The storm and turbulence around the future of the Deutsche Bank has grown with the announcement last week that some of its executives would face fraud charges in Italy in connection with the charges levied against some executives of the world’s oldest bank the Monte dei Paschi di Sienna founded in 1472. This announcement will only increase the pressure on shareholders to liquidate their shares and assets connected to the bank. Public opinion in Germany opposed to helping Deutsche bank survive the crisis will only harden once the news is digested. The trial in Italy will get under way in December.

In the meantime there is plenty of time for things to unravel. The ECB is in a no win position in wanting to manage the crisis and scandal and prevent it from becoming systemic. Deutsche bank has been trying so far, unsuccessfully apparently, to negotiate a reduction in the 14 billion US $ fine that the US department of Justice is demanding to settle a claim growing out of mortgage backed securities which Deutsche bank created and sold in the run up to the financial crash of 208. If they don’t get a major reduction, analysts believe the bank would fall into bankruptcy as shareholders desert the bank and a bank run ensues.The scandal and charges show that once again the financial markets are very slow learners about the dangers of derivatives and unethical practices and gambling as a strategy motivated by reckless greed. Again its an illustration of Minsky’s and Keynes’s understanding that speculation, risk and uncertainty is central to modern finance capitalism. Some analysts speculate that the collapse of Deutsche Bank and its links to the Italian banking crisis would have cascading consequences for global financial markets.We shall see how widespread the fallout will be in the coming weeks.