Tuesday, September 27, 2016

Matthew Lynn — The Deutsche Bank crisis could take Angela Merkel down – and the Euro


Deutsche Bank is teetering. Lehman?  Creditanstalt?

The Telegraph
The Deutsche Bank crisis could take Angela Merkel down – and the Euro
Matthew Lynn

18 comments:

Andrew Anderson said...

This year, there has been an unfolding Italian crisis, as bad debts mount, and yet Germany has insisted on enforcing euro-zone rules that say depositors – that is, ordinary people – have to shoulder some of the losses when a bank is in trouble. Matthew Lynn

Which does not make moral sense since the public has no choice but to deposit at one member of the usury cartel or another or else be limited to unsafe, inconvenient physical fiat, a.k.a. "cash."

Bob said...

Like the bail-in they imposed in Cyprus?

andy blatchford said...

If Deutsch goes down and it's increasingly looking like it will (assuming the Germans won't save it) anyone have any guesses how bad it will be?

Andrew don't you call for 'full reserve'? Don't you realise that it would mean bank runs aplenty? Loans still go bad in a full reserve system.

Andrew Anderson said...

Andrew don't you call for 'full reserve'? andy blatchford

No, I don't. Let 100% private banks with 100% voluntary depositors create all the deposits/liabilities they dare.

Don't you realise that it would mean bank runs aplenty?

Reform would be deflationary by itself which is why I also advocate equal fiat distributions to all adult citizens to counter this.

Loans still go bad in a full reserve system.

Why should we care if the loans of 100% private banks with 100% voluntary depositors go bad since the payment system would no longer have to work through depository institutions?

And again, I don't advocate 100% reserve lending.

Tom Hickey said...

If Deutsch goes down and it's increasingly looking like it will (assuming the Germans won't save it) anyone have any guesses how bad it will be?

The Germans don't seem to have digested Lehman.

The point of the danger of systemic risk is that no one knows how bad it might become financially and economically, or what the social and political repercussions could be either.

andy blatchford said...

'Equal distribution of fiat' OK so is that just the same to everyone or grade it depending on their social strata? If the former just entrenching inequality. If the latter then basically what we do with tax credits, food stamps etc...what exactly are you changing?

andy blatchford said...

A bit like Brexit Tom I sorta have a let it go attitude and see what happens but it ain't going to be good. I don't really see any other option than it blowing up.

Andrew Anderson said...

If the former just entrenching inequality. andy blatchford

Suppose A has $1,000,000. Suppose B has $1000. Then A has a 1000 times what B has.

Now give A and B $10,000 each. A now has $1,010,000 and B has $11,000. A now has only 91.8 times what B has.

Relative wealth inequality has decreased to 1/11 of what it was.

Andrew Anderson said...

I don't really see any other option than it blowing up.

No surprise there.

andy blatchford said...

No Andrew as you are just concentrating on 'money' what about other financial assets they own, what about land that they own etc. You are forgetting 'rent' you have a starting position which will not end up in equality it will just end up in more inequality and something the UBI crowd just don't think through.
Haven't you ever played monopoly? Passing go gets you $200 (a UBI) without other policies just chucking 'money' about won't do it...banker doesn't win in monopoly it's the land owner.

Andrew Anderson said...

No Andrew as you are just concentrating on 'money'

The proximate problem is excessive private debt and what caused it.

But no doubt asset distribution should be on the agenda too.

andy blatchford said...

"The proximate problem is excessive private debt"

Sure, doubt anyone here disagrees with that, I don't either. But the lazy just blaming the banking system I do disagree with, why not aim at the real problem the bond holders of the banks? We have a system that puts creditors at the fore. It isn't the 'banking system' itself that is the issue.
It is wealth distribution that is the problem and as per my point just chucking fiat about isn't going to cure that, sure we can do that but doesn't change the asset holders, it doesn't change wealth distribution, it doesn't change who owns resources.

Matt Franko said...

"But the lazy just blaming the banking system I do disagree with"

This is kinda how I think ... its lazy...

andy blatchford said...

One of the strangest arguments Matt is from some of the AMI/Positive Money crowd(not all)that they don't like usury, ok fair enough but then the solution they want by design makes loans more expensive...go figure.

Matt Franko said...

Well AA here wants the CB to give everybody equal munnie so I'd assume they think with that munnie from the CB then nobody would have to borrow much munnie or something...

But I think to your point loans would still happen but as the govt wouldnt be regulating the rates then imo rates would go way up as savers would have a monopoly on lending... ie in would come the yuge rents....

Andrew Anderson said...

Actually, I'm in favor of low interest rates but they should be brought about ethically, e.g. via equal fiat distributions to all citizens.

Ignacio said...

How you do that, send checks to everyone? If you send 10k USD to everyone (let's not think about the logistics of it, how much money to send, to whom, how, etc.) you are just diluting purchasing power you talk about, and if it's a one time thing is ineffective (that's what tax temporal tax cuts are in practice).

Is all about flows. Assets ownership (and exploitation) generate income flows, the problem is wealth distribution as Andy says. And then the government would have to take over the whole banking business too and offer loans or it would be pointless (as for what Matt and Andy are saying above), I'm not against that but again, is not just "let's send 10K USD checks to everyone and everything fixes itself".

In any case all this discussions are like the JG vs. BIG discussions: chance of that happening (either thing) now are zero, same as officially acknowledging and adopting MMT etc. It's all science fiction, maybe in an eon or so, if we still are not extinct ;)

Andrew Anderson said...

you are just diluting purchasing power you talk about, Ignacio

Reform by itself is deflationary.
Fiat distributions by themselves might be inflationary.

Combine the two.