DB: The Great Counter-Party Unwind Cometh?
DB – the German-traded shares – now sit at 25-yr support with this morning’s ~5% decline baked into the cake.
As the health of this behemoth appears increasingly tenuous, we must remind ourselves that DB holds anywhere from ~$40-$50 trillion in notional-value derivatives on its balance sheet at any given time.
Its failure – or even the incorrect perception that its survival is in question for but a moment – has the potential to precipitate the greatest counter-party risk unwind in history. The words “systematic risk” come to mind.
Should this occur, we will pine away for the nostalgic tranquility of Lehman and Bear.