Deutsche Bank Turning into a “Zero Bank”

The net profit of Germany’s biggest bank is down to almost zero: in the second quarter of this year, the bank made only EU18 million of profit. In the same quarter a year ago, it was EU796 million. This implies a loss in profits within one year by 97.5%.  At the Frankfurt exchange this morning, Deutsche Bank’s shares dropped by 6%.

In the first quarter of 2016, the bank still made a net profit of  EU236 million; against that, Q2 brought a loss by 94%. The sector “global markets” had most of the losses in Q2 with 28%, followed by asset management with -18% and other wealth management with -12%; the only profitable sector was Postbank, with a net profit of 13%.

The said Q2 mini-profit, however, is due to relatively low legal expenses of EU120 million from April to July; a year ago, the bank had to shoulder EU1.2 billion during the same period. CEO John Cryan, a British banker from the investment branch, said he is content with the performance of the bank to the extent that it is going through a “rather difficult period,” but he did not give any indication that a fundamental change of strategy is considered. Should the bank’s performance not improve, even more streamlining and cost-cutting would be on the agenda, Cryan said in the context of the Q2 figures.

As for “Project Jade,” which, according to recent media leaks, is a new strategy of Deutsche Bank to survive by separating investment and commercial activities from each other, a bank spokesman declared: “Project Jade is not about splitting the bank. It is rather a project that has been running for quite some time, to simplify the bank as such and in its structure.” A similar denial of separation plans was made by Marcus Schenck of the board, saying in a conference call with select media this afternoon, “Some people believe that we are forced to sell Postbank in 2017, but that is not the case.”

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Global Banks Exposed as Counterparties to Deutsche Bank Derivatives

Global Systemically Important Banks (GSIBs) have vast exposure as counterparties to post-Herrhausen Deutsche Bank’s huge derivatives portfolio, and will incur sweeping losses if Deutsche Bank defaults.

Schiller Institute chairwoman Helga Zepp-LaRouche has made an urgent call for Deutsche Bank to be saved with a one-time financial infusion, and be reorganized to return to its original function as an exemplar of the German industrial bank, whose major purpose was to make low-interest loans for long-term global physical infrastructure building. This was exemplified in Alfred Herrhausen’s program to issue such loans to rebuild Poland in 1989.

Today, if Helga Zepp-LaRouche’s urgent proposal is not taken up, not only will Deutsche Bank fail, but widespread financial carnage will result in Europe, Asia, and the U.S. banks, and some will not survive.

A diagram in ZeroHedge, based on the June 30 IMF Report which called Deutsche Bank the most systemically risky bank, quantifies the exposure to Deutsche Bank’s risk, of banks on three continents, as highest, higher, and high, as follows:

* In Asia, most exposed to potential Deutsche bank defaults are, with largest exposure, Industrial and Commercial Bank of China, China Construction Bank, Mitsubishi; medium exposure: Bank of China, Sumitomo, and Mizuho Banks.

* In Europe, the largest exposures to Deutsche Bank are: HSBC, BNP Paribas, Barclays; medium exposure: Santander, Societe Generale, Credit Agricole, Royal Bank of Scotland, and Credit Suisse

* In the United States, the largest exposure is JPMorganChase; medium exposure: Citibank, Wells Fargo, Goldman Sachs, Morgan Stanley; and lesser exposure: Bank of NY Mellon and State Street Bank.

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LaRouche: Never Forget the Lessons of Herrhausen

The Deutsche Bank policy of Herrhausen, focused on increasing the productive powers of labor, must be restored. [photo: Lucas Kaufmann]

 

Major financial media in Europe and the United States are warning that the European financial system is on the edge of a blowout, whether the trigger is a collapse of the world’s oldest bank, Monte dei Paschi, as part of a general bank collapse in Italy, or a derivatives meltdown by Deutsche Bank, recently described by the IMF as the world’s most “systemically risky” financial institution. The entire trans-Atlantic financial system is at the breaking point, and for this reason, a panicked consensus is emerging among some of the key players in the British game–the European Central Bank, the IMF, JPMorgan Chase, and Goldman Sachs–that a temporary cancellation of the bail-in law is essential, to allow for a bailout of the Italian banks, estimated at between 210 and 360 billion euro in currently non-performing debt. Deutsche Bank held an impromptu press conference on Wednesday by one of its directors to “protest too much” that the bank is not considering a split up between its London-centered gambling operations (Deutsche Bank has $55 trillion in derivatives exposure) and its other units, even after posting a second-quarter drop in profits of 97.5 percent, and a 20-percent decline in earnings from the same quarter in 2015.

The epic collapse of the trans-Atlantic financial system is, today, the number one factor driving the danger of war–thermonuclear war–provoked by Obama and NATO against Russia. The latest provocation comes from the Bulgarian government, which has accused Russia of violating a fabricated “NATO air space” under Bulgarian control.

The simple reality, expressed today by Lyndon LaRouche in discussions with colleagues is that “Deutsche Bank is dead. This needs to be said plainly and bluntly.” He added that the Germans ought to “ask Putin’s advice.”

While Wall Street continues to go ballistic over the fact that both the Republican and Democratic Parties put the reinstatement of Glass-Steagall in their platforms for the 2016 presidential elections, LaRouche took the issue one step further. While Glass-Steagall is essential, more is needed. The image of the former Chairman of Deutsche Bank, Alfred Herrhausen, must be invoked. Under Herrhausen, Deutsche Bank was an industrial bank that invested in the real economy. Deutsche Bank, even at the height of the Cold War, invested heavily in the Soviet economy, providing loans for pipelines, power plants, roads and railroads. Herrhausen’s assassination, on Nov. 30, 1989, coincided with the railroaded jailing of Lyndon LaRouche by the same George H.W. Bush-Margaret Thatcher-Francois Mitterrand forces that imposed the Maastricht straight-jacket on Germany, thus killing the Herrhausen plan to integrate the nations of the former Warsaw Pact into a single European-Eurasian economic space.

The German economy is on the edge of collapse, which is guaranteed if Deutsche Bank goes under. That must be prevented at all costs, but the immediate measures must involve a return to the kind of banking that was practiced by Herrhausen. If Germany goes under, a thermonuclear World War III is virtually guaranteed, and it must be prevented by emergency actions.

Another manifestation of the deadly crisis facing humanity today is the spreading plague of blind terrorism, whether it be atrocities by the Islamic State and other Anglo-Saudi created jihadist cults, or the “new violence” recently seen in Germany and Japan, involving youth who are brainwashed into violent acts by their addiction to point-and-shoot video games.

Helga Zepp-LaRouche, the founder and president of the Schiller Institute, has called for an international, coordinated effort to crush this terrorist scourge–in close collaboration with Russia. Last September, in his address before the United Nations Security Council, Russian President Vladimir Putin called for an international effort to defeat jihadist terrorism, modeled on the World War II alliance between the United States and the Soviet Union. On Wednesday, July 27, Putin addressed a meeting of the top Russian security and law enforcement officials and reiterated that call for a global war on terrorism, which is now a civilizational crisis that all nations must combat.

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Zepp-LaRouche: After Terrorist Attacks, Cooperation with Russia Is Even More Urgent

Schiller Institute founder and president Helga Zepp-LaRouche speaking in Berlin. Photo: Julien Lemaitre

 

by Helga Zepp-LaRouche

The author is chairwoman of the German political party Civil Rights Movement Solidarity, BueSo.

While France has been hit by five horrendous terror attacks since the beginning of 2015, and brutal attacks have occurred in the same time frame in more than 30 countries (often more than once) in Europe, Asia, the United States, and Africa—the reality of the terrorist threat has now been experienced firsthand in Germany, with the attacks in Wuerzburg and Munich,1 whatever the biography or description of the perpetrators turns out to be (whether political Islamists or “self-radicalized” lone assassins). Without a doubt, the problem of international terrorism is one of the major threats to humanity as a whole.

In a situation in which a whole array of crises is coming on thick and fast—the growing war danger in Europe, Southwest Asia, and the Pacific; an attempted coup and subsequent consolidation of state power in Turkey, a NATO state; Brexit and the erosion of the European Union; and a new imminent financial crisis, to name only a few—it should be obvious that we can only solve these crises if we discard the old ways of thinking and geopolitical rancors, and if the most important states work together on an international level.

CSU parliamentarian Hans-Peter Uhl was right, in the wake of the night of horror in Munich, to call for improved, preventive measures and heightened cooperation among the relevant authorities, both domestically and abroad. But given the history and international operating mode of radical Islam, that obviously implies cooperation with Russia, the victim that has the most expertise on the networks in Chechnya and their links to the Right Sector in Ukraine and to ISIS, and which has proven, through its military intervention in Syria, to be the only country that has successfully pushed back the power of ISIS.

It is therefore urgent to take up the offer extended by President Vladimir Putin in his speech to the UN General Assembly in 2015. After pointing to the fatal consequences of the West’s policy of training allegedly “moderate” rebels to combat secular governments in the Middle East, who then defected in droves to ISIS, Putin stressed:

“In these circumstances, it is hypocritical and irresponsible to make declarations about the threat of terrorism, and at the same time turn a blind eye to the channels used to finance and support terrorists, including revenues from drug trafficking, the illegal oil trade, and the arms trade.”It is equally irresponsible to manipulate extremist groups and use them to achieve your political goals, hoping that later you’ll find a way to get rid of them or somehow eliminate them….

“What we actually propose is to be guided by common values and common interests rather than by ambitions. Relying on international law, we must join efforts to address the problem that all of us are facing, and create a genuinely broad international coalition against terrorism. Similar to the anti-Hitler coalition, it could unite a broad range of parties willing to stand firm against those who, just like the Nazis, sow evil and hatred of humankind. And of course, Muslim nations should play a key role in such a coalition, since Islamic State not only poses a direct threat to them, but also tarnishes one of the greatest world religions with its atrocities. The ideologues of these extremists make a mockery of Islam and subvert its true humanist values.” [Kremlin translation]

Especially since the newly released Chilcot Inquiry report in Great Britain spotlights how Tony Blair orchestrated the war of aggression against Iraq on the basis of conscious lies, and the disclosure of the suppressed 28 pages of the official Joint Congressional Inquiry into 9/11 has left no doubt as to the role of Saudi Arabia in financing terrorism, a “more of the same” policy is tantamount to complicity in any new terrorist attacks.

The German authorities can no longer hide behind the usual sociological sophisms. The credibility of Mr. Uhl and Interior Minister Thomas de Maziere, of the members of the Bundestag’s domestic affairs committee, and of course of Chancellor Merkel, will depend on whether they initiate an official investigation to elucidate as quickly as possible the implications of these two documents—the Chilcot Report and the 28 pages—and draw the conclusions from them. It is unacceptable, under any circumstances, to use the attacks in Wuerzburg and Munich as the excuse to build up a police state as Turkish President Erdogan is doing, and to cooperate with precisely those governments that are exposed and implicated by the Chilcot Report and the 28 pages.

The Next Financial Crisis: Italy

A dramatic change in policy is also urgently necessary with respect to another existential crisis, the financial one. The word is out everywhere that Italy is the new Greece. But unlike Greece, it doesn’t represent just two percent of the European Union’s GDP, but is the fourth largest industrial nation in Europe. Yet the European Commission, the European Central Bank (ECB), and the German Finance Ministry are pursuing the same brutal and incompetent policy which has already ruined Greece and eroded the European Union (EU). Italy’s GDP has shrunk by about 25 percent as a result of the EU’s murderous austerity policy since the 2008 financial crisis, leading to horrible consequences for the healthcare system and pensions, an increase in unemployment, the shutdown of many small and medium-sized businesses, and a dramatic rise in suicides. One result of this shrinking of the real economy by about one quarter is that the Italian banks are now sitting on 360 billion euros of non-performing loans.

The medicine that ECB head Mario Draghi, EU Commission President Jean-Claude Juncker, the Bundesbank, and German Finance Minister Wolfgang Schaueble intend to administer to the “sick man of Europe,” is poisonous. They all agree, with minimal differences, that Italian savers and investors should pay for the rescue of the sick banks, as the EU’s bail-in law prescribes, thus accepting the Cyprus model—in the event that the stress test results for the Italian banks, to be made public at the end of July, show—as expected—that these banks are undercapitalized.

In that case, Italian savers and investors would have their money expropriated, and Prime Minister Matteo Renzi, as a result, would be threatened with a revolt. He would most likely lose the upcoming referendum for constitutional reform in October and he would lose the subsequent elections. The Five Star Movement would then set in motion Italy’s exit from the euro and the European Union.

While various media, among them Die Welt, describe Italy as a “failed state,” putting it for all intents and purposes in the same category as Somalia or Iraq, the so-called EU political leadership is doing nothing—absolutely nothing—to remedy the crisis. What these soulless EU bureaucrats—such as Juncker, ECB head Draghi, and other politicians and bankers who have made their careers by passing through the revolving door between politics and the major banking houses several times—have not for one moment taken into account, is that their policies in support of the casino economy are ruining entire nations, the lives and fortunes of many millions of people.

The Solution

There is a solution: The Bueso is working with many collaborators in Europe and the United States in a campaign to avert the threatened insolvency of Deutsche Bank through a return to the banking philosophy which underlay the policy of the assassinated chairman of the bank, Alfred Herrhausen.2 This campaign has generated a good deal of attention from the financial sector, since everyone knows that the trans-Atlantic financial system is hopelessly bankrupt. In this context, the report that Deutsche Bank is preparing for an in-house separation of its business and investment sections, is of interest.

The fact that the demand for a return to the Glass-Steagall banking separation law has been incorporated into the party platforms of both the Democratic and Republican parties—the result of many years of campaigning by the LaRouche Political Action Committee—has so far had two interesting results: It has produced screams from Wall Street, which fears Glass-Steagall more than the devil fears holy water, and it has discredited all those who constantly claimed that it couldn’t be done.

In these turbulent days there is a simple measure at hand, which will allow anyone to see whether leading politicians are championing the general welfare of the people they are supposed to represent, or whether they are lobbyists for other interests. This measure is their readiness to seize the existing solutions—that is, to accept Putin’s offer, and to return to an economic policy based on serving the general welfare. Politicians who fail to measure up should be hounded out of office for just that reason.

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Democrat Party, Like GOP, Is Disintegrating

The US system of political parties is disintegrating. Lyndon LaRouche has identified what he calls the “potty system” as being at the root of the dumbing down of the American population, forcing people to choose between two evil forces, both controlled by Wall Street. Now, after the romp by the British/FBI asset Donald Trump over the shattered Republican Party, the Democrat Party is following suit. Tens of thousands of Bernie Sanders supporters flooded into Philadelphia, trying to somehow turn the tide against Wall Street’s darling Hillary Clinton, only to see their phony hero call for unity behind Hillary. At a pre-convention meeting with his supporters, Sanders was met with heckling and booing, followed by a march to the convention with chants such as: “Donald Trump is a racist bore, Hillary is a corporate whore.”

On Monday Bernie’s army was breathing fire, yelling “Goldman Sachs” and “We trusted you” when Sanders, as well as Elizabeth Warren, called for unity behind Hillary. But by Tuesday afternoon, although Sanders supporters disrupted several state caucus breakfast meetings, observers said that the convention was like a morgue, both inside and out.

The hysterical effort by Hillary’s campaign to blame the leak of Democratic Party emails (which led to the resignation of Party chairperson Debbie Wasserman Schultz for sabotaging the Sanders campaign) on Vladimir Putin, is backfiring, due to its incredible stupidity. Foreign Minister Lavrov, asked about the charge, said he didn’t want to use four-letter words, and cartoons appearing everywhere are mocking the effort to call anyone not committed to the nuclear destruction of Russia (and the world) as “Putin’s useful fool.”

What will replace the broken parties? This must be determined by Americans mobilized around LaRouche, to create the required new institutions and policies which allow the restoration of the Hamiltonian American System, and to bring the nation into cooperation with Russia and China for global development and peace.

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Cristina Fernandez de Kirchner: Alliance with the BRICS Behind Assault on South American Nations

In a two-hour interview July 23, held at her home in El Calafate, Santa Cruz, former President Cristina Fernandez de Kirchner discussed a broad array of subjects, both national and international, and pointed to the absurdity of the charges launched against her by President Mauricio Macri’s “judicial party.”

“I’m not afraid of going to prison,” she said, explaining that she wouldn’t have implemented the anti-IMF, pro-growth measures she did as President had she feared going to jail. It used to take a military coup to impose the “policies of hunger and misery,” Fernandez said, but today Macri is using the corrupt judiciary and the media he controls to achieve the same effect, at the same time attacking the rule of law and trampling on constitutional rights, in order to intimidate opponents.

Asked about the destabilization of several South American nations, Fernandez pointed out that the strategic agreements that several governments, including her own, had signed with Russia and China, and the extraordinary July 2014 BRICS summit in Fortaleza, Brazil, must have set off “a red alert” in the U.S. After all, Russian President Vladimir Putin, Chinese President Xi Jinping, and heads of state and regional organizations from Central and South America and the Caribbean gathered to discuss regional development; on top of that, she added, there was the BRICS New Development Bank, posed “as an alternative to the International Monetary Fund.” Surely, the U.S. felt its geopolitical interests threatened.

Internationally, Fernandez said, a new geopolitical map is being drawn in an increasingly complex world, in which global terrorism is the new ingredient, and there isn’t a clear strategy for dealing with it.

“There is a lack of leadership [willing] to sit down and come up with a different strategy, because if we continue…invading and bombing countries, the situation will get worse.” Leadership used to be a matter of individuals, she said. Nelson Mandela, Fidel Castro, Charles De Gaulle, John Kennedy, Juan Peron, and Yasser Arafat were leaders of great stature, she noted, but today, the “only glimpse of leadership” similar to theirs is Vladimir Putin.

Then you have Macri, she noted, surrounded by his unsavory political cronies, many guilty of financial crimes, offshore accounts, etc.

“It turns out that every day, individuals are discovered who, if they don’t have accounts in HSBC and didn’t sneak money out of the country, they appear in the Panama Papers,” as does Macri.

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Western Society in Collapse—New Paradigm, or New Dark Age

U.S. Secretary of State John Kerry and Russian Foreign Minister Sergey Lavrov July 26, 2016, before a bilateral conversation on the sidelines of ASEAN. Photo: U.S. State Dept.

 

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Bloody mass killings now fill the headlines on a daily basis in every part of the “advanced sector” nations:

* A crazed former employee of a Japanese mental facility attacked the facility and slit the throats of 19 patients and seriously injured 26 more, after writing a letter to the parliament explaining what he intended to do, as an act of “beneficial” euthanasia;

* Two terrorists attacked a church in France, slitting the throats of the priest and a nun, before being killed by police. IS took credit for the attack, feeding the anti-Muslim frenzy in the press.

* Two suicide bombers from al-Shabaab exploded their vehicles at a UN peacekeeping base in the capital of Somalia, killing 12;

* Two teens were killed and 16 others wounded in Ft. Myers Florida, when three other teens opened fire at a crowd outside a nightclub;

* And in Germany, the fifth killing in a week, as a man killed his doctor and himself in a hospital.

This is just today’s toll. These are not all terrorist assaults, as some are by people driven mad by their hopeless state in society, or by the violent culture, or by the psychosis-inducing video games and popular “entertainment,” or by drugs, or by all of these.

It is a symptom of a dying culture. While millions are driven from their homes in Southwest Asia by Obama’s policy of perpetual “regime change” wars, and as the media in the West hypes Obama’s lie that Russia and China are “aggressors” run by dictators who must be confronted militarily, the population is told to join in the Roman Circus of the political conventions, and unite behind leaders who offer only more economic destruction and global warfare.

But the brainwashing is falling apart. Both political party conventions have been fiascoes, producing candidates hated by the majority of the population, and leaving their party structures in disarray. The only thing left standing is the demand for Glass-Steagall, which is recognized in Congress and internationally as the result of Lyndon LaRouche’s unrelenting campaign over the past decades to educate and mobilize the population and the political institutions, that only a return to Franklin Roosevelt’s war on Wall Street can reverse the ongoing collapse of the western economies.

Roosevelt’s famous statement that the “only thing we have to fear is fear itself” is the operative principle in mobilizing the population to end the madness — together with LaRouche’s warning against any kind of pragmatism. No partial measures are possible in a world facing thermonuclear war. The leaders of the United Kingdom and the United States have been shown by their own governments to be war criminals, through the release of the Chilcot Report in England and the 28 pages of the Joint Congressional Investigation on 9/11 in the US. Blair, Bush and Obama have been shown to be guilty of launching illegal wars of aggression, and of collaboration with (or control over) terrorists to prosecute those wars. And yet they remain out of jail, and Obama still sits in the White House with his finger on the trigger.

The Obama drive for war on Russia and China is also in danger. Putin and Lavrov have pulled Turkey out of the mobilization for war on Syria and Russia, while China has pulled the entire Association of Southeast Asian Nations (ASEAN) out of the mobilization for war on China. The world is turning to Russia and China for leadership and development, rather than the West’s austerity and war. Even the European nations are beginning to see the insanity of the drive for war on Russia, and the benefits of peace and development through cooperation.

The New Paradigm posed by Lyndon and Helga LaRouche, based on the common aims of mankind, is within our grasp, if the citizens of the West have the courage to follow the Schiller Institute’s lead for a “New Silk Road” development of the entire world, and to follow the wise words of Friedrich Schiller that we must be both patriots of our nations and citizens of the world.

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