With Euro-zone banks showing renewed signs of crisis (Deutsche Bank deleveraging by a massive €425 billion over the past year- the fastest pace since the 2011 near-Euro collapse, and Barclays admitting a £12.8bn capital shortfall Tuesday) and fundamental indicators in the gold market screaming financial crisis (GOFO rates remain negative for nearly 20 days and massive inventory draw-downs at the COMEX & LBMA), The Doc spoke with Jim Willie Tuesday in an explosive MUST READ interview.
Willie, who recently stated that Deutche Bank is under major duress and could be the first major bank to collapse in the next stage of the banking crisis, informed The Doc that unlike the collapse of Lehman Brothers in 2008 which the Western Central banks were able to contain thanks to $13 T in bailout funds, a failure of Deutsche Bank would trigger a systemic banking contagion the likes of which the Western world has never seen.
When asked by The Doc how Deutsche Bank differs from Lehman Brothers in 2008, and what events could lead to a renewed banking crisis, Willie responded:
My best German source informs me that 3 major banks are in trouble, and these 3 banks are fighting every single night to fight off insolvency and failure. He says CitiGroup in New York, Barclays in London, and Deutsche Bank in Germany- every single night are in trouble.
The important thing to keep in mind about Deutsche Bank is that it won’t go down alone if it goes down at all. If it fails, it will take along with it 3,4,5,6 or 10, or 15 other banks! It will be 1 or 2 quickly, then a 3rd and 4th a few weeks later, another, then before you know it, all of Italy and their major banks would be kaput.
My belief is that Deutsche Bank and its constant overnight risk of failure is somewhat tied to derivatives related to LIBOR, and also a risk related to their FOREX derivatives. In other words, derivatives that the banks use to balance off the currencies.
Believe it or not, in the derivatives world, gold is treated like a currency. Isn’t that ironic?
The FOREX derivatives that the banks are involved in are very much tied to gold.
The big immediate threat for Deutsche Bank though has to do with their problems in hiding debt for the Sovereign nations applying for the Eurozone. For example, Greece and Italy couldn’t have their debt ratios over certain levels, so what Deutsche Bank did was they turned nice big chunks of Sovereign debt into currency swaps.
For an example of how this works: Suppose you have a $250,000 bad business loan that is stinking up your credit report. So you call up your favorite Deutsche banker (or Goldman or Morgan- pick your criminal enterprise that is your personal favorite) and you tell him, look I have a $250,000 debt here and I want to make it go away. They say OK, we can do something clever here. We can pay off your debt so your credit report looks good, and we can establish this $250,000 Euro swap, and we’ll keep it off the books!
So you have this $250,000 bad loan stinking up your books, it goes away, and is replaced by something hidden- a euro currency swap! That’s precisely what was done on a larger macro scale by Greece and Italy- and Deutsche Bank is involved with several of these, and the total that is becoming disclosed is $400 Billion. Apply your typical ratios and you can conclude that they are $10, $15, $20 billion short for capital requirements!
The big banks are so criminal that they have converted fraud and criminal activity into a small cost of doing business!
When asked to clarify his statement that a failure of Deutsche Bank would likely result in a contagion of bank failures Jim Willie responded:
Deutsche Bank is in a slightly different situation than Barclays, even though Barclays just announced a 12.8 billion capital shortfall Tuesday. The former Deutsche Bank CEO Ackermann was forced out last year.
Interpol came into Ackermann’s office and conducted a financial document raid. There’s a new sheriff in town. Sources indicate that big, powerful Eastern interests hired Interpol to clean things up.
We had events in April, May, and June in which 5,000 metric tons of gold were lifted out of London. Eastern entities were angry as hell that their gold had been leased and rehypothecated. The London banks used the Easterners’ gold as equity for futures contracts that went bad- like in Spanish, Greek, and Italian debt.
Deutsche Bank’s CEO could not withstand an assault on their office to retrieve data, even though he appealed to several high level politicians.
Fast forward to July 2013, and now we are seeing several Deutsche Bank Vice Presidents being indicted under various fraud charges, and they are almost all cooperating with Interpol! They’ve flipped to cooperate with the serious fraud division of Interpol.
London and New York remain fortresses (for the cartel banksters), but Frankfurt might be in the process of being penetrated.
Getting back to your question as to why a Deutsche Bank failure would be different than Lehman Brothers, it’s because they are involved with all the different Sovereign bonds! Spain, France, Italy, Greece, they’re involved with all of them and their balance sheet qualifications for the European Union!
Deutsche Bank is involved very closely with all of the Eurozone currencies and bonds, and they have massive swaps interwoven with all the major Western banks.
I have a client informing me that Deutsche Bank has a bunch of swaps that they wrote against Detroit muni bonds! Deutsche Bank has their fingers in alot of different pies! Lehman Brothers was involved in numerous mortgage instruments.
Dont bet your money that Deutsche Bank will go down, but if it does, the next day its going to be Citi, Barclays, HSBC, Morgan Stanley, Soc Gen, and big threats to JP Morgan and Goldman Sachs!
In conclusion, Deutsche Bank owns $25 trillion in OTC swaps with the Central banks and other major banks, so expect a daisy chain of derivative failures for the $1.6 quadrillion derivative market if it were to fail!
Deutsche Bank cannot break down by itself. It would result in the complete breakdown of the European Monetary Union!
In today’s world when a big bank dies, they merge them with another big bank. Another European bank, potentially Barclays. I think we are going to see massive amounts of money flooding into gold!
A bank failure contagion, that’s whats going to push gold way over $2,000/oz again.
Silver is going to be moving over $100 and gold is going over $5,000, I’m as certain of it as I am that the sun will rise in the east in the morning come January.