning you wrote correctly “Deutsche Bank”, but then you wrote “Deutche Bank” with the letter S missing, and in the last paragraph you wrote “Deuche Bank” with both S and T missing.
    These missing letters show the inner decay of this bank. S stands for security, T stands for transparency. These virtues are both gone and the once decent Deutsche Bank has now turned into the pathetic Deuche Bank.

  6. Haha! That’s awesome. I’ve corrected the errors, but Deuche Bank does sound better. 🙂

  7. If anything major goes wrong in Europe

    Like what? Something catastrophic like war seems unlikely. Perhaps several important countries leaving the eurozone at the same time? Or something worse like a big terrorist attack?

Leave a Reply

To leave a comment, enter your comment below. PLEASE make sure to read the commenting rules before commenting, since failure to follow these rules means your comment may be deleted. Also please do not use the username “Anonymous” or “Anon” or any variation thereof (makes things too confusing).

Off-topic comments are allowed, but Caleb will ignore those.

Caleb responds to comments in person, but he only does so on the two most current blog articles.

Related Posts

Begin typing your search term above and press enter to search.

Back To Top