Economy: Watch Deutsche Bank

Like many other people out there, I've been saying that we're headed into another recession soon.  At 4:50 in the podcast above, Jim Rogers talks about Deutsche Bank right now.  I think the best thing now is to prepare for tough times and watch that bank for bad news. 

Historically, we have a recession every 4 to 10 years, and we're into year 10 since the Great Recession of 2008.  In this clip above, legendary and longtime investor Jim Rogers has been saying for quite a while that we're headed for the biggest economic crash in his lifetime.  And he's not a young guy. Mr. Rogers is one of many intelligent people who see a huge recession (or worse) ahead. 

If you're old enough to remember the 2008 collapse well, you remember that a big investment bank, Bear Stearns, collapsed, seemingly overnight.  A large amount of their investments were sketchy and highly leveraged, and very quickly a huge amount were virtually worthless.  Days after that, as the collapse rippled outward, another big investment bank, Lehman Brothers, also became insolvent, again seemingly overnight.  Those two were the big events that got the whole world's notice that things were really, really bad in the global economy.

I was was homeless after the taxi industry took a dive in 2007, and I wasn't paying super close attention then.  But just from watching the Southern California real estate market, I knew a big recession was coming. 

This time, I'm paying a lot closer attention.  Almost a month ago, I predicted that April 4th was the start of this recession.  I could be completely wrong, but that's the day I became convinced that the stock market was not going to surge to new highs again.  But I don't know just what will trigger the coming collapse.  So yesterday I looked around the interwebs to see if I could find a major bank that might turn into this recession's Lehman Brothers. 

In short order I found that Deutsche Bank, the biggest bank in Germany, is struggling in a big way right now.  They somehow have $60 Trillion in derivatives.  A trillion dollars is a thousand billion.  There's only $280 Trillion dollars worth of wealth in the whole world.  Derivatives are investments like stock or commodity options, Collateralized Debt Obligations, SLABS (Student Loan Asset Backed Securities) and a whole host of other investments that art based on the performance of something else.  When these investments pay off, they make huge amounts of money.  But when the collapse, it's a really really bad day. 

If you look in the news, you'll see Deutsche Bank has recently had their own debt downgraded by the ratings agencies, they've suddenly laid off 400 people, got a new CEO, are talking about dropping most worldwide operations, and laying off another 1,000 people or more.  That's all signs that things are really bad there.  So, at this point, it looks like Deutsche Bank could be the Lehman Brothers of this next economic crash, the "canary in the coal mine." 

So, keep an eye on the big German bank.  If it's suddenly all over the news, things will get sketchy soon after.  We weathered the last recession, and we should be able to weather this one.  But it's going to be really, really tough on a lot of people.  Think of this news as a weather report.  There's an economic hurricane coming at some point.  Get ready to hunker down.