Too Big to Save?

In the past the notion that Major Banks were “Too Big To Fail” has morphed into “Too Big to Save.”

Cue up:  Credit Suisse (CS) AND Deutsche Bank (DB) of Germany.

First Credit Suisse last week supposedly bailed out by the investment group UBS for $3.2 Billion.

But was it a bailout or merger?

This will inevitably be a lead weight on UBS adding to their eventual demise.

Why?

They will be crushed with losses and lawsuits that will be far more than the $3.2 Billion price tag.

And most people don’t realize that the Swiss banking debt is 5X bigger than their GDP.

Huh?

But the real elephant in the room is Germany’s Deutsche Bank (DB), who, like Credit Suisse has been on life support for years.

Before the 2008 crisis DB was trading at $145 per share.

Today it’s $9.40.

Way Too Big to Save

So, the main reason most banks in Europe – like DB and CS – are Too Big to Save is because the European Central Bank (ECB) lowered interest rates to ZERO and later to NEGATIVE in 2014.

This put them on the course of no return of which they will never recover.

And by 2019 we faced our REPO Crisis when suddenly, (September 2019) US banks refused to deal with European banks.

In October 2019 we wrote:

Recently there’s been a monumental increase in volatility in REPO’s.

Why?

One word.

Europe.

No one wants to buy their debt.

It’s toxic.

And it will be the first major domino to fall in the bond market in the near future.

READ:The Coming Debt Crisis vs the Average PersonOctober 29, 2019

So, we’re not saying we told you so…check that.

Yes, we are.

But it was obvious to those paying attention that the politicians in Europe (COUGH! Merkel, COUGH! COUGH!) were caught in a Catch 22.

Merkel refused to help any of the Greek banks.

So, when DB got in trouble, she was forced to state that they would NOT bail out Deutsche Bank.

This marked the beginning of our REPO Crisis.

READ: Why Banks Don’t Trust Banks (HERE)

As a result of our REPO crisis, no US bank would take any counter-party risk with a European bank if their government would let them collapse.

IT GET WORSE.

But we don’t have time to explain it in a short email.

Instead, be sure to read about how the Boyz are rearranging the deck chairs on the Banking Titanic in our April newsletter (HERE).

Share this with a friend…especially if they believe the crap about “our banks are safe.”

They’ll thank YOU later.

We’re Not Just About Finance

But we use finance to give you hope.