Deutsche Bank lays off 18,000 employees.
A few days ago, multinational finance giant Deutsche Bank announced it would axe 18,000 staff from its payroll by 2022 as part of a “radical transformation.”
According to Nathan Birch of Binvested, this could prove to be the writing on the wall when it comes to the GFD.
It’s not every day a bank lays off 18,000 workers.
As part of the bank’s new strategy, Deutsche announced it was exiting the Equities Sales & Trading business before returning 5 billion euros of capital to shareholders starting in 2022.
In a July 7 media release, CEO of Deutsche Bank Christian Sewing said:
“This is a restart for Deutsche Bank – for the long-term benefit of our clients, employees, investors and society.”
This “restart” signals the end of a decades long attempt to compete against US investment banks.
Nathan says to watch this space.
“It’s not normal that you see one bank lose almost 20,000 staff in a day.”
“I believe Deutsche Bank is a lynchpin to the GFD.”
What does this mean for the economy?
In a recent post, Nathan announced that the GFD had officially began.
The GFD, or Global Financial Depression, was set to “make the GFC look like a minor glitch,” he said.
The restructuring of Deutsche points to the bank being in serious trouble.
“Deutsche Bank alone has $60 or $70 trillion worth of derivatives currently that we know of.”
If you compare this to the $7 to $8 trillion worth of derivatives that caused the GFC in 2008, then things are certainly looking grim.
“If Deutsche Bank goes under, there will be massive casualties all around the world,” says Nathan.
An inverted yield curve points to troubled times.
The recession signal recently lit up when the Treasury yield curve became inverted. If you compare it with the lead up to the 2008 inversion, it is a good indication of where we are heading economically.
Yield curve May 2018:
The above image shows flattening of a yield curve in the start of May 2018.
Yield curve May 2019:
The yield curve in the above image is severely inverted where the 5 and the 10 year marks are lower than the 3 month mark, signalling a recession.
A positive yield curve indicates signs of a strong economy. Whereas, a negative yield curve indicates a weakened economy where risk has been taken from longer term bonds and placed in shorter term bonds.
When Nathan said that the GFD would occur some time between August to November 2018, people called him crazy. But, the yield curve fell off a cliff on the 10th of October 2018 – right between the dates he predicted!
Fun fact: 27 out of the last 29 yield curve inversions have led to a recession.
What will happen next?
While the GFD could play out in a few different ways, Nathan believes we are likely to see volatility in the stock market, with large organisations collapsing. This will be the trigger for panic and chaos.
“People will lose a lot of money in their superfunds and their paper assets while losing the ability to spend their savings,” he says.
The masses will become fearful and want to hold onto whatever money they have.
Then, the regulators will step in.
We have already seen the RBA drop the cash rate twice to 1% over the past two months.
The Australian Government has also announced a new scheme to help first home buyers with the cost of their deposits.
Everything is on track with the GFD, says Nathan.
Inevitably, regulators will have to print more money to get out of recession and push the economy into action again. This will cause further inflation and damped the spending power of money.
“If you use that money now while things are on sale, you won’t just do well out of it, you will overcompensate and do super well.”
“This is the opportunity right now to get out of the matrix.”
While most people will be too fearful to spend their money over the next 12 months or so, Nathan says now is the best time to accumulate assets. Once inflation picks up again and prices begin to climb it will become hard to buy properties once more.