More precisely everyone got the same currency but didn't have to actually live by the stability pact. The politics of Euro membership were more important than the reality. Greece should never have been allowed to join, France and German routinely ignored the Stability and Growth pact.
The problem with DB is that Germany cannot let it fail because it underwrites its export economy, plus it would be a national humiliation. However bailing it out after imposing austerity on the PIGS, especially Greece would pour fuel on the fire of anti-German sentiment in the EU.
Wouldn't help, Deutsche Bank doesn't have too many retail clients, getting reimbursed for 100.000 Euros of deposits doesn't help the typical corporate client much.
Highly unusual for an investment bank, they acquired Postbank to open up a retail channel, but that is < 5% of the size of Deutsche Bank.
German media makes a point that Deutsche Bank has been hit hard with the fines from their (past) crimes. Investment bankers and CEOs took their bonuses and moved on. Spiegel reports Deutsche Bank used $15 billions since 2012 for legal disputes.
I wonder why there isn't more resistance against the exorbitant fines the US charges European banks every year. These fines have become a significant business risk and should be regulated in free trade agreements, just like subsidies are limited in such agreements. For many European banks, the US business is a money drain, i.e. it costs them more than they get from it. However, they cannot escape US regulation and legal exposure as long as they want to have the ability to trade US dollars. In the end, this is a hidden tax the US charges on all banks world wide, just because it is powerful enough to do so.
If a bank is really big, like HSBC, it can't/won't be penally prosecuted in real world, so the rational choice [1] is actually to keep committing crimes, and settle the ones where they're caught.
On the scale of such bank, even fines which would be astronomical from the perspective of a normal citizen, are peanuts (so to speak) for a large bank.
US Regulators fine all banks in the US that they catch flagrantly breaking the law. They don't just fine European banks - have a look at how much they have fined the likes of JPMorgan or BoA over the last few years.
Likewise, regulators in Europe dish out fines a-plenty. The FSA certainly did over the LIBOR scandal recently.
European banks could mitigate risk in the US by trading legally or by ceasing trading there at all. If they really think they can't trade legally then their business is not welcome.
...but you forgot a little detail, the US saves each of its banks if they get any close to becoming bankrupt. They don't save foreign banks if the same happens, at all.
It's not the regulators, it's the prosecutors in New York, who have jurisdiction over the European banks since USD transactions are cleared there.
The problem is that banks absolutely cannot afford to risk going to court, since losing a case could mean losing their ability to deal in USD, which would be the end for them. That means that the banks must settle any case brought by the prosecutors. The prosecutors in New York have used this leverage to squeeze billions in settlements from the European banks. The "justice"system has basically turned into what amounts to a protection racket.
Which is why the Chinese are trying to get out from under all this influence by creating their own parallel version of various aspects of the western financial system[1][2]:
With "protecting" you mean for example protecting the money laundering business in Mexico?
Your perspective is too generalized, thus ultimately false. The case depends on the size of the bank.
In the case of a famous British bank, the prosecution literally stated that they could not prosecute the bank because it would have been too much of a big impact on the economy.
They got fined with the equivalent of a few weeks of profit, and who knows how much they ever profited from such illegal activities.
Your comment is farcical; it's been widely written about how lightly banks and other financial institutions get off following egregious violations of law.
This is a fraud nearly as bad as Kerviel, and happening at about the same time ($8bn unauthorised position), and where Goldman quietly fired the trader and did not report the fraud, which enabled the trader to work at another bank. And for that Goldman was given a mega-fine of..... $1.5m.
> they cannot escape US regulation and legal exposure as
> long as they want to have the ability to trade US dollars
You don't need to be in the US to trade USD. FX is more lightly regulated than almost all other asset classes. For most of the cold war there was a strong trade in USD based out of London-based banks that had no US presence. https://en.wikipedia.org/wiki/Eurodollar
Doesn't need to be a bank. You go to a shopfront FX dealer in Vientiane or Tehran or St Petersburg and deposit or withdraw USD against local currency (or anything else that's liquid).
In the most basic trades, possession is settlement. Much of the third world has significant trade in USD, including countries that the US doesn't regard well. In Panama, the USD is a defacto national currency, a choice the crowd has arrived at due to convenience.
You can get an armoured van and deliver packs of physical notes.
You can use contracts to get more complicated arrangements, including where you have USD on paper but backed by an alternative currency. You can do balance sheet adjustments by contract. You can be a dutch firm ordering agricultural goods from Kenya, and do your leg of the transaction by delivering USD. The banks in the middle might exchange physical USD to make it happen, without any of them being regulated by the US at the time. But - probably - they'll just organise the deal in terms of USD using holdings of other currencies or commodities or contract-agreed offsets that are convenient to them.
If you do a transaction with physical cash, yes you don't need a bank. But if you do any large transaction it will not be in physical cash, and the clearing has to go through a US approved bank. Foreign banks that cannot clear USD use other banks behind the scene.
Well, Germany has been allowed to act as the emperor with no clothes for a while now; an economic powerhouse sitting on empty pension chests with an ageing population.
My colleague from Greece has been giddy as a schoolboy about this story all week. Not quite the roaring, thunderous fits of laughter as with the Volkswagen scandal, but this is still developing.
I'm from Germany and the troubles of the Deutsche Bank please me to no end. The only thing I'm scared of is that it will be declared "too big to fail" and bailed out with tax money, while at the same time there's no money for schools, police, refugees etc because Wolfgang Schäuble is obsessed with his "black zero".
Actually Greece has in a way already paid for a bailout of DB (+ other German & French banks). Just before the (famous?) PSI[1], the Greek state (through retirement funds, universities & other public and semi-public institutions) bought off a lot of (Greek) government bonds from these banks. Then the haircut happened. So instead for these banks to suffer the losses, they were moved to the taxpayer.
> while at the same time there's no money for schools, police, refugees etc because Wolfgang Schäuble is obsessed with his "black zero".
Schleswig-Holstein just decided to drop any plans for the black zero, and doubled the funding for new police recruits. Additionally, we decided to also build more schools. And fix the infrastructure.
As an Irish person living in Germany (partially as a result of an extremely ill-advised bank bailout), it's quite amusing to watch. I've watched this exact scenario happen in my own country, except with retail "pillar" banks instead of investment banks. I compare bankers to the monarchy of old, they are completely unelected and hold a huge amount of power.
You can be sure that if the shit really hits the fan, Deutsche will be bailed out, no matter the cost. I would bet anything on this happening.
Maybe your colleague from Greece should realize that when DB 'falls' tons of people will take the fall for it, regular people like you and me, people who are just trying to make a living, like all those poor fucks in Greece. The group of people taking the fall for it won't be limited to Germany, you can be sure Greeks will feel it as well.
Put yourself in their shoes for a moment. For the past 8 years, day in day out you have to hear jokes about how dishonest and unreliable Greeks are, that they caused these problems for us with their cheating, how they should be strictly honest and reliable like Germans, how they shouldn't spend money they don't have and get their finances in order like Germans, and then the Volkswagen scandal happened, and now this. You know, it doesn't involve me at all, but I can imagine why he finds this amusing.
... and all sane people in Germany condemned them for that.
BTW nobody spoke on the issues of other EU members, like e.g. Greece's northern neighbours Bulgaria and Romania where people live with less than the Greeks during the worst times of their crisis. And all this just because someone somewhere gave carte blanche to the Soviet Union to install pro-communist forces in countries of strategic interest to them where there was almost non-existant communist movement compared to Greece where the UK allegedly intervened so that this won't happen. Just for perspective: people lived comparably good/bad in all three countries before WW2.
As a German, you should know how economically devastated was the DDR after 1989. And bear in mind that it was the best player in the Eastern league of non-representativeness and corruption. (comparisons with the West are another topic altogether)
But quite tame in comparison to Greek media the picturing Merkel with a swastika or the Schäuble cartoon where it was implied he wanted to make soap out of Greek citizens in new concentration camps...
The Germans will be ok, don't worry about them, but maybe they'll change their mind about collective guilt now.
I never saw the EU bailouts as handouts from the virtuous to the losers, nor do I see it as an altruistic gift to our friends in need. I see it more as an insurance. Do people whose house isn't on fire want to punish those whose house burned down? No. We all know it could happen to us.
I don't think Germany will need a bailout, but if some day they do, we should do it.
Oh, definitely, but it's still not something to wish on someone. Then again, I guess the colleague was just laughing at the irony, so we aren't all arguing the same point here.
Fact is, it hasn't happened in Germany so far, even in the big financial crisis 2008, all the banks could easily be bailed out by Germany's own public funds. In addition, Deutsche Bank hasn't failed yet, so save your gloating until something actually happeny...
Small correction: "When the banks were Greek, Spanish, Portuguese or Irish, the Greek, Spanish, Portuguese and Irish governments didn't give a fuck about the people."
Since you appear to be from one of those countries, you should see how to get more responsible for your choices and look for better representatives to elect. I don't see what's your point about another sovereign country. Everyone has their own problems, let's just focus on ours.
BTW you would be surprised how pissed off were Germans at that time, because every sane person knows the old saying: "Bankers here, bankers there, all the same everywhere." So we (at least not the bigots among us) should be allowed to speak of regular people bearing the cost of such changes, shall they happen, just as we (and YOU) did it when the same thing happened in Greece, Spain, Portugal and Ireland.
No, your correction is a lie. The ones that didn't give a fuck, didn't want to help and made the crisis worst were the German government and their negative to help because the South countries were just a bunch of people that didn't work, expend too much and deserved all that happen.
>? Since you appear to be from one of those countries, you should see how to get more responsible for your choices and look for better representatives to elect. I don't see what's your point about another sovereign country. Everyone has their own problems, let's just focus on ours.
This must be a fucking joke looking what happened to Greece. When the people elected different government, the German one did what they did.
Precisely! You prove my point. It was the German government and not the regular people in Germany. My "advice" applies to Germany and elsewhere equally as well. The point being, ΣΥΡΙΖΑ won with sweet words, but failed to act upon them, which is a pity. Don't think that just because Merkel gets reelected, everyone from the German nation stays behind all her government does. NO! And there was, is and will be a lot of criticism from the German people for things like this.
So, για όνομα του Θεού, don't fall into the trap the media tries to put us into (for whatever reasons, I don't care). This is not about Germans vs Greeks, it's about the consistently failing banking system around the world. Only when we realise the true nature of the problems at hand, can we deal with them.
I could not upvote you more. Eight years of economic war and now that their popularity sinked, politics are afraid that the people could suffer. Seriously?
Portuguese, Spaniards, Greeks... were sold in the slave market for the dirty tricks of banks like this. We'll never know how many Europeans will not born or how many suicides or premature deaths are directly caused by the big scam. So please, politicians, don't illustrate us about suffering when the people don't want to vote you anymore. We'll survive with or without you.
Germany does not have such a thing as a pension chest. Pensions are directly paid by the working generation. That has it's problems, but it does also have it's benefits and makes this comparison useless.
> Germany does not have such a thing as a pension chest. Pensions are directly paid by the working generation.
That's only the statutory part though. You are advised to contribute to an occupational and/or private arrangement alongside the statutory scheme. They operate differently.
The underlying problem Germany has is the population dynamics. The population is an ageing one. Lots of people are living longer and not enough children are being born to cover the gap. It might be politically unpopular, but importing refugees and successfully converting them to integrated German tax payers, might well be a long term goal of the state in order to stave off the pensions crisis.
The economic migrants are not going to work and be a tax payers. Even if they wanted to work, there's no work for their qualification. They are going to drain the social support budget and increase the inner pressure in the society.
In the past, 10% of regugees were employed after a year, 50% after 5 years, 70% after 15 years[0]. So it takes a while, unsurprisingly, but your predicitions are not borne out in reality. Of course extrapolating from past experience is just an approximation, so it might take longer; on the other hand there are probably ways to speed up the process.
I'm not implying anything. I'm saying that the GP's predictions of 100% unemployment after unspecified amounts of time are unfounded and digging up some more reasonable numbers.
I suppose a good outcome would see the unemployment rate of refugees converge against the unemployment rate of the non-migrant population (vaguely: 7.9%[0]), or more specifically the unemployment rate of those parts of the non-migrant population with similar levels of qualification (vaguely: 13.3%). Because as these levels converge, it makes less and less sense to think of it as a migration issue and more of a more general labor market issue.
[0] Numbers strictly to get a feel for the broad range, the first is the overall unemployment rate in 2011, the second the unemployment rate of people with basic education; unemployment numbers are a rats nest in the best of cases. http://www.bpb.de/nachschlagen/zahlen-und-fakten/soziale-sit...
> The underlying problem Germany has is the population dynamics.
Actually the fact that wages stopped rising along with the economy as a whole (e.g. less of the generated profits get payed out as wages) seems to play an important role, too.
The retirees represent a cost in absolute numbers (e.g. they are entitled to pension benefits of a certain size). The workforce is collectivly paying out the retirees with a share of their income.
That system works fine even with a declining retiree/workforce ratio (which actually shrinks since at least the 1960s) as long as real wages continue to grow along with GDP and productivity.
Germany led by Merkel has set itself up for trouble.
Cyprus and Greece have created a precedence for creditor bail-ins. Public finances are stretched due to refugee inflows and opposition to Merkel is growing even internally in her massive coalition government.
This setup may lead to something not predicted (ie. DB not getting the guarantees it needs or even a creditor bail-in) or more predictively the rise of left or right-wing non-established / populist politics.
Public finances are only stretched because the German government (and the electorate) has a weird aversion to taking on new debt. If she wanted to, Germany could essentially borrow money for free thanks to extremely low or even negative interest rates.
However, Merkel also pushed new EU legislation, so the government cannot help the bank (even if it has unlimited money) until depositors are bailed in. Currently, however, Italy is trying to find a loophole, that Germany might use as well later.
1) I'd hardly call them stretched.
2) I wouldn't call it a "weird aversion". Weimar Hyperinflation (and the consequences) is still in the public's heads. Compared to other places I have lived people in Germany are indeed more reluctant to debt-finance things in general and "save before buying". I think it's a fairly healthy base attitude (but I'm probably biased being German). It's less valuable currently with near 0% credits everywhere but as a base mindset it helps avoid the trap of not finding a way to generate the expected revenue streams eventually.
> Public finances are stretched due to refugee inflows
Pfft. Get real.
Germany has survived an influx of 10 million refugees in the immediate aftermath of WW2 and created the Wirtschaftswunder in passing while rebuilding the whole country.
Germany has survived the reunification and integration of 16 million communists (going by the right-wing, the only worse subhumans than foreigners) with a dead industry, and became the economic powerhouse of and dominating power in Europe while eating up the reunification's 2 trillion Euro cost.
Half a million refugees are a rounding error in our budgets.
What I meant was: The influx of refugees will strech the public finances.
How much and whether "welcoming refugees eventually will turn out to be a good investment" is deeply controversial and so politicized that it is very hard to have a reasonable conversation about it.
However I think it is fair to say that taking in refugees costs money in the short term.
Merkel buying new shoe laces costs money in the short term. You have just repeated your claims from the original post without clearing up what you mean by stretching public finances and documenting it with numbers. Everybody else is basically saying that the refugees aren't expensive enough to warrant this language on the balance sheet of one of the richer economies in the world.
I really was biting my tongue to write this as dry and neutral as possible.
I am from Denmark and in many ways we are similar to Germany.
But we are different in that we have taken in a relatively small number of refugees (around 25.000 pa. excl. family reunions, population 6 mio.) and yet the subject number 1 in Danish politics is how to handle the strech on public finances it creates.
This may be due to two things:
1. Denmark is more generous to refugees and/or integrates them more poorly.
2. Denmark has different politics where it is okay to talk refugees as expenses. (Whether they are or not is another question - my point is that our politicians talk about it in this way.)
What I wrote would absolutely not be controversial to say in Denmark but I can see from the downvotes that it is different elsewhere.
Which I think underlines my point that this subject really is too touchy to have a good conversation about.
> But we are different in that we have taken in a relatively small number of refugees (around 25.000 pa. excl. family reunions, population 6 mio.) and yet the subject number 1 in Danish politics is how to handle the strech on public finances it creates.
How much of that stretch is real, and how much is fear-mongering to influence upcoming elections? Do you have hard numbers?
It's completely reasonable to talk about refugees in terms of what they cost -- the number is important since it has to be accounted for in the budget planning after all. When you've got a reasonable feel for how high that number is, it's worth putting it into the context of the general budget to determine whether it "stretches it" (again, whatever that means). I don't have either of those numbers for Denmark.
What to do with either of them is a separate question, if the estimated cost (or its relation to the general budget) is so high that it warrants barring the entry to asylum seekers. This is obviously a difficult thing to judge, since it trades off economic policy against what is typically framed in terms of basic human rights.
Thanks for staying cool. :) I do think it's possible to have a reasonable conversation about this, and you are right that it is often strange how different the conversation is even just across the border.
Deutsche Bank is counterparty to 55 trillion euros of derivatives contracts (about 65 trillion USD). I worked for 3 years on its trading floor. It was Sales-a-gogo. "Print as much as you can". It's one of the very biggest counterparties to derivatives. Imagine if there was basis risk of only one tenth of one percent on those books (ie hedge imperfection usually due to a third factor such as credit quality or geographic mismatch). That would mean a P&L of 32.5 billion dollars. For risk on only one thousandth of the notional value of its derivatives books. Deutsche Bank is only worth 22 billion dollars.
Now of course such P&L could be positive too, but inevitably, when the wolves of the markets start hunting, they'll seek out the positions that are "wrong way". Let alone if DBK starts to try to unwind some of these derivatives. I bet it wouldn't be able to unwind even 2% (1.3 trillion!) of the books without blowing itself up.
I think this bank is Exhibit A to the catastrophic excesses of the past 20 years.
> I think this bank is Exhibit A to the catastrophic excesses of the past 20 years.
Only partially related, I remember one of the German landsbanke (can't remember its name) buying full one-page splashy ads in magazines like The Economist, back in 2007. Only one year later they went catastrophically under because they had bought in into the subprime lending and its derivatives' mania. I remember one of the directors saying something like "we didn't know what exactly we were buying, those products were too complicated for us, we trusted the people who had sold them to us". It's fools all the way down.
You've hit the nail on the head, the derivatives they have on their books are massive compared to shareholder equity. "Counterparty risk" are the words nobody analysing bank's derivatives positions wants to hear.
It's a terrible mistake there has never been a separation of investment banking from commercial banking in Germany (i realise the line is hard to draw), because the German taxpayer is essentially guaranteeing this shoddily run bank.
Unfortunately German politicians seem to be quite oblivious to this problem. Joe Ackermann (then CEO of DB) was giving Merkel advice on the financial crisis of 2008, so there seems to be some asymmetry of information there...
It is not mere speculation, like it is with commodities trading, it is "trading" of imaginary things with other people's money in a way that it will be other people's problems. Now there is no way to convert these imaginary things back to other people's money, so it became German people's problem.
I would state it differently. Derivatives can be quite useful for the economy, because they allow people to offload risk, e.g. companies can hedge their commodity or exchange rate risks.
They become a problem in banks that have a lot of them ("weapons of financial mass destruction") because of their opacity on the balance sheet (DB has one line in their balance sheet for derivatives, ~ 500 billion Euros) and because banks offload their long-tail risks to their depositors and ultimately the taxpayer. The new bail-in rules mean that depositors in banks are essentially guaranteeing the bank's balance sheet. Think about that the next time you look at your bank account.
Yes, you're left high-and-dry if your counterparty goes bust, and since this would be such a cataclysmic event in the case of Deutsche Bank, the authorities would be forced to step in (at ginormous cost) to prevent it.
It's worth noting that on derivatives, your loss if your counterparty goes bust is not the notional. It's a fraction of the notional. But even a small fraction of 65 trillion is a very, very large number.
In fact the number in DBK's case is so large that it might endanger the credibility of the authorities themselves.
Moving from the UK to Germany, I chose Deutsche Bank based on its reputation.
Pros:
* English! There is always someone on the phone who can speak English, and they can even send their letters in English. (for Germany, this is very rare)
* More "high touch" - there is a person assigned to your account
* I can't remember if this was the case in UK, but I noticed that transfers to some Western EU countries have no fees and happen almost instantly. Yay!
Cons:
* Buggy app and web interface, sometimes the login fails or hangs randomly (revenue was €31.95 billion in 2014, it's understandable that they can't afford spending too much on this)
* The way to authorise online transactions is with a piece of paper with 100 codes printed on it (TAN list). This was a shock, but it's apparently common here.
* Taking advantage of new customers. They offered me a loan which I later realised had a ridiculous interest rate. (I guess this isn't exclusive to DB, but silly me expected that a good, more prestigious bank would value longer term customer relationships)
* Stupid useless cards. The default account (€5/month) comes with a card (EC Karte) that can only be used at German ATMs and in most German stores. Good luck trying to do anything online with it. For that you need a credit card (extra €5/month), the very idea of something like VISA Debit seems completely alien to Germans.
> The way to authorise online transactions is with a piece of paper with 100 codes printed on it (TAN list). This was a shock, but it's apparently common here.
Well whoever can hack your password, mobile TAN or TAN reader device will likely still not hack into your paper TAN list. There's something to be said for a "physical layer".
In Australia, pretty much every bank account will include a free Visa / Mastercard debit card, built-in to your ATM card. You can also buy them in supermarkets as reloadable gift cards, or post offices as international travel cards. Though they typically won't work in Germany, since most German stores only accept EC Cards and not Visa / Mastercard.
> Well whoever can hack your password, mobile TAN or TAN reader device will likely still not hack into your paper TAN list.
They are frequently hacked by phishing (intercepting the bank site, changing out the reciever and asking for the TAN code nevertheless). chipTAN for example works by optically transmitting the transaction details to a small handheld device with your banking card inserted, and the handheld device shows you the IBAN and amount... foolproof.
Different countries, different markets, right? Most Germans don't have a CC (if so, then often only for vacation). Inside Germany, the preferred payment version is direct debit. For ecommerce usually paypal as well. Everybody has an EC card (=debit card) issued by their bank and uses that for paying without cash in shops. Even with a CC you wouldn't be able to pay in many of them.
I don't know many Germans that do not have a credit card these days. You are right that the EC card gets used day-to-day (but maybe less than cash) but most Germans have a credit card for online shopping.
Deutsche Bank is pretty expensive. The debit card (which is useless for shopping online, although most local online stores offer other alternatives to credit cards) is free for most people, and I think I pay about 20 EUR/year for my credit card. This is with another large bank.
I'm a (german) DB customer as well, and I can't say I share a lot of these experiences.
> Buggy app and web interface, sometimes the login fails or hangs randomly
This never happened to me, maybe I'm just lucky. There used to be a problem with the web interface when you entered the banking system's URL without "https://" but that's not really the same.
> The way to authorise online transactions is with a piece of paper with 100 codes printed on it (TAN list)
I think the TAN list is just there to get you started (and for some technophobic Germans). I used it to set up SMS TANs immediately, and I think there is still an option for a dedicated TAN generator device (at least there used to be). Don't use the TAN list!
> Stupid useless cards. The default account (€5/month) comes with a card (EC Karte) that can only be used at German ATMs and in most German stores.
An EC Card is the thing you need to go shopping in Germany. It's entirely appropriate for this country, and contrary to what you claim it works just fine internationally (at least mine does). While it's true that some banks offer a separate VISA credit card, it shouldn't be a problem for you to get one elsewhere. As for VISA debit cards, I'm not sure if those even exist in Germany.
Actually most of the time German VISA and MasterCards work as a debit card. Payments are cleared from your checking account / Giro, instantly or nightly, so you are never really in debt, rather than being a second account that is always negative and partially or fully paid off each month. I am not sure which type is more common, but I usually ended up with the debit card style.
I have ING DiBa and it is the cheapest account ever here in Germany — they even give you a free VISA card, and free withdrawals in Germany and rest of the world. The only difference is that there's no physical office, so you have to use their website, which is good, and never had problems with it.
> The way to authorise online transactions is with a piece of paper with 100 codes printed on it (TAN list). This was a shock, but it's apparently common here.
This is what I've had with all European banks. It's simple, secure and always in your wallet. What's the method you are accustomed to in the UK?
Some banks do an extra validation step in case of unexpected transfers (such as a large sum, or a new foreign destination account) by sending the required TAN index by SMS. You'll then look up the matching TAN from your list an put that in.
> * I can't remember if this was the case in UK, but I noticed that transfers to some Western EU countries
This is the law for all Euro-denominated transfers in the EU (even in the UK -- but unless your account is Euro-denominated they can still make money off the forex).
111 comments
[ 4.5 ms ] story [ 170 ms ] threadThe problem with DB is that Germany cannot let it fail because it underwrites its export economy, plus it would be a national humiliation. However bailing it out after imposing austerity on the PIGS, especially Greece would pour fuel on the fire of anti-German sentiment in the EU.
Highly unusual for an investment bank, they acquired Postbank to open up a retail channel, but that is < 5% of the size of Deutsche Bank.
Maybe US should not project their legislation on foreign subjects? They didn't vote for anyone who created that legislation anyway.
If a bank is really big, like HSBC, it can't/won't be penally prosecuted in real world, so the rational choice [1] is actually to keep committing crimes, and settle the ones where they're caught.
On the scale of such bank, even fines which would be astronomical from the perspective of a normal citizen, are peanuts (so to speak) for a large bank.
[1] = in a logical, not moral, sense.
But the standard for banks is now a zero tolerance policy with multi-billions fines for any breach. It is a game they cannot win.
Likewise, regulators in Europe dish out fines a-plenty. The FSA certainly did over the LIBOR scandal recently.
European banks could mitigate risk in the US by trading legally or by ceasing trading there at all. If they really think they can't trade legally then their business is not welcome.
Multinationals just don't work like that.
The problem is that banks absolutely cannot afford to risk going to court, since losing a case could mean losing their ability to deal in USD, which would be the end for them. That means that the banks must settle any case brought by the prosecutors. The prosecutors in New York have used this leverage to squeeze billions in settlements from the European banks. The "justice"system has basically turned into what amounts to a protection racket.
[1] https://en.wikipedia.org/wiki/China_UnionPay
[2] https://www.rt.com/business/239189-china-payment-system-read...
Your perspective is too generalized, thus ultimately false. The case depends on the size of the bank.
In the case of a famous British bank, the prosecution literally stated that they could not prosecute the bank because it would have been too much of a big impact on the economy.
They got fined with the equivalent of a few weeks of profit, and who knows how much they ever profited from such illegal activities.
Doesn't sound a protection racket to me.
Your comment is farcical; it's been widely written about how lightly banks and other financial institutions get off following egregious violations of law.
Pocket money they pay out of their bailout spoils.
This is a fraud nearly as bad as Kerviel, and happening at about the same time ($8bn unauthorised position), and where Goldman quietly fired the trader and did not report the fraud, which enabled the trader to work at another bank. And for that Goldman was given a mega-fine of..... $1.5m.
It helps to have friends.
a) They were among the worst offenders
b) They tried to get rid of the lawsuits quickly.
In the most basic trades, possession is settlement. Much of the third world has significant trade in USD, including countries that the US doesn't regard well. In Panama, the USD is a defacto national currency, a choice the crowd has arrived at due to convenience.
You can get an armoured van and deliver packs of physical notes.
You can use contracts to get more complicated arrangements, including where you have USD on paper but backed by an alternative currency. You can do balance sheet adjustments by contract. You can be a dutch firm ordering agricultural goods from Kenya, and do your leg of the transaction by delivering USD. The banks in the middle might exchange physical USD to make it happen, without any of them being regulated by the US at the time. But - probably - they'll just organise the deal in terms of USD using holdings of other currencies or commodities or contract-agreed offsets that are convenient to them.
To compare pension fund assets:
http://www.oecd.org/finance/Pension-funds-pre-data-2015.pdfThose "pension fund assets" can therefore only be private pension contracts on top of it.
[1] https://en.wikipedia.org/wiki/Private_sector_involvement
Schleswig-Holstein just decided to drop any plans for the black zero, and doubled the funding for new police recruits. Additionally, we decided to also build more schools. And fix the infrastructure.
In a way it is already too late.
The scandal is that DB has been allowed to grow this big.
You can be sure that if the shit really hits the fan, Deutsche will be bailed out, no matter the cost. I would bet anything on this happening.
The bank always wins :-(
Tell him to just stfu and get back to work.
BTW nobody spoke on the issues of other EU members, like e.g. Greece's northern neighbours Bulgaria and Romania where people live with less than the Greeks during the worst times of their crisis. And all this just because someone somewhere gave carte blanche to the Soviet Union to install pro-communist forces in countries of strategic interest to them where there was almost non-existant communist movement compared to Greece where the UK allegedly intervened so that this won't happen. Just for perspective: people lived comparably good/bad in all three countries before WW2.
As a German, you should know how economically devastated was the DDR after 1989. And bear in mind that it was the best player in the Eastern league of non-representativeness and corruption. (comparisons with the West are another topic altogether)
Such a banking fiasco would never happen in a country filled with precise, punctual, hard-working and responsible light beings such as Germany.
I never saw the EU bailouts as handouts from the virtuous to the losers, nor do I see it as an altruistic gift to our friends in need. I see it more as an insurance. Do people whose house isn't on fire want to punish those whose house burned down? No. We all know it could happen to us.
I don't think Germany will need a bailout, but if some day they do, we should do it.
When the banks were Greek, Spanish, Portuguese or Irish, the German government didn't give a fuck about the people.
Don't tell us about regular people, we have suffered it since years ago and Merkel just said STFU and fuck off
And don't talking about the moral lessons they gave us. But ohh, the German banks are exactly the same as the other ones
Since you appear to be from one of those countries, you should see how to get more responsible for your choices and look for better representatives to elect. I don't see what's your point about another sovereign country. Everyone has their own problems, let's just focus on ours.
BTW you would be surprised how pissed off were Germans at that time, because every sane person knows the old saying: "Bankers here, bankers there, all the same everywhere." So we (at least not the bigots among us) should be allowed to speak of regular people bearing the cost of such changes, shall they happen, just as we (and YOU) did it when the same thing happened in Greece, Spain, Portugal and Ireland.
>? Since you appear to be from one of those countries, you should see how to get more responsible for your choices and look for better representatives to elect. I don't see what's your point about another sovereign country. Everyone has their own problems, let's just focus on ours.
This must be a fucking joke looking what happened to Greece. When the people elected different government, the German one did what they did.
So, για όνομα του Θεού, don't fall into the trap the media tries to put us into (for whatever reasons, I don't care). This is not about Germans vs Greeks, it's about the consistently failing banking system around the world. Only when we realise the true nature of the problems at hand, can we deal with them.
Be well and prosperous!
Why? Because German and French banks lent huge sums to periphery countries - which is why the bailouts were forced on them.
What you are seeing now is the chickens coming home to roost.
http://www.davidmcwilliams.ie/2012/05/10/financial-contagion...
Portuguese, Spaniards, Greeks... were sold in the slave market for the dirty tricks of banks like this. We'll never know how many Europeans will not born or how many suicides or premature deaths are directly caused by the big scam. So please, politicians, don't illustrate us about suffering when the people don't want to vote you anymore. We'll survive with or without you.
That's only the statutory part though. You are advised to contribute to an occupational and/or private arrangement alongside the statutory scheme. They operate differently.
The underlying problem Germany has is the population dynamics. The population is an ageing one. Lots of people are living longer and not enough children are being born to cover the gap. It might be politically unpopular, but importing refugees and successfully converting them to integrated German tax payers, might well be a long term goal of the state in order to stave off the pensions crisis.
[0] Figures released by a research institute of the federal government. http://doku.iab.de/aktuell/2015/aktueller_bericht_1514.pdf
I suppose a good outcome would see the unemployment rate of refugees converge against the unemployment rate of the non-migrant population (vaguely: 7.9%[0]), or more specifically the unemployment rate of those parts of the non-migrant population with similar levels of qualification (vaguely: 13.3%). Because as these levels converge, it makes less and less sense to think of it as a migration issue and more of a more general labor market issue.
[0] Numbers strictly to get a feel for the broad range, the first is the overall unemployment rate in 2011, the second the unemployment rate of people with basic education; unemployment numbers are a rats nest in the best of cases. http://www.bpb.de/nachschlagen/zahlen-und-fakten/soziale-sit...
Actually the fact that wages stopped rising along with the economy as a whole (e.g. less of the generated profits get payed out as wages) seems to play an important role, too.
The retirees represent a cost in absolute numbers (e.g. they are entitled to pension benefits of a certain size). The workforce is collectivly paying out the retirees with a share of their income.
That system works fine even with a declining retiree/workforce ratio (which actually shrinks since at least the 1960s) as long as real wages continue to grow along with GDP and productivity.
Which they don't, and that's a problem.
Cyprus and Greece have created a precedence for creditor bail-ins. Public finances are stretched due to refugee inflows and opposition to Merkel is growing even internally in her massive coalition government.
This setup may lead to something not predicted (ie. DB not getting the guarantees it needs or even a creditor bail-in) or more predictively the rise of left or right-wing non-established / populist politics.
Secondly interest rates are low due to low inflation masquerading a higher real interest.
As others have pointed out
https://www.cia.gov/library/publications/the-world-factbook/...
https://en.wikipedia.org/wiki/List_of_government_budgets_by_...
The only two countries in the world which have a higher surplus than Germany are Norway and Qatar
Pfft. Get real.
Germany has survived an influx of 10 million refugees in the immediate aftermath of WW2 and created the Wirtschaftswunder in passing while rebuilding the whole country.
Germany has survived the reunification and integration of 16 million communists (going by the right-wing, the only worse subhumans than foreigners) with a dead industry, and became the economic powerhouse of and dominating power in Europe while eating up the reunification's 2 trillion Euro cost.
Half a million refugees are a rounding error in our budgets.
What I meant was: The influx of refugees will strech the public finances.
How much and whether "welcoming refugees eventually will turn out to be a good investment" is deeply controversial and so politicized that it is very hard to have a reasonable conversation about it.
However I think it is fair to say that taking in refugees costs money in the short term.
I am from Denmark and in many ways we are similar to Germany.
But we are different in that we have taken in a relatively small number of refugees (around 25.000 pa. excl. family reunions, population 6 mio.) and yet the subject number 1 in Danish politics is how to handle the strech on public finances it creates.
This may be due to two things:
1. Denmark is more generous to refugees and/or integrates them more poorly.
2. Denmark has different politics where it is okay to talk refugees as expenses. (Whether they are or not is another question - my point is that our politicians talk about it in this way.)
What I wrote would absolutely not be controversial to say in Denmark but I can see from the downvotes that it is different elsewhere.
Which I think underlines my point that this subject really is too touchy to have a good conversation about.
How much of that stretch is real, and how much is fear-mongering to influence upcoming elections? Do you have hard numbers?
What to do with either of them is a separate question, if the estimated cost (or its relation to the general budget) is so high that it warrants barring the entry to asylum seekers. This is obviously a difficult thing to judge, since it trades off economic policy against what is typically framed in terms of basic human rights.
Thanks for staying cool. :) I do think it's possible to have a reasonable conversation about this, and you are right that it is often strange how different the conversation is even just across the border.
Now of course such P&L could be positive too, but inevitably, when the wolves of the markets start hunting, they'll seek out the positions that are "wrong way". Let alone if DBK starts to try to unwind some of these derivatives. I bet it wouldn't be able to unwind even 2% (1.3 trillion!) of the books without blowing itself up.
I think this bank is Exhibit A to the catastrophic excesses of the past 20 years.
Only partially related, I remember one of the German landsbanke (can't remember its name) buying full one-page splashy ads in magazines like The Economist, back in 2007. Only one year later they went catastrophically under because they had bought in into the subprime lending and its derivatives' mania. I remember one of the directors saying something like "we didn't know what exactly we were buying, those products were too complicated for us, we trusted the people who had sold them to us". It's fools all the way down.
It's a terrible mistake there has never been a separation of investment banking from commercial banking in Germany (i realise the line is hard to draw), because the German taxpayer is essentially guaranteeing this shoddily run bank.
Unfortunately German politicians seem to be quite oblivious to this problem. Joe Ackermann (then CEO of DB) was giving Merkel advice on the financial crisis of 2008, so there seems to be some asymmetry of information there...
This is the cause.
It is not mere speculation, like it is with commodities trading, it is "trading" of imaginary things with other people's money in a way that it will be other people's problems. Now there is no way to convert these imaginary things back to other people's money, so it became German people's problem.
They become a problem in banks that have a lot of them ("weapons of financial mass destruction") because of their opacity on the balance sheet (DB has one line in their balance sheet for derivatives, ~ 500 billion Euros) and because banks offload their long-tail risks to their depositors and ultimately the taxpayer. The new bail-in rules mean that depositors in banks are essentially guaranteeing the bank's balance sheet. Think about that the next time you look at your bank account.
It's worth noting that on derivatives, your loss if your counterparty goes bust is not the notional. It's a fraction of the notional. But even a small fraction of 65 trillion is a very, very large number.
In fact the number in DBK's case is so large that it might endanger the credibility of the authorities themselves.
I thought their HQ is in London.
As far as i know the Investment Banking branch mainly operates from out of London.
Pros:
* English! There is always someone on the phone who can speak English, and they can even send their letters in English. (for Germany, this is very rare)
* More "high touch" - there is a person assigned to your account
* I can't remember if this was the case in UK, but I noticed that transfers to some Western EU countries have no fees and happen almost instantly. Yay!
Cons:
* Buggy app and web interface, sometimes the login fails or hangs randomly (revenue was €31.95 billion in 2014, it's understandable that they can't afford spending too much on this)
* The way to authorise online transactions is with a piece of paper with 100 codes printed on it (TAN list). This was a shock, but it's apparently common here.
* Taking advantage of new customers. They offered me a loan which I later realised had a ridiculous interest rate. (I guess this isn't exclusive to DB, but silly me expected that a good, more prestigious bank would value longer term customer relationships)
* Stupid useless cards. The default account (€5/month) comes with a card (EC Karte) that can only be used at German ATMs and in most German stores. Good luck trying to do anything online with it. For that you need a credit card (extra €5/month), the very idea of something like VISA Debit seems completely alien to Germans.
Well whoever can hack your password, mobile TAN or TAN reader device will likely still not hack into your paper TAN list. There's something to be said for a "physical layer".
They are frequently hacked by phishing (intercepting the bank site, changing out the reciever and asking for the TAN code nevertheless). chipTAN for example works by optically transmitting the transaction details to a small handheld device with your banking card inserted, and the handheld device shows you the IBAN and amount... foolproof.
http://business.chip.de/bii/1/6/5/0/1/8/6/0/chipTAN_sparkass... for an example pic of such a handheld device.
http://www.handelsblatt.com/politik/konjunktur/nachrichten/z...
http://abcnews.go.com/WNT/FinancialSecurity/story?id=129664
> Buggy app and web interface, sometimes the login fails or hangs randomly
This never happened to me, maybe I'm just lucky. There used to be a problem with the web interface when you entered the banking system's URL without "https://" but that's not really the same.
> The way to authorise online transactions is with a piece of paper with 100 codes printed on it (TAN list)
I think the TAN list is just there to get you started (and for some technophobic Germans). I used it to set up SMS TANs immediately, and I think there is still an option for a dedicated TAN generator device (at least there used to be). Don't use the TAN list!
> Stupid useless cards. The default account (€5/month) comes with a card (EC Karte) that can only be used at German ATMs and in most German stores.
An EC Card is the thing you need to go shopping in Germany. It's entirely appropriate for this country, and contrary to what you claim it works just fine internationally (at least mine does). While it's true that some banks offer a separate VISA credit card, it shouldn't be a problem for you to get one elsewhere. As for VISA debit cards, I'm not sure if those even exist in Germany.
What's behind this recommendation?
This is what I've had with all European banks. It's simple, secure and always in your wallet. What's the method you are accustomed to in the UK?
Some banks do an extra validation step in case of unexpected transfers (such as a large sum, or a new foreign destination account) by sending the required TAN index by SMS. You'll then look up the matching TAN from your list an put that in.
This is the law for all Euro-denominated transfers in the EU (even in the UK -- but unless your account is Euro-denominated they can still make money off the forex).