Deutsche Bank bankruptcy would collapse world financial system – Jim Rogers
Germany's Deutsche Bank reportedly failed to reach an agreement with the US on settling a massive fine. The bank is facing a $14 billion fine penalty from the US Justice Department for mis-selling mortgage securities in the run-up to the 2008 financial crisis.
RT: Firstly just to make it clear why has the US imposed such an enormous penalty?
Jim Rogers: The main reason is that the US government is deep in debt. They’ve got a gigantic deficit – they are desperate for money. They’ll try to get it anywhere they can. I can’t imagine that Deutsche Bank should be liable for $14 billion, but I’m not involved.
RT: The bank said it won't pay anything near to what the US has asked for - how will this be settled?
JR: Either Deutsche Bank goes bankrupt, which is going bring down the entire world financial system, or they are going to come up to some kind of compromise at a lower number. If Deutsche Bank does have to pay $14 billion – you should be very worried anyway, but especially if they have to pay $14 billion.
RT: How desperate is Germany's main bank at this point? Will it survive without a bailout?
JR: If you look at its balance sheet you will see it has huge, staggering debts both on balance sheet and off balance sheet, which means their debts that they don’t reveal directly. It probably will survive if it has support, but otherwise we all are going to have huge problem in the next couple of years. I’ve told you before: you should be very worried. The western world, the world is going to have a lot of problems the next couple of years. Be worried!
RT:Just back in August the US was furious over the EU's decision to demand billions of euro from Apple in back taxes. Many see the recent scandal around Deutsche as revenge from Washington. What's your take on that?
JR: These governments do play tic-tac-toe and tic for tac over and over again, which is not good for any of us. But that is what they do. You give these bureaucrats power – they take it and they run with it. Power corrupts, it has been happening for hundreds of years.
RT: In the event Deutsche Bank fails what would that mean for the EU and the financial world in general?
JR: Then the EU would disintegrate, because Germany would no longer be able to support it, would not want to support it. A lot of other people would start bailing out; many banks in Europe have problems. And if Deutsche Bank has to fail – that is the end of it. In 1931, when one of the largest banks in Europe failed, it led to the Great Depression and eventually the WWII. Be worried!
Germany has been rightly telling everybody not to bail out their banks, but if they have to suddenly bail out their banks, then other countries will be furious and the politicians will have a field day.
The statements, views and opinions expressed in this column are solely those of the author and do not necessarily represent those of RT.