Loading ...Mike Savage
Quick Update
Because of all the chatter around Deutsche Bank I thought it would be helpful to share something that I think may be important at this time.
Back in 2008 I was employed by Wachovia. Rumors had been swirling about the bank’s financial health but I had no reason to think that anything was amiss because there was always a note from upper management that said all was ok.
On a Friday afternoon the bank manager entered my office and asked a strange question. She asked if I had cash at home. At the time I kept very little cash at home – likely less than $1000.00. So I told her yeah- a little – why do you ask? She said “I am hearing rumors we may be closed for a few weeks. I suggest you get some cash out of the bank and into your house”.
On the following Monday there was a company-wide conference call from the CEO down to the part-time tellers that everyone had to attend. On that call we were assured that Wachovia had a fortress balance sheet and that there was no chance of needing a bailout. We were also assured that Wachovia would also always be a standalone entity.
Looking back, we may think that we were being misled at that time but I am pretty sure that we were not being misled but that even the people at the top didn’t understand the severity of the situation.
It was later in the week when a member of the board of directors bought 1 million shares of Wachovia stock at $10.00 per share- putting his money where his mouth was. This is why I don’t believe we were being intentionally misled. You don’t buy $10 million worth of stock during the week if you have any idea that Citigroup was going to buy the company for $1.00 per share on the following Sunday.
I believe that it is possible Wachovia was being used to bail out Citigroup. Later on, Wells Fargo stepped up and bought Wachovia out for $7.00 per share. Of course, Citigroup got over $2.5 trillion to bail them out from the Fed anyway. (Government Accountability Office)
Anyway, I believe it is important to keep your eyes open when so many are coming out and stating that all is ok. There is no reason to say anything if all really is ok. It is also interesting that many large investors are the ones that are the first withdrawing money from DB. Do they know something that we don’t know yet? Don’t kid yourself- they certainly could have some sort of advance warning and there would be nothing new about that in my opinion.
Deutsche Bank’s derivative book is reportedly 6 times the size of the Eurozone’s GDP. That may be too big to save. According to the IMF many other banks are at risk if DB were to become impaired. Below is a list of a few banks mentioned:
Bank of New York Mellon, JP Morgan, Goldman Sachs, Bank of America, Morgan Stanley, Citigroup, State Street, Wells Fargo, HSBC, Standard Chartered, Santander, Soc Gen, Credit Agripole, Unicredit, BNP Paribas, Commerzbank (Just suspended dividends and are laying off 9000 employees), UBS, ING, RBS, Credit Suisse, UBS, Barclays, Bank of China, China Construction Bank, ICBC, Mitsubishi, Mizuho, Sumitumo. These are some of the systemically important banks- there are likely many more particularly in Italy and other Euro countries in particular.
Hopefully, because of what happened in the not too distant past this possible large problem can be averted. Just in case, however, I suggest you don’t waste any time in making any preparations you feel may be necessary to protect yourselves and your families. If the people at the top of Wachovia’s banking hierarchy couldn’t tell that the conditions were present for a financial implosion at their own firm why should we listen to “experts” who are on the outside looking in on the financial game shows?
It would be better to be prepared for a non-event or weeks or months early in planning than a moment late.- BE PREPARED!