Wednesday, August 10, 2016

Deutsche Bank Still A Smoldering Fire

Things get interesting if a crisis reaches the point where the Germans have to choose between following rules they made for Greece or breaking those rules to avoid depression. Merkel exhausted political capital on economic issues by battling Greece, now what capital she earned in those battles (such as from the financially responsible Finns, Slovaks etc.), she has nearly exhausted with her migrant push.
Deutsche Bank Unexpectedly Found To Have Massive Capital Gap, Larger Than Its Entire Market Cap
German economic research institute ZEW found that Germany's largest bank, Deutsche Bank, had the highest potential capital shortfall, as much as €19 billion in a study of 51 European banks using U.S. Federal Reserve stress test methods. The capital gap is greater than DB's entire market cap.

While it would probably not go bust in a fresh downturn - he predicted the bank which is crucial to the German economy would face serious equity problems. He said: "Putting it short: for a long and serious crisis there simply wouldn't be enough money."

He said: "Turning banks into community property through public funds is not only possible but also necessary. If a bank is no longer able to help itself, the federal government should take on shares and exercise the related control functions."

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