Re:Brexit Is a Lehman Moment for European Banks
by adrenalinelol on Sunday July 10, 2016 @03:52PM
(#12066996)
A bank failure doesn't have to happen overnight (Lehman), it can happen over a protracted period of time, in which there will be no systemic risk to the global banking establishment. In 2007, every bank was playing dirty w/Credit Default Swaps + CDOs -> "if our balance sheet is loaded with garbage, then the other guy's is too" -> no lending -> credit crisis. The only thing the DB "has" that is toxic is crappy management. BoA won't reconsider it's lending to JPM Chase because of DB, as would've been the case in 2007.
Re:Brexit Is a Lehman Moment for European Banks
by joeyspn on Sunday July 10, 2016 @08:21PM
(#12067972)
> A bank failure doesn't have to happen overnight
A confirmed bankruptcy of Deutsche Bank would be followed by the collapse of 10s of banks, not in a day but maybe few weeks. Quick enough for unleashing the biggest financial armageddon in the western world.
> there will be no systemic risk to the global banking establishment [...]
Are you sure? on June 30th the IMF said exactly the contrary: "Deutsche Bank Poses Greatest Risk to Financial System"
http://www.nasdaq.com/article/deutsche-bank-poses-greatest-r...
or in a simple pic:
http://cf.broadsheet.ie/wp-content/uploads/2016/06/risks.jpg
https://pbs.twimg.com/media/CbBMXbTWAAAl-PG.png
It's another league. That could cause a x10 times Lehman. Too big to fail. If DB falls, the rest of the world follows suit...
Another pearl from the article:
> If the rot isn't stopped soon, Europe will have found a novel solution to the too-big-to-fail problem -- by allowing its banks to shrink until they're too small to be fit for purpose.
Really? and what about the derivatives exposure?