Deutsche Bank toxic derivative losses

John_Jones

AG47 wrote: »

This is a too big to fail, meaning if it fails then the entire financial system goes down

Yet it's failing

There will be no bailout this time

Did you not learn two years ago when you started posting this rubbish that you simply do not understand companies, markets, or banking?

Come on, you claimed that they had lost trillions of pounds and were imminently going to collapse. Surely you would be better served spending your time doing some ,earning, not hiding for two years and pretending that you did not make a fool of yourself last time.

cogito

John_Jones wrote: »

Did you not learn two years ago when you started posting this rubbish that you simply do not understand companies, markets, or banking?

Come on, you claimed that they had lost trillions of pounds and were imminently going to collapse. Surely you would be better served spending your time doing some ,earning, not hiding for two years and pretending that you did not make a fool of yourself last time.

Agreed. He obviously hasn't a clue about the workings of derivative markets.

AG47

Just out of interest are there still people who still think DB are not in a mess, and that they are not the largest derivative holders in the world?

If not DB then who are the largest derivative holders in the world?

Whoever they are (I know it is DB) they are goin to need a bail out or a bail in with Europe debt crisis becoming unmanageable

John_Jones

AG47 wrote: »

Just out of interest are there still people who still think DB are not in a mess, and that they are not the largest derivative holders in the world?

If not DB then who are the largest derivative holders in the world?

Whoever they are (I know it is DB) they are goin to need a bail out or a bail in with Europe debt crisis becoming unmanageable

What does it matter that they are the largest derivative holder? If you have paid fixed on a billion pounds of ten years to chase, but received on a billion ten years from BOA then do you actually think that they have in some way got a two billion pound exposure?

For one thing the contract is to pay and receive interest on each, not to pay the whole amount, but on the other they offset, and each is strong collateralised with daily calls.

Nowadays the risk is capitalised, too, via counterparty credit risk and market risk measures.

The notional on the derivatives contracts is meaningless, why do you refer to it as though it matters?

michaels

Can anybody be bothered to research whether AG's Deutsche posts correlate with a buying opportunity for the stock?

AG47

AFF8879 wrote: »

The trillions refer to the notional amount of the derivative, which is VERY different to the balance sheet amount that is actually “at risk”, which will be far, far smaller.

Secondly it refers to the absolute exposure, whereas in reality many of the contracts take opposing cash flows and hence will cancel each other out.

This is not to say the situation doesn’t have the potential to be perilous to DB shareholders / staff etc, but this is not an apocalypse scenario.

I'm sure hey would like you to believe that.

But you don't understand is domino effect, these small dominos like DB will knock over larger and larger ones until it knocks over the central banks and pension funds and the world economy

They can't bail out and they can't bail on for fear of bank runs, what can they do?

Malthusian

In AG47land I'm exposed to over half a million worth of debt because I've got a mortgage for £250,000 and I've also got a house worth a bit more, which is an asset, and any asset is just a liability viewed from the other side. So if you add all that exposure up, along with all my other investments (which are just debts that other people owe me, so therefore this is also "exposure") I'm exposed to half a million worth of liabilities. Which side I'm on is irrelevant, the fact that my mortgage is netted off by the value of my house is irrelevant, the point is I'm exposed to half a million worth of liabilities.

This is clearly a huge amount and I couldn't possibly find the cash to pay half a million worth of liabilities (and if I could, I'd be in an even worse position as I'd now be exposed to half a million worth of loans to the Bank of England) so clearly I'm about to go bankrupt at any moment and the fact that I haven't is a grotesque conspiracy.

I suspect AG47 has great difficulty in using changing rooms. In his world, it doesn't matter which side of the door you're on, you're still exposed either way.

AG47

Malthusian wrote: »

In AG47land I'm exposed to over half a million worth of debt because I've got a mortgage for £250,000 and I've also got a house worth a bit more, which is an asset, and any asset is just a liability viewed from the other side. So if you add all that exposure up, along with all my other investments (which are just debts that other people owe me, so therefore this is also "exposure") I'm exposed to half a million worth of liabilities. Which side I'm on is irrelevant, the fact that my mortgage is netted off by the value of my house is irrelevant, the point is I'm exposed to half a million worth of liabilities.

This is clearly a huge amount and I couldn't possibly find the cash to pay half a million worth of liabilities (and if I could, I'd be in an even worse position as I'd now be exposed to half a million worth of loans to the Bank of England) so clearly I'm about to go bankrupt at any moment and the fact that I haven't is a grotesque conspiracy.

I suspect AG47 has great difficulty in using changing rooms. In his world, it doesn't matter which side of the door you're on, you're still exposed either way.

So many people do not understand leverage and derivatives.

For example these new loans being offered for gold and silver as collateral


They lend something like 70% of the value of the silver you can put up as security. So they take your silver and put it in the vault, and you get 70% of the value in cash.

Say you go and buy as much silver as you can with that 70%, and go and use this new silver as collateral for a new 70% loan.

You take that cash and go and buy more silver on the open market.

It's great as long as the price of silver goes up, you will be able to take back your original deposit of silver. Sounds great, but what if the price of silver goes down? You get margin calls.


These banks like DB have taken this to the next level with derivatives and leverage, it would have been great if their bets had gone the way they wanted, but unfortunately the horses they bet on did not come in.

AG47

Could Germany handle a 50 Trillion loss if they do bail out DB?

Even if they take all the depositors and savers money from all accounts in all the main German banks for a bail in, it still would not be enough to cover the 50 trillion in toxic derivatives

Yes I know some of the toxic derivatives offset, and they take net derivatives it if one goes they all go.

If one counter party fails they all fail.

50 trillion comes right on the books, they cant just take the assets and not the liabilities,

Because the liabilities from that bank are other peoples assets.

Its easy, this is not rocket science.

westernpromise

Dream on...