DEUTSCHE BANK WON’T FALL IN NEAR TERM

How many times we’ve heard about the fall of giants. The term too big too fail
can be happen all over the sectors, banking particularly.

Yet, does anyone still remember the jaw dropping armageddon that happened
on Sept. 15, 2008.

Lehman Brothers filed for bankruptcy.

For the first time in modern financial history, hundreds of employees who
dressed in business suits, leaving the bank's offices with boxes in their
hands.

It was a history that portrait--even in the richness of the financial and

investment worlds could fall one day.

By the time of bankruptcy, Lehman had $639 billion in assets and $619 billion
in debt and it was the fourth-largest U.S. investment bank at the time of its
collapse, with 25,000 employees worldwide.

All over, you may have wonder, how such a financial juggernaut could have
fall from its grace.

Is there no one out there who would have stop this?

Overzealous lending during the housing bubble, triple-A rated

MBS, outrageous sales bonuses for salesperson, loose financial regulation
and for good sake blind-folded regulator pursuing for economy growth which
literally built on sand.

We are Timberland Academy and we do research on financial case study and

valuable companies that worth a look. This is our first video and we hope you
all enjoy it.

The same case of Lehman could happen all over again and this time many
would have been talking about Deutsche bank, who may become the best
candidate for crash after Lehman.

Deutsche bank potential crash has been the press spotlight and its news has
been haunting investor like an active volcano, which eruption is
unpredictable.
Deutsche bank is a German multinational investment bank and financial
services company headquartered in Frankfurt, Germany. The bank is the 17th
largest bank in the world by total assets and has now become the next crash
candidate to replace Lehman.

But we hold a different view and we predict a different scenario. Deutsche

bank won't gone bankrupt at least in near term. What hold our view on this
prediction? Lets move on.

The first reason to believe why Deutsche Bank won’t collapse may sound
unrealistic, but let us finish our analytics. We all know things that can kill a
bank will be things like bad loans, impaired loans and mother of all financial
weapon, derivatives. Derivatives was first created by brilliant people for
hedging purposes. The banks involve derivatives because the so-called
conventional business, loan and get paid in interest was demolished by record
low interest rate, and it is unprecedentedly low. The banks were forced to
venture into derivatives as it is more lucrative and higher return compared to
conventional loans business. But, derivatives are double edge sword. It can
be disastrous if the risk is not contained properly. The real thing is, no one can
contain the risk brought by derivatives. Just like a spider web, derivatives can
be some sort of arrangement or financial product used to protect a party
interest against some sort of future uncertainty. Bank who has tons of money
usually involved in this business as they can’t earn higher interest on
conventional loan. Deutsche bank is the biggest player around the world who
play the biggest card on derivatives. But why our analysis denies the fact that
deutsche would gone imploded. First, we all know that derivatives was called
“the weapon of mass destruction and potential lethal” by Warren Buffett. The
world greatest investor called it a weapon for a reason. Deutsche bank had
been carrying so much derivatives on its book until the notional value reached
a whopping €48 trillion in 2017 and €43 trillion in 2018 alone. While US
strongest bank, JP Morgan also own this dangerous stuff, which valued at $48
trillion in both 2017 and 2018. Citibank also own $45 trillion and $46 trillion for
year 2017 and 2018 respectively. It is kind of madness for this kind of
maneuver in term of scale and amount involve for banks. But it is like drugs,
easy come yet hard to let go. Derivatives often involves lots of parties, banks
in particular. It is for this very reason we believe Deutsche bank won’t
collapse.

The Fed in the past 2 months had triggered REPO buying program to stop
liquidity crises that happen in the banking sector. The intervention is the best
prove to believe that central bank in the US and Europe just won’t let the
derivatives to implode and risk the survival of their banks. The REPO activity
is just one of many examples of how the central bank will be there to save
their banks. As the overall economy in the western world is still recovering
from the second biggest recession in modern history, the central banks of the
western world would very likely to keep interest as low as possible and on the
other hand, monitoring the inflation rates that will be coming back as a result
of low interest rates. For bank bad practices to involve in derivatives madness,
the central banks have been aware of it and will keep monitoring, spooning
and even trigger a larger saving plan that we all yet to witness before if a crisis
do come.

The second reason to believe why Deutsche bank won’t fall will be the US
bank. As we mentioned earlier, the US banks also own large amounts of
derivatives. The US banks and Europe banks particularly Deutsche bank have
involved in complicated derivatives business that tie upon banks balance
sheet. It is so complex that even the banks themselves are hard to tell how
much is tied. Each day the number goes up. Everyone is the winner in the
game until now, the blowup happens in Deutsche bank. The banks transferred
their asset in term of derivatives to other banks in hope to lower their risk
incurred. The result, a complex derivatives system that tied everyone on the
same boat. We all know the US economy must look good in 2020 as president
Trump would like to continue his presidential journey fort second term. The
kind of blast like derivatives collapse will only lead to disaster. Stock will
crash, people will lose job and all over 2008 happen again. No president can
survive this kind of strike on his road to second term.

The third reason is related to interest rates. As we mentioned earlier, interest

rates is very very likely to stay low for near to medium term. For year 2018,
out of €43 trillion of Deutsche bank’s derivatives, nearly €36 trillion is interest
related. As long as the interest is staying low or relatively stable, the
derivatives might be safe. The probabilities to implode or fail a derivative’s
arrangement order is relatively small.

These are the reasons we believe why deutsche won’t fail at least in near
term. With the on-going restructuring, big laying offs and governmental
support, Deutsche bank’s venture seems doesn’t end here.

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