Bojo. Lying sack of shital w
Raab thicker than two short planks
Leadsom. Same
Give. Snake with venal wife
Any member if erg is a loon
To be clear, anyone serious about leaving with no deal is insane if they genuinely want to avoid medium term disruption
In the end, I don’t care, in a personal level it makes zero difference for me, my kids, where I live or work but if the tories destroy the UK economy for a generation and labour are complicit under step toe there will be consequences
Tube, lift, lory, spotted dick, bubble and squeak, loo, . . . I don’t have anything to add I just wanted to join in.
Jodrell banker
Jeremy hunt
Apples and pears…
Cup of tea luv
Upside: if they get out of the EU quick enough they won’t be on the hook when Deutsche Bank goes down and takes most of the rest of Europe’s banking system with it.
DB market cap: $15.16billion
Other companies with similar market caps:
GarminYum brand’s Chinese subsidiaryDarden Restaurants (Olive Garden)Region’s Bank (a regional bank in the U.S.)Keep in mind that none of the companies above have liabilities of $1.5trillion or a $49trillion derivatives book (that’s TRILLION with a T). Deutsche Bank does. DB is f**ked and, by extension, so are the German taxpayers… and probably the rest of the EU. Why? DB’s problem is just a manifestation of Europe’s broader NPL problem.
The worst managed bank in the world. They don’t do anything well. I blame the stench of Bankers Trust never leaving their I Bank division.
Would they bail the bank out?
They would have to do a good bank bad bank. Their derivative book is probably overvalued and they just drip and drab it because if they did a proper revaluation they would go down.
You can’t have anyone worse than her
Wrong. What if they had your guy.
Would they bail the bank out?
Yes (they certainly wouldn’t liquidate it). The thing is, people have become a little too comfortable with what a bank bailout looks like. Just pass some legislation, print some money, and call it a day…
No.
The U.S. properly bailed out and recapitalized its banks. Even at the height of the financial crisis, NPLs never exceeded 2% of all the assets in the U.S. banking system. What a lot of people don’t realize is that Europe actually had a much larger financial crisis at the same time in corporate loans but it was papered over by saying that it was a result of money markets “seizing†due to Lehman. The causality doesn’t really matter as the problem was always there: European banks had lent Dollars to European companies with very poor underwriting and, if it weren’t for dollar supply/liquidity and continued lending to what were(are) zombie corporations an NPL problem would have arisen in Europe sometime around 2009-2012. Lehman caused money markets to seize up and brought that problem forward.
The ECB was lucky that they had a good relationship with the Fed and all they had to do was make a phone call to do over $1trillion in currency swaps (I don’t even remember the final swap number but it was well over $1t). Literally with a phone call Trichet was able to bail out Europe’s entire financial system by flooding it with Dollars.
The problem with that bailout is that nothing changed and, in many ways, behavior patterns were reinforced. By U.S. standards, NPLs in a country like Italy are likely >20%. NPLs throughout Europe are likely greater than 10%… and that’s before you address the “zombie†problem.
The IMF defines a “zombie†company as a company that cannot meet its interest obligations from its operating cash flow for three years. The low estimate I have seen for zombie corporations in Europe is 15%. Some think it’s as high as 40%. The core problem is with how corporate lending is done in Europe. Janis Varoufakis circa 2012 was running around saying that Europe needed to lend more money to Greek corporations because they were employment engines and doing so allowed for household savings. The debt loads of said companies “didn’t matter†in Varoufakis’ eyes (his words) and that pretty much encompasses the European attitude toward lending.
So what does a bailout look like when the fat lady (Deutsche Bank) sings?
Three options:
Option 1: a rolling German bailout. Germany asks the EU to bailout DB. The rest of the EU asks Germany for greater fiscal transfers, Germany refuses and takes on the bailout of DB on its own. The bill is too large to pay at once so Germany recapitalizes DB to the tune of 50-100bil/year for the next decade or two. Simultaneously, DB is forced to curtail lending which stalls Germany’s economy which creates a vicious downward cycle… which in turn curtails it’s ability to subsidize the rest of the EU bringing banking/economic problems elsewhere in the EU to the fore.
Option 2: Germany gets the EU to bail out DB in return for greater fiscal transfers and a recapitalization of the rest of the failing banks in the EU. The combination of taxation and money printing necessary nukes capital formation on the continent causing the Euro to get hammered (below USD parity), import inflation to surge, and economic growth to tank.
And the third option…
You can’t have anyone worse than her
Wrong. What if they had your guy.
You forget you’re still a crown colony
And the third option…
Weimar
.
Ah! Not sure how I posted without the third option:
Option #3: Germany nationalizes DB. In this scenario, shareholders and non-senior creditors will likely get wiped out which would have ripple effects of its own. This is similar to option #1 except now the German government is now on the hook for DB’s liabilities. The bond market will see this as a prelude to greater future bund issuance and likely shift Germany’s entire yield curve higher (into positive territory) so not only will Germany now have to shoulder a greater debt load but they’ll actually have to pay creditors to do so. The Bundesbank will likely reevaluate their Austrian leanings and send more… ahem… dovish signals to the ECB which, as Windy pointed out, is a prelude to significant money printing.
Without getting into MMT, there is something to the theory that money can be “printed” without causing inflation so long as there is slack in productive factors. That’s basically what happened in the U.S. when the Fed flooded the system with reserves. The EU is in a different scenario. A country like Germany is highly dependent on exports to take up productive slack and avoid deflation as there isn’t enough domestic demand for domestic production with the caveat being that Germany specializes in high value-added goods and is not self-sufficient in the production of much of its domestic consumption.
So what happens when the EU loses access to a large consumer market like say… the U.S? First, there’s two scenarios under which this happens: 1. tariffs and other trade barriers and 2. an aging U.S. reduces its demand for foreign goods. The short answer is that the current accounts of EU exporters would quickly go into the red.
So now go back to Germany living in a world where the ECB is trying to print itself out of an insolvent banking system. Let’s say between bank recapitalizations and a decline in exports, Germany’s capital account goes into decline. What happens to the Euro? Well, a huge chunk of commodities imported by the continent are bought in USD so the Euro will decline against the USD and a host of other currencies accordingly.
To paraphrase Powell circa 2014 when he pontificated on the reversal of the Fed’s balance sheet “it won’t just be $30billion, or $40billion, or $50billion a month. The market will see it’s that much per month as far as the eye can see and it will treat it as it’s all happening at once.” Powell nailed it and that’s exactly how credit markets responded in September/October of last year (equities followed going into the end of the year) and had the Fed not reversed policy course we would have gone further down that rabbit hole.
So when the day comes that DB has to be bailed out, the market will say “it’s not just DB, it’s the entire European banking system and it’s not 50billion EUR a month, it’s several trillion EUR”.
I wouldn’t say it will be a Weimar-like event. However I could see the EUR trading down 20 handles in a matter of a few weeks which would be really unprecedented and due to import inflation Europe would basically be staring down a nasty period of rising inflation and slowing/contracting GDP.
i had no idea the author of “the places in between” was even a politician until i checked his Wiki page. That is a pretty impressive resume for a relatively young guy - especially the pre-political stuff in the early 2000s. Doesn’t seem to fit in with the slimy back stabbing Tory MPs…he even seems to have empathy for others who aren’t even British. he may be thoughtful, and softly spoken with an upper class accent, but anyone walking across afghanistan in 2002 or spending time in leadership roles in dangerous places in Iraq not long afterwards clearly has balls and doesn’t need to shout to prove it.
just looking at part of the job being to project what the brits think they are as a country why wouldn’t the 125K (my impression is that they are all like the retired major from Fawlty Towers - but i haven’t lived in the UK for 22 years) pick a brave, intelligent, articulate adventurer over Boris, Gove and the rest of the political slime?
I wouldn’t say it will be a Weimar-like event. However I could see the EUR trading down 20 handles in a matter of a few weeks which would be really unprecedented and due to import inflation Europe would basically be staring down a nasty period of rising inflation and slowing/contracting GDP.
Euro would have a 70 handle IMO.
I’ll counter with some ideas on some probably stale data.
The consumer bank is fine with industry average bad loans
The merchant bank is fine with some but not a ton of bad loans
The I Bank is a money pit of stupidity
You know and I know the 49T in notional nets down to a delta notional of less than XX Billion in losses because they’re bad traders (one would hope otherwise they have no risk controls, which is admittedly possible because it is the worst run bank in the world). I really thought Commerz was going to buy retail and commercial assets leaving the garbage in DB to be wound down in a good bank bad bank scenario brought about by M&A and not fiat. The fact CB walked away makes me think either or both 1 and 2 above are wrong. Netting a book and then closing the remainder is doable but if their loan book sucks it will be bad
Guessing if the last sentence is correct it will only be bad for ze Germans… And EU
Though there would be some sense of schadenfreude on the part of the Greeks I’d guess
Guessing if the last sentence is correct it will only be bad for ze Germans… And EU
Though there would be some sense of schadenfreude on the part of the Greeks I’d guess
No it will be bad for everyone short term
i think it is clear that if he wins the UK won’t have a clown running the country. i also watched his no-notes speech in parliament on hedgehogs when he was environment minister. Sounds a trivial topic, but it showed someone who took his brief seriously and an incredible ability to communicate.
Those MPs are going to be picking their own boss (or at least narrowing it down to 2). if i was picking my boss i would want someone consistent, smarter than me, fair, did the job they have well. Based on the comments on HIGNFY after he left it doesn’t seem like work colleagues like Borris very much. lets hope the MPs and the party members do the right thing.
here is Rory in parliament - on hedgehogs. must have been Bercow’s day off as one of his deputy’s is in the chair - but the reaction at the end is priceless.
https://www.youtube.com/watch?v=vqTkLoekm_0
does make me a little jealous when i see how well a UK minister can know and articulate their brief when we have sleepy, and clueless Ben Carson mixing up acronyms thinking he is getting asked about Oreo cookies and Amway (a cosmetic company part-owned by husband of education minister Betsy Devoss).
I went to grand rapids once…
Honestly, stayed at the am way grand and it was bizarre
I’m very impressed with Stewart which is almost certainly why he won’t get it but more importantly should not even be in the party
Yeah their derivatives book should largely net out but it wouldn’t shock me if they were off sides to the tune of 200-300billion. Or even more. What you propose is reasonable if DB had a decent loan book. I suspect CB walked because they realized DB’s loan book was loaded with NPLs that aren’t being marked accordingly (the whole labor thing was just optics IMO). Between bad loans and bad derivatives bets the tab could easily push 500billion EUR which is ~15% of their GDP.
They won’t realize it all at once of course which will only make things worse.
70 handle seems… extreme… but I suppose all bets are off once it breaks parity. A re-test of 1.05/1.06 seems like an eventuality at this point and if that fails you can be guaranteed it will test parity and, if parity fails to hold… all bets are off because you run into a plethora of problems:
-confidence
-trade settlement (who wants to get paid in a currency in decline especially when bank bail-ins are the official policy of the EU?)
-shrinking liquidity
-etc. (these factors feed on each other)
Interesting times.
What’s a handle
What’s the time line for DB to see a reckoning
.