Monday, January 25, 2016

Meet Miss Kreditanstalt of 2016: Deutsche Bank

The beauty contest started in 1931, two years after The Crash of 1929. The markets crashed but regained 60% by May 1930.

Austria's Kreditanstalt failed in May 1931. And the market plunged more than in October 1929. And worldwide. And triggered bank runs and defaults worldwide.

And so, in honor of the first big domino in modern history, these awards are The Miss Kreditanstalt.

A short history of the awards:
1984 - Continental Illinois National Bank and Trust Company
Deja vu-ish, Continental's over-exposure to gas and oil loans, issued in the boom years of the 1970s, collapsed along with energy prices in the early 1980s. (See 2016 quarterly earnings from Wells Fargo, Citigroup, Bank of America, and JPMorgan on their exposure to US oil and gas companies here at Zero Hedge.)

1998 - Long-Term Capital Management, or, LTCM.
If only Russia hadn't defaulted.

In 2007 we went to monthly awards
February - FHLMC
September - Northern Rock (UK)

March - Bear Stearns ("bought" by JPMorgan)
June - Countrywide ("bought" by Bank of America)
July - IndyMac goes into bankruptcy
September 7 - FNMA and FHLMC go into government conservatorship
September 15 - Lehman Brothers files for bankruptcy AND Merrill Lynch "bought" by Bank of America
September 16 - AIG gets lifeline from Fed
September 17 - SEC bans short-selling on financial sector stocks
September 21 - Fed approves Goldman Sachs and Morgan Stanley's conversion to bank holding companies
September 25 - A bankrupt Washington Mutual is "bought" by JPMorgan
October 24 - PNC Financial Services buys National City Corp (creating 5th biggest bank in US)
November 10 - Fed approves American Express' conversion to bank holding company
November 17 - 3 insurance companies seek TARP funding: Lincoln National. Hartford, and Genworth
November 18 - Ford, GM, and Chrysler seek TARP funding
November 23 - Fed, Treasury, and FDIC agree to jointly provide Citigroup funding and guarantees.

Things were quietly turbulent from 2009 to 2014, when junk bonds began failing.
2015 - the energy sector bonds began defaulting as a result of crashing oil and gas prices.
And China exports dropped due to the world's recession.

2016 - Markets are down. Is Deutsche Bank Miss Kreditanstalt of 2016? Could DB share the honor with others? Confused? You won't be after this week's episode of "Soap."