Quote:
Originally Posted by High Altitude
Germany will bail them out if needed.
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Germany doesn't have enough money to bail them out.
Deutsche Bank AG (USA)(NYSE
B): Derivatives Biggest Problem Moving Forward | ETF Daily News
As we have detailed previously, Deutsche has the world’s largest so-called derivatives book—its portfolio of financial contracts based on the value of other assets. As Forbes notes, it peaked at over $75 trillion, about 20 times German GDP, but had shrunk to around $46 trillion by the end of last year. That’s around 12% of the total notional value of derivatives outstanding worldwide ($384 trillion), according to the Bank for International Settlements.
As a reminder, if the liquidity run forces DB to start unwinding or being forced to novate derivatives, it could get ugly.
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German GDP is 3 trillion dollars. Deutsche has 46 trillion in exposure to the derivatives market. That's like saying the United States (GDP 18.5 trillion) could bail out a bank with 259 trillion dollars in exposure to the derivatives market. YES the majority of the exposure will not be lost if they are forced to unwind the positions but unloading them quick will likely cause losses of 10 to 20% easily. Can Germany afford to bail out 4.6 to 9.2 trillion dollars? Over 150% of its GDP?
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