While plenty of alarms have been activated around the German banking super-giant Deutsche Bank, which recently was described also by the IMF as "the greatest systemic risk to the global financial system", a Bank's expert claimed that the European banking system and especially the Italian banking system are in trouble!
Furthermore, presumptuously said that the banks should be bailed-out with more billions at the expense of the European taxpayers!
As zerohedge reported:
"In Europe, the bailout does not need to be so large. A €150 billion program should be enough to help European banks recapitalize," said David Folkerts-Landau. He adds that the decline in bank stocks is only the symptom of a much larger problem, namely a fatal combination of low growth, high debt and a "dangerous" deflation.
"Europe is seriously ill and needs to address very quickly the existing problems, or face an accident," said the chief economist.
The Deutsche Bank expert said he is particularly worried about Italy and the condition of local banks, where the €40 billion in funding needs is said to be "conservative." He said that the bank bailout is so urgent that it should permit Europe to violate the bail-in rules of the new Banking Directive. The economist notes that such a bail-in is not doable and is politically unfeasible because it would hit people's savings and may cause a bank run in both Italy and elsewhere. We find it strange how nobody thought of this before the rules were implemented, or rather how impairing savings was only a problem when "second-rate" European citizens such as those in Cyprus and Greece were affected. Now that Italians and even Germans are in the cross hairs, suddenly "it is time to change the rules."
Our only question is whether Deutsche Bank's chief economist is more worried about the future of Italy's banks, or that of his own employer.
In the meantime, we look forward to the next pan-European bank bailout, now that even Germany's biggest bank has thrown in its support behind the proposal, which means Merkel and Schauble's resistance will promptly evaporate in the coming days as insolvent banks across Europe once again get rescued by taxpayers, in the process further escalating populist anger at the treatment of banks, leading to more Brexit-like events and the further fragmentation of Europe.
It is obvious that the current euro-circus, a Frankenstein creation consisted of political puppets, corrupted politicians, technocrats, lobbyists and bankers, has completely lost common sense.
At the time when the euroship is going straight to the iceberg, this peculiar mixture of sociopaths appears to be in absolute confusion, without showing any signs of returning to sensible thinking. So far:
- Greece has been forced to continue implementing the neoliberal policies that for six years now are destroying the economy.
- Even after Brexit and the unprecedented rise of euroscepticism, the German sado-monetarists demand more pain and iron discipline from the member states.
- Experts from the greatest systemic risk to the financial system simply ignore this risk and try to direct attention to the rest of the European banking system which indeed is in trouble too.
- The bankers request bail-out, thus more money from the taxpayers and the states, when at the same time demand further deregulation, thus minimum state interference.
- The bankers request defiance of the rules, like the bail-in, at the same time when their political puppets impose sado-monetarism demanding from the member-states absolute commitment to the "rules".
Who will be those that may jump out of the ship before the collision with the iceberg? It seems that this is the only question for which we should seek an answer right now.