Deutsche Bank Profit Plunges 98 Percent As The Outlook For The Worlds Riskiest Bank DarkensBy Michael Snyder Today, we got some more bad news from Deutsche Bank. Compared to the exact same period last year, profits were down 98 percent. A nearly 100 percent drop in net income spooked a lot of investors, and Deutsche Bank shares got hit hard on Wednesday. Of course Deutsche Bank shares are already down by more than half over the past 12 months, and the financial sharks can smell blood in the water. Just like Lehman Brothers in 2008, Deutsche Bank is essentially in panic mode at this point. They recently announced that they will be closing188 branches and that 3,000 workers will be losing their jobs. But this could just be the beginning of the layoffs at the bank. According to some reports, the bank could cut up to 35,000 jobs by the year 2020, and CEO John Cryan recently admitted that they may have to accelerate cost-cutting measures. What makes all of this even more alarming is that Deutsche Bank is widely considered to be the most dangerous bank on the entire planet. The following comes from a CNN article posted just today entitled The worlds riskiest bank is in trouble Germanys biggest lender was dubbed the worlds riskiest bank by the International Monetary Fund last month, just as one of its U.S. businesses failed a Federal Reserve stress test. Its shares are down 45% this year, and on Wednesday it said second quarter profits were wiped out by a 98% slump in earnings. The stock fell 2.5% in Frankfurt. The primary reason why Deutsche Bank is the worlds riskiest bank is because of the mammoth derivatives portfolio that is possesses. It currently has42 trillion euros of exposure to derivatives, which is an amount of money about 13 times the size of the entire German economy. When Deutsche Bank finally goes down for good, it is going to be the shot heard around the financial world, and it will be a disaster many times greater than the collapse of Lehman Brothers in 2008. Just consider what Jeff Gundlach had to say about the bankearlier this year Banks are dying and policymakers dont know what to do, Gundlach said. Watch Deutsche Bank shares go to single digits and people will start to panic youll see someone say, Someone is going to have to do something. As I write this, shares of Deutsche Bank are sitting at just $13.63, and many experts are having a very difficult time finding any reason for optimism. In fact, Edward Misrahi has stated that the bank is his number one short trade, andJim Collins says that it is just impossible to recommend buying shares of Deutsche Bank even at this depressed level As an equity analyst, it is just impossible to recommend shares of a bank that is not growing revenue. So really, Deutsche is an untouchable, and the stock market is trying to the tune of a 58% decline in DBs market value in 12 months to recalibrate Deutsches market capitalization to the true value of its assets net of liabilities. Thats a painful journey. I dont mean to just pick on Deutsche Bank. Certainly there are a lot of other major banks around the globe that are also teetering on the brink right now. Just take a look at Italy. Basically their entire banking system is in the process of melting down. But the utter collapse of Italys banking system wont have the same kind of worldwide impact that the collapse of Deutsche Bank will. Unlike some of his predecessors, CEO John Cryan is being honest about some of the struggles that Deutsche Bank is going through right now, and he admits that they may need to be more ambitious in our restructuring. The following comes from Business Insider Cryan said in a statement (emphasis ours): We have continued to de-risk our balance sheet, to invest in our processes and to modernize our infrastructure. However, if the current weak economic environment persists, we will need to be yet more ambitious in the timing and intensity of our restructuring. He said something similar in a note to employees (emphasis again ours): Here I would like to speak plainly. If this weak economic environment persists, we will need to be still more ambitious in our restructuring. We will do everything in our power to accelerate the measures we have already planned. Yes, I know that the stock market in the United States has been setting all sorts of all-time record highs lately. But that doesnt change what is going on in the rest of the world one bit. The financial crisis that has been gripping Europe, Asia, South America and most of the rest of the planet since the second half of last year is accelerating. And it is inevitable that the U.S. is going to be experiencing some very real pain in the not too distant future as well. So even though things may seem a bit quiet this summer in the financial world, the truth is that there is a whole lot going on under the surface. Deutsche Bank is one glaringly obvious example of this, but there are many others all over the globe. And not too long from now, the dominoes will begin to fall very rapidly. Michael Snyder is a writer, speaker and activist who writes and edits his own blogs The American Dream and Economic Collapse Blog. Follow him on Twitter here. How totally reckless to indulge in hedge fund and derivative trading. What could these pompous, snotty bankers be thinking? Oh, they were eating greed for breakfast, lunch and dinner. They figured they controlled the news, controlled the markets and could just skim and profit to greater heights. Go after the wealth of these bankers first. Do not let them steal the savings and deposits of the depositors. Do not expect taxpayers to bail them out. Take the bankers personal wealth and stop the crime now. They had the control. They chose to engage in risky speculative investments, let them pay the price. Wasnt a German bank the first major bank to institute negative interest rates? Wonder if the Germans will be the next test case for Cyprus style bail ins. The entire G20 agreed to using bail-ins about a year ago. G20 = Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, South Korea, Mexico, Russia, Saudi Arabia, South Africa, Turkey, the United Kingdom and the United States, and the European Union. Thank you Blue for inserting that important perspective!!! Youre very welcome! The sooner all the zentral banks fail and the bankers are pushed out over the great pond the soone a thousand years of peace will commence. 