Wednesday, September 21, 2016

Why Deutsche Bank Matters

The Dindus at the DoJ retaliated against the EU's attack on Apple with an attack on Deutsche Bank. Now the fallout is rolling in.

"Deutsche Bank May Ultimately Need A State Bailout" - Handelsblatt
So could a state bailout for Deutsche Bank be needed? With next year’s general election looming, and the populist Alternative for Germany party rising in the polls, this would be the last thing the German government wants. But there is no panic in the federal finance ministry as yet. In the past, American banks have been confronted with similarly breathtakingly initial settlement demands, only to see them radically reduced in the final deal.

Unfortunately, Deutsche Bank may not be so lucky. Even if theories are discounted that the $14-billion charge is payback for European tax demands on Apple, the German bank may face tough treatment in the United States.
If DB goes down, it will benefit anti-EU and anti-euro parties in Europe. Whether it is German parties or those outside of Germany that benefit most will depend on how Germany acts. Does Germany sacrifice national interest to benefit the EU, or act in the national interest at the expense of the EU? There is a way to act both in the national and European political interest: devalue the euro. But the Germans remain very opposed to easy money and a devaluation risks a global recession and global financial crisis.

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