Deutsche Bank 8x Lehman shock

AG47

http://www.theguardian.com/business/deutschebank

Looking back at the Lehman Brothers collapse of 2008, it’s amazing how quickly it all happened. In hindsight there were a few early-warning signs, but the true scale of the disaster publicly unfolded only in the final moments before it became apparent that Lehman was doomed.

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First, for purposes of drawing a parallel, let’s re-cap the events of 2007-2008:

There were few early indicators of Lehman’s plight. Insiders however, were well aware: In late 2007, Goldman Sachs placed a massive proprietary bet against Lehman which would be known internally as the “Big Short”. (It’s a bet that would later profit from during the crisis).



In the summer 2007 subprime loans were beginning to perform poorly in the marketplace. By August of 2007, the commercial paper market saw liquidity evaporating quickly and funding for all types of asset-backed security was drying up.

But still — even in late 2007, there was little public indication that Lehman was circling the drain.

Probably the first public indication that things were heading downhill for Lehman wasn’t until June 9th, 2008, when Fitch Ratings cut Lehman’s rating to AA-minus, outlook negative. (ironically, 7 years to the day before S&P would cut DB)

purch

AG47 wrote: »

let’s re-cap the events of 2007-2008:

Do we have to :eek:

Thrugelmir

DB is already steps to scale back on it's activities. Considering that RBS was the largest bank in the world when it toppled over. I'm sure that the Bundesbank will be competent enough to conduct a similar exercise on DB.

Why were Lehmans allowed to go to the wall? Barclays traded out the books at a good profit.

AG47

What possible way out is there for 75trillion in derivatives losses?

Bailout? Not again, the people won't stand for it.

Bail in, maybe. People relying on their pensions and investments should realise they are not safe as they think they are.

Generali

AG47 wrote: »

What possible way out is there for 75trillion in derivatives losses?

Bailout? Not again, the people won't stand for it.

Bail in, maybe. People relying on their pensions and investments should realise they are not safe as they think they are.

The notional value of derivatives sum to $75,000,000,000,000 however unless the value of the underlying simultaneously rises to infinity while also falling to $0 the outstanding will never be remotely close to that figure.

The situation with Deutsche Bank is interesting as they are supposed to be bailed in. If they are bailed out instead, if it comes to that, I would expect a fairly grumpy reaction from Greek people.

Thrugelmir

AG47 wrote: »

Bailout? Not again, the people won't stand for it.

Which German banks have been bailed out so far by taxpayers?

Generali

Thrugelmir wrote: »

Which German banks have been bailed out so far by taxpayers?

Do you mean the explicit equity stakes taken by the Government in Commerzbank and Hypo Real Estate or the €480,000,000,000 bailout package for the financial system as a whole? Or the ECB's various bailout policies that have been ongoing since 2008? Or the access that banks like Deutsche and Commerz have had to other Central banks' cheap money schemes and QE packages?

Apart from that the German banks have had very little help from taxpayers.