Thursday, September 29, 2016

Invisible Hand Will Make Deutsche Bank and Politicians Look Bad

Worries about Deutsche Bank (DB) go back years. It's become the biggest worry in the world only because Merkel foolishly, more likely cluelelssly, said Nein to bailout this week. Relentless Selling and the mass exodus of prominent hedge funds will force a realistic look at DB's solvency (soon) or Merkel to change her hard line position.

Headline: Why is Deutsche Bank now the biggest worry in the financial world?

Since the credit crunch in 2008, banks have been struggling to adapt to their new environment. Low interest rates coupled with meagre yields in the financial markets mean banks can generate fewer profits from the deposits they collect, the loans they dole out, and the market services they provide.

While government schemes such as Funding for Lending have propped up some of the banks’ operations, they have dampened activity in other areas, for example by subduing market volatility with vast quantitative easing programmes.



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