“Folks are literally starving to death in Venezuela from economic collapse, and if Deutsche Bank goes under, starvation will hit Europe and the USA too. Here’s the likely trigger: Deutsche Bank. Moody’s Investors Service has today downgraded the ratings of Deutsche Bank AG (DB) and affiliates, including:

• the bank’s long-term deposit rating, to A3 from A2,
• its senior unsecured debt rating to Baa2 from Baa1,
• its standalone baseline credit assessment (BCA) to ba1 from baa3, and
• its counterparty risk assessment to A3(cr) from A2(cr).
• Deutsche Bank’s short-term ratings and short-term counterparty risk assessments were also downgraded to Prime-2 from Prime-1 and to Prime-2(cr) and Prime-1(cr), respectively.

Today’s rating action reflects the increased execution challenges DB faces in achieving its strategic plan.
OK, So What Does This Mean to Me? What it means is there is likely financial Armageddon on the near horizon- again. The chart below shows what it means when a financial powerhouse finds its rating “downgraded” the way DB’s was today:

Lehman was downgraded in late April to early May, 2008.  By the first week in September, it had triggered the Great Financial Collapse (GFC) of 2008. Lehman’s collapse had a staggering huge effect upon the entire financial system; it affected everything!  Well, Lehman was “small change” compared to DB.  

If Deutsche Bank goes under, and many financial people are fearful they will, the effects will make the Lehman collapse look like a sunny Summer Day. Deutsche Bank is huge. And they are strategically positioned in the Derivatives market, doing business with almost everyone. They buy and issue Credit Default Swaps, which act like insurance for other people’s debts. If DB goes under, all that “protection” is gone and the world goes right off a cliff into a financial abyss.

The trouble is, DB is far too big to save. No one in the world has enough money to prop them up. So if DB fails- and it is looking more and more as though they will-  the end of the western banking and financial systems will be upon us within hours.