Deutsche Bank Chief Economist: DB Collapse Could Lead to the Next Great Depression

Jon Economy, Government, Market Commentary

Despite being the fourth-largest bank in Europe with over $2 trillion in assets, Deutsche Bank’s (NYSE: DB) collapse is a huge possibility.
It simply doesn’t have the free cash flow necessary to pay the $5.4 billion Department of Justice settlement issued on Sept. 30. Currently, Deutsche Bank reports its free cash flow as $2.4 billion as of June.
What’s more, the German government doesn’t want to bail out the bank. German Chancellor Angela Merkel has repeatedly refused to say whether the government will have the funds necessary to do so.
‘We naturally hope,’ she said to reporters on Sept. 27, ‘even if there are temporary difficulties that things will develop positively.’
Without a bailout, Deutsche Bank’s fate seems sealed…
You see, earlier in September, analysts at JPMorgan Chase & Co. said a U. S. settlement of $3 billion would render Deutsche Bank unable to settle other legal issues, according to Bloomberg. Any additional $1 billion in settlement charges would erode the bank’s capital by a staggering 24 basis points, the analysts said.
That would be a huge blow to pensioners, savers, and other Deutsche Bank customers.
‘Central banks around the world are continuing to promote excessive stimulus – just like they did before the Great Depression.’
But it gets even worse.

This post was published at Wall Street Examiner on October 5, 2016.