Tag Archives: financial advice

Dawn J. Bennett: The Five Stages of Deutsche Bank Grief

Financial expert Dawn J. Bennett recently wrote an article titled, “The Five Stages of Deutsche Bank Grief,” in which she discusses the potential collapse of Deutsche Bank. According to Bennett, Elisabeth Kübler-Ross’s famous five stages of grief can be seen in the markets. In their usual order, the five stages are denial, anger, bargaining, depression and acceptance.

Deutsche Bank has a high risk-taking culture and the risk of its collapse is real. The bank is connected to a number of other banks and institutions, including the 200 institutions just from its hedge fund business. If the bank fails, it will create a domino effect and have much larger and more intense impact than Lehman Brothers. Deutsche Bank’s assets are approximately $1.9 trillion, and they have a balance sheet about equal to Germany’s gross domestic product (GDP).

As things progress and more retail depositors start to worry and pull out, Bennett says the bank only has a few options— none of which are good. These options include:

  1. To sell their equity to provide much-needed liquidity.
  2. To approach the European Central Bank (ECB) for a liquidity bridge, an option opposed by Chancellor Angela Merkel and denied by the ECB for Greek and Italian banks.
  3. To eliminate billions in unsecured claims and deposits, which could result in a full-blown, systemic bank run with depositors rushing to withdraw their savings.

“And here we are, mired in the throes of Kubler-Ross’s stages of grief,” says Bennett. “We saw denial as the market wanted to go higher on the belief that there would surely be some sort of bail-out, but ultimately going negative. If Germany does bail out Deutsche Bank when it advocated so strongly against similarly helping Greece and Italy, there may well be a full-blown political mutiny in Europe, and the ECB certainly wouldn’t be happy. Of course, the next stage is anger, and that’s easy to see. ‘Who let this situation get so bad? Who can we blame?’ Bargaining follows, as investors look for a way to walk away and take their losses without being hurt further. After that comes the depression of seeing all that money just gone, something we remember all too clearly from 2008 and 2009, when many investors lost from 25 to even 70 percent of their portfolios.”

Bennett says the most important thing is how the acceptance stage is handled. This is the time to determine how to rebuild, she says.

“Systemically, of course, this is a matter for governments and institutions, but markets are made of individuals, and how we each respond is a critical element in how the global economy will respond,” says Bennett. “If we take a defensive position, focus on assets like gold and silver that are likeliest to hold real value in a collapse or crisis, and then rebuild while demanding free markets that are actually free before we opt back in to the ‘system’ that looks set to fail yet again, then these five stages will not have been in vain.”

 

 

Why Financial Experts Hunger for Answers

All eyes are on the Federal Reserve this August as we await Chairwoman Janet Yellen’s announcement regarding potential adjustments to national fiscal policy and—experts hope—a long-awaited increase in interest rates. However, some financial experts, like long-time money manager and radio host Dawn J Bennett, believe that whatever Yellen announces this month, the odds aren’t likely to be in the nation’s favor. As Bennett states, a growing number of economic indicators point to the reality that the Fed has lost a handle on the economy as a result of its focus on exclusively finding solutions for the present, rather than the future.

Is Government Overreaching?

Regardless of whether the Federal Reserve increases interest rates and delivers the recommendation that the country has anxiously awaited, the larger problem at hand is the presence of the government’s ever-extending, unwarranted hand into economic outcomes. As Bennett points out, the economic upheaval and excruciatingly slow recovery from 2008’s recession was the product of a “wait-and-see” economic experiment by the Feds, not a method grounded in sound fundamentals.

Forgetting about Long-Term Gains

The performances of central banks around the world point to the consequences of this type of approach to economics; many are currently experiencing some of their worst numbers in over 2 years. While central banks are suffering the stock market is still holding up, but Bennett argues that this, too, is a deceptive cover for the manipulation that’s really at play. In fact, there’s a significant lack of real “volume” behind the stock market; the internal financial health of companies does not match up with the external sky-high values that irresponsible policies have propped up.

In fact, FactSet predicts that year-over-year declines in earnings per share will continue for the majority of companies on the market into the 3rd and 4th quarters. Yet, central banks and other large companies continue to make choices that improve conditions in the short term while ignoring opportunities for growth in the long term.

A Realistic Perspective

What can and should be done to prevent an impending market slump (an inevitable consequence of a market not backed by real volume)? According to Bennett, the government and central banks should first come clean and offer an honest, transparent forecast of the economy. There’s no denying that the odds aren’t in our favor. What’s done is done, but moving forward, we can improve our situation by holding a strong cash position, investing more heavily in gold, and hedging with short-term bonds.

We can only hope that (as unlikely as it may be) Ms. Yellen’s announcement will address these points.

Bennett Group Financial Services LLC, based in Washington, D.C., is a comprehensive financial services firm committed to providing opportunities to clients’ as they seek long-term financial success. Its customized programs are designed with the potential to help grow, lower overall risk and conserve client assets by delivering a high level of personalized service and skill.

For more information, call 866-286-2268 or visit http://www.bennettgroupfinancial.com

Securities offered through Western International Securities Inc. (WIS), member FINRA/SIPC. BGFS and WIS are separate and unaffiliated entities.

About Dawn Bennett

Dawn Bennett is CEO and Founder of Bennett Group Financial Services. She hosts a national radio program called Financial Myth Busting http://www.financialmythbusting.com

She discusses educational topics and events in the financial news, along with her thoughts on the economy, financial markets, investments, and more with her live guests, who have included rock legend Ted Nugent, as well as Steve Forbes and Grover Norquist. Listeners can call 855-884-DAWN a as well as take podcasts on the road and forums for interaction.

She can be reached on Twitter @DawnBennettFMB or on Facebook Financial Myth Busting with Dawn Bennett ordbennett@bennettgroupfinancial.com