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July 10, 2016 | Deutsche Bank Chief Economist: “Europe is Seriously Ill”, Banks Need €150 Billion Bailout

Mike 'Mish' Shedlock

Mike Shedlock / Mish is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction.

David Folkerts-Landau, chief economist at Deutsche Bank, says “Europe is Seriously Ill”, and EU banks need a €150 billion bailout program.

Via translation from Die Walt: German Bank Chief Economist Calls for €150 Billion Bank Bailout.

Europe risks a new banking crisis says David Folkerts-Landau, chief economist at Deutsche Bank. He suggests a huge EU bailout program. Private creditors should not participate.

“Europe is seriously ill”

Rules prohibit state aid. However, bail-ins are not politically feasible because it would take out a lot of private savers in Italy, and possibly even trigger an onslaught of creditors and customers of the banks. “Strictly to keep to the rules would cause greater harm than they suspend them” said Folkerts-Landau.

The decline in bank stocks is only the symptom of a much larger problem, namely a fatal combination of low growth, high debt and a proximity to dangerous deflation. “Europe is seriously ill and needs to address very quickly the existing problems, or face an accident,” said the chief economist.

Question of the Day

Is David Folkerts-Landau more concerned about Italian banks and Italian savers or the repercussions that a collapse on an Italian banks would cause Deutsche Bank?

I suggest the latter.

Regardless, the entire European banking system is on the verge of collapse, starting with Italy. Deutsche Bank’s derivatives mess is nothing to sneeze at either.

Further Reading

Get Out Now!

Once again, I repeat my warning from last December: Get Your Money Out of Italian Banks Now!

Mike “Mish” Shedlock

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July 10th, 2016

Posted In: Mish Talk

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