Forget the cowbell. What we need is more cash!

Deutsche Bank Next On The Chopping Block?


Germany's Deutsche Bank, regarded as the most systemically important bank in Europe saw its shares drop some 9% overnight to a five month low after a sudden spike in CDSs (credit default swaps), which is basically insurance against default, reigniting fears of a global banking crisis.

Apparently, an unprecendented $60 billion in foreign official REPO occurred last night. This suggests a scramble for liquidity, aka dollars. According to an article on Zero Hedge this morning, Euro bank shares are down to 3 month lows across the board.

Commerzbank was also mentioned in the article. Commerzbank, I believe, is the second biggest bank in Germany. This bank too is seeing a spike in CDSs. Are they are in trouble too? Are we to expect an eventual merger between these two banks similar to Credit Suisse and UBS as happened earlier this week?

In fact, Credit Suisse shares began to tumble as word got out about its own credit default swaps, sparking a bank run which led to its sudden demise last weekend. It all happened in a matter of days. Are we to see a replay next week with Deutsche Bank and / or Commerzbank? In fact, DB's credit swap defaults overnight have exceeded the total amount of swaps conducted at the height of the lockdowns in 2020.

The FED and the Bank of England each raised their rates by another quarter percent this week, in spite of all the banking woes. With the rate hike 'lag effect', I fully expect the banking situation to only get worse as time goes on.

The European Central Bank is set to raise another quarter percent next May but now the markets are pricing in only 60% odds of an actual rate increase. I wonder what those odds will be next week because I believe the wheels are now in motion for another major bank collapse and very soon. Will it be Deutsche Bank or Commerzbank? We'll found out very soon.

I'm now also on Substack where I will soon begin new podcasts as well as post extra material. Links are in the references section.

Peace and love to everyone.

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Check out some of my previous posts.

Ronald Stoeferle: It took more than 10 years to tame 1970s inflation.

RED raises rates another 25 basis points.

Rate hike lag effect only hitting us now.

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Gold hits record high against Aussie dollar.

800Moz paper derivatives dumped on future market.

Never before seen divergence between silver and gold.

Will 2023 be the year silver finally breaches its 1980 high?

U.S. mortgage apps drop to 28 year lows.

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SweptOverNiagara
SweptOverNiagara

Name's Joe and I live in Ontario, Canada. I like writing on a wide variety of topics. I enjoy keeping track of markets, investing and commodities and the crypto sector. Also do some coding for web browsers.


The Brave New World
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