Monday, September 26, 2016

Merkel Rules Out State Bailout of Deutsche Bank, Stock Plunges

Angela Merkel announced she has ruled out a state 'bail-out' for Deutsche Bank (DB).  No surprise, DB's shares tumbled to an all-time low, sliding more than 6% this morning to €10.70, amid concerns that mounting legal bills and fine would force it to raise capital soon.

The failure of DB, the largest bank in Germany, would ushering in devastating consequences for not only the German but also European economy. Flight to safety capital money flows from Europe (Euro) to the United States (US Dollar) would also intensify, thus, sending the dollar higher. A dollar rally would take the evolving global debt crisis to the level of systemic failure.

Headline: Nein to a Bailout for Deutsche Bank

Deutsche Bank shares fell to a new low this morning after a weekend report that Chancellor Angela Merkel gave a firm “no’’ to bailing out Germany’s embattled bank. Merkel said Berlin would not intervene on Deutsche’s behalf to whittle down a $14 billion fine that could come in from U.S. authorities. With federal elections coming up next year, she knows voters want to hear about tax breaks, not bailouts.



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