I'm pretty sure bankers hate this song [1] by now.
On a more serious note, this was to be expected, I was basically asking the same thing on here a few days ago [2] and I'm not an institutional investor handling billions of dollars/euros in investments. I do wonder though when it will all stabilise? Will it stabilise? Is there anything stabile left to stabilise, so to speak?
But why italian banks (and not - say - french or spanish or other countries, like the ones involved in the 2009-2010 crisis), are they (the italian banks) more fragile/exposed than other countries' banks?
From what I understood of reading Varoufakis's "Adults in the Room" the French and German banks were every bit as risk during the euro debt crisis, as they had bought government debt from PIGS countries.
The issue was painted as profligate borrowing by PIGS, but was just as much an issue in keeping up the pretence that the PIGS (G in particular) weren't in fact bankrupt, and the German and French banks accordingly in deep trouble.
Hence the subsequent demand for brutal austerity, as this was the only policy option when you can't default and devalue your own currency, nor persuade the taxpayers of other euro countries to bail you out.
As I understand, Greece _was_ bankrupt. The citizens did not get bailed out, they got brutal austerity.
The German and French banks, who were exposed to Greek debt, got bailed out, by pretending that Greece was not bankrupt.
If Greece was a sovereign state, they would have defaulted, and the banks would have likely failed. The drachma would devalue and Greeks would have hopefully recovered by virtue of cheaper exports.
It says a lot about the French-German hegemony in Europe that Greece was propped up for the sake of European banks, and its citizens treated to the worst austerity since WW2 (discussed in the book).
I know Varoufakis' take on the Greek crisis. I think he's mostly correct on the fact that having a common currency without a correcting mechanism will inevitably lead to these issues. However, Greece benefitted enormously from being part of the eurozone too. And the fact is that it borrowed cheaply and invested that money badly. The bail out was there, the invrstors had to agree to a "haircut" and new credit lines were given to Greece (indeed under austerity, which I also found counterproductive).
I think I mostly don't disagree with you, just offering a slightly different perspective too.
It's not. It's an infamous bank for not only poor management already mentioned in the comments but also massive, ruthless criminal scandals, among which for example laundering 10 billions to Russia [0]. Perhaps DB is truly too big to fall, but I don't see what (any) italian bank has to do with it. As soon as CS started faltering many put their eyes on DB.
Italian systemic banks are fine and the permanent sick institutions are already on a watchlist/chopping block/Merger. (minor) Troubles could arise from local banks as they are too dependent from real estates values (NPL) and weak to shadow interests such as corrupted practices from executive and dealings with corrupt politicians / businessmens / mafia
Morning announcement by executives "our cash flows are perfect, we're ready to weather any storm, we're passing all stress tests with the highest marks". Media by the end of the day "this bank was the worst fraud since Hitler". It's hilarious except I hope my money will not vanish.
Deutsche is the perennial sick man of European banking. It keeps lurching from one crisis to another, bad loans, bad acquisitions, bad management, just like Credit Suisse, the only difference being that it's at the heart of the German and by extension the EU economy, so it's never going to be allowed to fail.
Wasn't Deutsche Bank also the only bank still willing to do business with Trump, as well as involved in Russian money laundering? I'm frankly surprised it's still around.
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[ 2.7 ms ] story [ 63.0 ms ] threadOn a more serious note, this was to be expected, I was basically asking the same thing on here a few days ago [2] and I'm not an institutional investor handling billions of dollars/euros in investments. I do wonder though when it will all stabilise? Will it stabilise? Is there anything stabile left to stabilise, so to speak?
[1] https://www.youtube.com/watch?v=kfVsfOSbJY0
[2] https://news.ycombinator.com/reply?id=35224921
[in robotic voice] fun fun fun fun
[3] https://en.m.wikipedia.org/wiki/European_debt_crisis
The issue was painted as profligate borrowing by PIGS, but was just as much an issue in keeping up the pretence that the PIGS (G in particular) weren't in fact bankrupt, and the German and French banks accordingly in deep trouble.
Hence the subsequent demand for brutal austerity, as this was the only policy option when you can't default and devalue your own currency, nor persuade the taxpayers of other euro countries to bail you out.
The German and French banks, who were exposed to Greek debt, got bailed out, by pretending that Greece was not bankrupt.
If Greece was a sovereign state, they would have defaulted, and the banks would have likely failed. The drachma would devalue and Greeks would have hopefully recovered by virtue of cheaper exports.
It says a lot about the French-German hegemony in Europe that Greece was propped up for the sake of European banks, and its citizens treated to the worst austerity since WW2 (discussed in the book).
I think I mostly don't disagree with you, just offering a slightly different perspective too.
It's not. It's an infamous bank for not only poor management already mentioned in the comments but also massive, ruthless criminal scandals, among which for example laundering 10 billions to Russia [0]. Perhaps DB is truly too big to fall, but I don't see what (any) italian bank has to do with it. As soon as CS started faltering many put their eyes on DB.
0. https://www.nytimes.com/2017/01/30/business/dealbook/deutsch...