SAMA is pumping $5.3b into the banking system amid a biting cash crunch. The second bailout in a year. Meanwhile, the riyal's peg to the dollar is still in place and is being defended to a tilt. Interbank rate has spiked to GFC levels. Things are going to get ugly here. With oil in its $40s compared to about $145pb back in 2007, the shelf life of this peg is about to expire. The similarities between the Saudi and Chinese (both banking and currency) crises are remarkably spooky. http://www.bloomberg.com...lion-to-boost-stability

DB's troubles are now making headline news after simmering on the sidelines for what seems like forever. The masses get to understand the seriousness of the situation after it is too late.

At current market price - near single digit - DB is trading at about 30% of its book value. For comparison purposes, that is similar to NBK. In addition, its AT1/CoCo bonds are trading at 70% of par. This means raising new capital is not a ready option since there will be no takers if any.

Most European banks suffer from the same symptoms more or less. For now it is a question of how long confidence in the global banking system can last coz everything else is in tatters.

Unfortunately it is a lot more complicated than that and a merger with Commerzbank won't solve anything. My thinking is those merger talks are idle chatter.

Not only is Deutsche bank 'too big to fail' it is also 'too big to bail'. Both Germany and the EU can't afford a bailout in the magnitude required for DB's rescue especially in the current circumstances. Germany wouldn't want a situation where a corporate insolvency turns into a sovereign one. Back in 2008 Ireland made that mistake with Anglo-Irish bank. DB is several times bigger and likewise with regards to its derivatives exposure.

Chopping/spinning off profitable/liquid assets is a short-term ploy to stay afloat and maintain a semblance of normalcy. It can't work for long vis a vis its leverage ratio.

Raising capital is becoming a dead end the more its stock plunges and even if they were to pull this off I doubt they would raise much. The same applies for debt.

As far as a bail-in is concerned, many depositors won't just sit and wait for a massive haircut if they have the chance to take their cash and run. In addition, this particular course of action has extensive systemic consequences for other German and European banks. Cyprus comes to mind.

Setting up a bad bank - good bank kind of rescue strategy would have worked if this was about DB's loan book/deteriorating asset quality but again even that will come up short in relation to DB.

In all fairness to Germany, this DB situation has all the makings of doomed if you do and doomed if you don't. The die appears to have been cast.

Months of skepticism on the sustainability of a rally in emerging-market stocks is waning, if short sellers are any guide. Bearish bets on the iShares MSCI Emerging Markets Index fell to a two-year low at the end of last week, an indication that investors have greater conviction this year’s 15 percent advance in the benchmark gauge has further to run.

The World Bank, IMF and WTO can sense that they are sitting on the edge of a volcano that could blow at any time. They fear, rightly, that a second big crash within a decade would create a backlash leading to protectionism and the rise of dark political forces that would be difficult, if not impossible, to control.

The Jubilee Debt Campaign (JDC) has been keeping a close eye on Ghana, which grew strongly after oil was discovered and commodity prices were rising, but was left exposed by the subsequent crash. More money was then borrowed to blunt the impact of the commodity price fall, but the halving of the Ghanaian currency, the cedi, meant that debt-servicing costs increased. Almost one-third of Ghana’s budget is spent on external debt servicing.

In early 2015, the IMF and World Bank said Ghana was at high risk of being unable to pay its debts. Seven months later, the World Bank guaranteed $400m of repayments on a £1bn bond sold to private investors. It had to waive its rules to do so, because the World Bank is not supposed to guarantee loans to countries at high risk of distress.

The World Bank said it was trying to help refinance expensive short-term debt and free up resources that could be used for investment, but the winners of this arrangement are the speculators getting a 10.75% return, who will make money even if Ghana can’t repay the loan, due to the World Bank guarantee. The losers will be the Ghanaian people, who will be subject to austerity under the terms of a new IMF programme. Ghana is planning spending cuts by 2017 of 20% per head on 2012 levels.

Sub-Saharan Africa is not a homogeneous region. Some countries are still growing strongly, helped by declining energy prices. But Ghana is not the only country to fall foul of the boom and bust cycle in commodities, and the JDC is highlighting the risk of a fresh debt crisis.

Neither the World Bank nor the IMF consider this a serious threat. Kim said last week: “I am not yet concerned that we’re reaching a debt level crisis, certainly not in most of sub-Saharan Africa. But we have to watch it.”