By Tyler Durden. Originally appeared at ZeroHedge
The head of Germany’s largest commercial bank warned of the fallout from cheap money, cautioning against using the strong euro as a justification for printing more.
Bloomberg reports that the Deutsche Bank Chief Executive Officer John Cryan called for an end to the era of cheap money in Europe, saying that the prolonged period of rock-bottom interest rates is starting to inflate asset bubbles and putting the bank at a disadvantage to U.S. rivals.
“We are now seeing signs of bubbles in more and more parts of the capital market where we wouldn’t have expected them,” Cryan said, adding that the interest-rate policy has been partly responsible for the decline in earnings at European banks.
“I welcome the recent announcement by the Federal Reserve and now also from the ECB that they intend to gradually bring their loose monetary policy to an end.”
Low interest rates, money printing and a penalty charge for hoarding cash have been at the heart of attempts by the central bank to reinvigorate the 19-country euro zone economy in the wake of the 2008-09 financial crisis.
Reuters reports Cryan told a room full of bankers in Frankfurt on Wednesday, a day before the ECB’s governors meet to discuss policy, that:
“the era of cheap money in Europe should come to an end – despite the strong euro.”
Cryan also explained how ECB policy (relative to The Fed) has disadvantaged European banks…
“U.S. banks enjoy a competitive advantage due to the local interest rate environment,” Cryan said.
“In the first half of 2017 alone the net interest income of U.S. banks rose by eight percent, in Europe it fell by two percent. We at Deutsche Bank had access to over 285 billion euros of liquidity at the end of the second quarter, because we are now receiving huge cash inflows. This money, which actually constitutes the strength of a bank, is costing us penalty interest.”
And finally took at jab at the Brexiteers, noting that Frankfurt was the most natural location as a financial hub as banks move from London after Britain’s decision to leave the European Union – ahead of Paris, Dublin and Amsterdam.
“There is only one European city which can fulfil these requirements and that city is Frankfurt,” he said, pointing to Frankfurt’s supervisory authorities, law firms, consultancies and airport.
“It’s not about a choice between Dublin, Paris or Frankfurt – it’s about a choice between New York, Singapore or Frankfurt,” he said. “Brexit could become a large stimulus package for Frankfurt’s economy.”
In conclusion, Cryan urged that The ECB should “wave goodbye” to loose monetary policy because while it helped banks, financial markets and individual countries emerge from the financial crisis, it’s now causing “ever greater upheaval.”
Once Interest rates start to Rise the Stock Market will begin its final BURST upward for the Blow Off to follow and a Depression will show its ugly face in about a year after, assuming Interest rates continue to rise
That is how the Rothschild Famly, led by Jacob of this dynasty, works
A Pogrom is long overdue.
I hear France still has some working Guillotines
France must be encouraged to make some more. Kosher ones naturally :)
Some economy by Allah made by Muhammed, where the world of production was based by robbing, killing and taking slaves until there wasnt anymore to steel is completly irrelevant for the rest of the world.
Not even most muslims believes that. And off course – as usual – the rest of the world are not dancing for Your world of stupid economics and You deny to understand that, because Your bible says so during 1400 years.
Our economy is based on things You not even have and dont want to have. Better to sit in Your own made dark blaming us.
Jews invented the holy Choran to keep you down. Didnt they.
I’m Atheist but thanks for reading my comment
Bitcoin vão tomar o mundo ? todo
Tenga cuidad, amigo.
In 2008 we bought us out of the crisis, which didn’t mean that the crisis was endet. It’s back.
The same system will produce the same events, if ten years ago or now, or even in another ten years if we inflate the nonsense again.
Actually, the bubbles are reaching the real economy with force now, even precarious work conditions, cutting social benefits and much more everywhere could only delay the inevitable of the faulty money system. And something drastically changed too. In the past such crisis could be addressed by wars and economical crashes, but now in the internet age too many people understood. It would be the end of the Banksters and Oligarchs dominance, who try to delay this as long as possible. But in the mean time even more people will understand, they snapped their own trap to profit from those crashes and wars, now it won’t work anymore, no matter the media brainwashing. Too many people have spoken out, too many who suddenly would be in high demand to speak out again.
What we see now is, to prevent the worst as long as possible. As excess money is searching for profits and interest rates, the house market already gained momentum. First with buildings having hundreds of residential units, it now reached houses for two families only already. And the housing market is only one example.
To stop, or better say to delay this trend, money needs another spot where it can be invested, and for that the interest rates have to be higher.
Some people care for names. I don’t care for that, it is the easy way out of real arguments. We have to learn to care for facts instead.
There are more facets to that, but I hope you get the core of the picture.
I dont think the crisis are back, more like we are close to the rpoduction level meeting the same kind of problems, which we should treat much better.
But Im a little worried. To many making the bubble at 2008 something stillare there having too much influenze.
It is a fallacy to think that the fractional reserve banking can be really controlled by a central bank setting rates.
The money creation out of thin air still allowed to the commercial banks amount to a perverse incentive: In good times increasing the money supply explosively. Well aware that in bad times the bank last requiring return of its money will end up with empty hands so at the first signs of a turning tide all banks are frantically annihilating money by forcing lenders to repay and retracting lines of credit to the extent of damaging the real economy.
Allowing commercial banks to create money out of thin air virtually guarantees a cyclical jo-jo economy. It is however both vital and central to the business model of commercial banks. Small wonder that the commercial banking lobby will fight to suppress any alternative. They succeeded in getting any reform of the agenda in the Netherlands because the Netherlands within the Euro zone isn’t allowed that sovereignty anymore.
Of course banks are still selling their trans formative role aggregating money from individual savers and lending that on to industry. However that’s window dressing only. The real banking model is creation of money leveraging the banks capital with a factor of 20 and of course the risk too. Current banking practices make it next to impossible to create a stable economy. Worse offloading losses to the tax payer is the ‘solution’ most western countries opted for.
Iceland realized this and is looking for an alternative: https://eng.forsaetisraduneyti.is/news-and-articles/reform-of-the-monetary-system
One might note that only Iceland jailed bankers and politicians after the last crises, also let banks fail and recovered a lot faster.
Even the Swiss ( you know this country known for its banks up in the mountains): http://internationalmoneyreform.org/blog/2015/11/swiss-campaign-triggers-referendum-money-creation/
Anyway the bad balance of both FED and ECB will make reform not a question of “if” but only “when”. Collapse of the Euro zone may provide a trigger in allowing nations to define national policy again.
Im sure there will be no collapse, but I dont want to see what happend a few years ago here in Denmark. When the buble grew we were told, that we shouldnt build things we couldnt eat such as bridges and hospitals, because it would overheat the economy because those would be too expensive.
But those moderates taking away artificial money and the making of more of them away was a minority.
The result was, that there were no money left, when it went vertical down and the private sector had billions and billions in minus. Our Goverment today seemes to be like that again putting no real money away into areas, where they can be kept for sensible use.
Our problems are different from many others. The public sector is mainly under control having the best A`s ever. But the private sector shouldnt have so much money, because they spend it in artificial speculations and those add themselfesup making bubles looking like the one a few years ago.
The strangest thing is, that our goverment has learned nothing from last time, where our right wing goverment had to nationalize banks even they are totally against that and name it as socialisme or worse.
So germany – pls behave. No more money too keep the Euro lower. Take them away by things we then have, when hard times come.
It’s not back yet, but that is just a matter of time. This system cannot prevail, its destruction is a design element of it, making it necessary to fail every 70 – 80 years.
We will see. In my mind its about politicians getting re-elected by making too much unpaid gifts.
I hope we will grew very old before Your dreams becomes thrue.
Instead, I hope that we won’t grow old before this nonsense gets changed to a sustainable economic and financial system.
Time is running out, but the people are sleeping and not acting at all. Daydreamers walking open eyed into their catastrophe.
Its always a dilemma, when economic goes up and down. And it does.
The biggest bubble is the balance sheet of Deutsche Bank itself.
The bank rife with scams defrauding many governments, defrauding many of its customers.
The bank that “bought” in the crises 20.000 business clients in the Netherlands to send 19.000 of those within two years a letter they had to repay all amounts due more or less immideately as Deutsche Bank did not want them anymore as customers while charging them fines for repaying loans before term.
Deutsche Bank is a bank of which customers should be proud to say : “it WAS my bank”
Yup, cheep money, rock bottom intress, sent the “marked” it created to the sky, yeah, what could possibly go wrong, everything. I could think of some scenarios, and non of them are nice, the deliberate housing boble is the banks final call, where people will suffer, the banks repossess and gets even bigger part of the world, by crashing everything, and with an printing press going into warp drive, buy everything.
Du you understand. What I find remarkable is the deep rooted senility, an blackout and ignored reality where the sup-prime event in 2008 is the root cause of the banking calamity and what followed was the inevitable bail-outs of this same banks whom in the first lace lobbied to create the present “marked” like Housing. I recommend just to give you an ex. to investigate on how the national debt of Belgium exploded and what followed was the inevitable bail-outs with tax payers money. Yeah, do that, follow the money. This shit goes way back, to the Island of Jekyll and Hyde. Why did the central banks forced European entirety to take this looses, and hughe debt accumulated, and the debt, despite austerity’s have continued to grow, by not even doing anything to correct it, namely to let this banks die, the era of the central banking scam must end, we simply dont need them, this centralization is like an bloody religion, we dont need this big entity’s, they must die, before anything can happen that benefits us, not the robber barons.
The refugees, is just the same, but thru whats defined as human capital, free flowing, capice, cheep labor, no rights, no nothing, and the bill is sent to us all, why dont we hang some of this executives and politicians, to make them understand that we see it, crystal clear, we are been invaded, and since nobody in the elite bothers to tell us the truth, we must force it out of them, we are millions, and should lust walk down the elites and their minions in the police force.
We need an f….. revolution.
Bankers manage for themselves. Everyone else is expendable. Economies can and frequently go do, go to h–l.
The Zion owned Deutsche Bank accuses the Zion owned FED of unfairly treating the Zion owned ECB.
The socalled bubbles are no problem as long as it is investors taking the risks. If they lose money, so what, no problem. In case it is the banks financing those bubbles, it is another matter.
Because of this, the required capital ratios are set higher then before (Basell requirements).
There is something to be said for each country having at least one bank that does no commercial banking, no financial engineering and leveraging and uses the KIS principle. Were that bank to be a cooperative bank or a state bank, so much the better.
I myself like the Rabobank, used to be one of the very few triple A banks. Tbh, even they were involved in US mortgages, Libor scandal and such. They closed down much of the involved departments, mostly in London. Maybe there is something positive to be said for Brexit after all.