Germany's most important bank has become a mainstay in the headlines, and rarely in a good way these days, Deutsche Welle reported today. A record loss in the last year, rock-bottom share prices, every fourth branch shut down, and rumors of a split. The Deutsche Bank is more "zombie than champion,” according to The Economist. As if that weren't bad enough, the International Monetary Fund labeled the bank the most dangerous bank in the world, because of all the systemic risk it brought to the international banking system — more than HSBC. Now Deutsche Bank is being compared with Lehman Brothers. Especially alarming is the mountain of derivatives. Those are financial products, with which exporters use to hedge against currency effects, and investors use to insure against interest rate fluctuations. But there are derivatives that bet on specific outcomes and have no connection to real trade. Because these types of derivatives played such a key role in the U.S., such products have fallen into disrepute.
