Monday morning, Deutsche Bank AG (NYSE: DB) stock hit a record low, dropping 6.5% to below $12. So far this year, the embattled bank has lost more than 50%.
As I warned you in February, Deutsche Bank is the proverbial canary in the coal mine of the global financial system. It poses systemic risk because it is poorly managed, even more poorly capitalized, and party to $60 trillion of derivatives contracts.
Now the U. S. government is chasing it down for billions of dollars of penalties on fraudulent mortgages it sold before the financial crisis, but German Chancellor Angela Merkel has said that the German government will not bail out the bank if it runs out of money. This is a recipe not only for DB stock to drop to where global interest rates are – zero – but to damage the rest of the financial system on the way.
This post was published at Wall Street Examiner by Michael E. Lewitt ‘ September 27, 2016.