Bundesbank Warns European Investors: "We See Risks, Despite Calm Markets"

Tyler Durden's picture

A day after the Federal Reserve warned that "low level of expected volatility implied by some financial market prices might also signal an increase in risk appetite" and this complacency; the Bundesbank has decided to try and jawbone back investors' exuberance across Europe. As Die Welt reports, while stocks and bonds are near record highs across Europe - thanks to the ECB's Mario Draghi's promises, Bundesbank board member Andreas Dombret warned "we see risks - despite the fact that markets are calm," and perhaps incredibly suggested investors "flatten all risks now to avoid the herd behavior."


Via Die Welt (via Google Translate),

The Bundesbank is the spoilsport. While stocks and bonds of the euro-zone haussieren and politics everywhere knocks on the shoulder just before the European elections, how great the euro crisis has been mastered, the highest German monetary authorities appear suddenly as a stern warning voice. They warn of speculative excesses in the markets, drag the new risks to financial stability by itself.


"We see risks - despite the fact that the markets are calm," Bundesbank board member Andreas Dombret said the financial agency Bloomberg. In many European countries, the real estate prices are very high. An exuberance is also reflected in the ratings of corporate bonds, he said. "The small fluctuations in the markets entice the market players to weigh in safety."


"We must not again flatten all risks now. Transported the herd behavior", Dombret said, referring to the market developments. The word of the 54-year-old certainly has weight. So Dombret care at the Bundesbank been responsible for financial stability.


And the Bundesbank board is not the only high-ranking central bankers, who warns against a false sense of security for investors. On Tuesday already U.S. central bankers Richard Fisher had raised the alarm. "I am disturbed by the fact that there is no volatility in the markets. This is not a healthy development." Fisher's concern is not unfounded. The last time that the financial markets moved in as quiet lanes, was in 2007, shortly before the outbreak of the financial crisis.




monetary authorities seem to be trying to counteract with verbal interventions. Financial stability plays an increasingly important role in the monetary policy. Thus, the financial crisis has shown in 2008 that bursting speculative bubbles entire economies can tear into the abyss.

Remember though - don't fight the Fed (unless they say to sell)

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Cattender's picture

Risk? Fuck that.. we are in a RECOVERY!!!!!! (accept it Bitches)

TeamDepends's picture

Ve also see Elvis, und he ist rockink ze haus!!!

cifo's picture

should have said "despite kept calm markets"

maskone909's picture

Hans Gruber: This time John Wayne does not walk off into the sunset with Grace Kelly.

John McClane: That was Gary Cooper, asshole.

Oldwood's picture

This must be a Muslim recovery....each day we get a little closer to Allah.

maskone909's picture

wtf is calm about 50billion per month in QE (emergency measures)!?!?

Carpenter1's picture

Call me crazy,  but Germany seems to be doing more to harm the "all is well" message than help it. Some are saying there's a Russia/Germany/China axis forming and I'm starting to believe it.

Rainman's picture

nah ...Germany won't do anything like that ...they're waiting around for gold deliveries * chuckles*

dryam's picture

Look, why would Germany do that? There's a deep sense of trust between Germany & the U.S. right now. Plus, the U.S. is teaching them a lot about good espionage tactics.

trader1's picture

you're just figuring that out?


gdiamond22's picture

Given Germany's track record in world wars I highly doubt Russia and China would want to be on that side of history. However, with Obama hollowing out our military, spying on anyone who speaks and the simple fact that he's an incompetent Marxist golfer, I can see that alliance forming.

Haus-Targaryen's picture

I normally like what you have to say, and instead of being a sarcastic asshole, I'd like to point a few things out to you as to why your first sentence is dead wrong. 

- "On that side of history" I find interesting.  What "side of history" are you talking about?  Not wanting to be in lock-step with the country that was once hijacked by a dictator and exterminated 6 million people? (the USSR under Stalin executed 20 million people, and Mao killed over over 50 million.  6 millions is peanuts)

- Or are you talking about Germany's track record of losing world wars?  See, in WWI Germany's Axis with a population of around 110 million people at the time (Germany + Austria Hungary + the various other lesser kingdoms) took on over 450 million people, and were outnumbered 4-1.  Thereafter, in WWII a country with 65 million people (at the time) took on -- single-handidly -- over 500,000,000 people.  They were outnumbered over 12 to 1, and they still almost own. What causes Germany to keep losing WW is their over-confidence in efficiency, and at some point, sheer numbers overwhelm a much smaller force, irrespective of how efficient it is. 

There are tons of good economic reasons Germany (and Austria -- lets be honest here) will start looking East as opposed to West.  I don't want to write War and Peace as a reply to your post on page 2 of ZH, so I'll leave it at that -- however, to assert that Russia and China won't be bffls with Germany because of WWI and WWII -- I think you are gravely mistaken.   

Ghordius's picture

agree with you. perhaps it's the "don't bet on a horse that was slaughtered two times" anti-German sentiment speaking, there. quite common

imho, Germany, Austria and many other countries including... Russia have learned a lot from fascism & communism. this, imho, gives a certain edge regarding political excesses

Ludwig Von's picture

And the rest of Europe will follow, not all at once, but they will. The brittish will drop out and become the next banana on the US flag. 

Al Huxley's picture

If you operate on the principal that central banks are either completely clueless, or pathological liars, then the recent FED comments, coupled with these Bundesbank comments bode will for a powerful bull market dead ahead.

fonzannoon's picture

"flatten all risks now to avoid the herd behavior."



WTF does that mean? What isn't risky? 

Al Huxley's picture

The only thing I can think of that's risk free is the S&P.

SharkBit's picture

The Germans breaking ranks.  This could be interesting.  Folks in Europe are slowly waking up to the US Ponzi scheme.

pob's picture

Its a WORLD Ponzi scheme !

SharkBit's picture

Agree with you there.  But Europe certainly following US lead as they have been for past 60 years.  Notice how quite Europe has been with respect to Russia escapades.  Where has UK been?  Where has France been?  Germans are realistically only ones making a bit of noise.  Interesting times.

Oldwood's picture

The key to happiness is lowering one's expectations.

We have struck a mighty iceberg while racing across the dark and uncertain sea at speed, but fear not, for if we but remain calm, refusing to panic, I am quite sure all will be well.

Stay calm, do not sell your elevated, inflated positions for they now need time to secure their lifeboats. But do not worry. The fact that they are climbing into these relatively few vessels of safety, does not mean they are fleeing for their lives. They are simply exercising caution, checking out their fitness and safety for the rest of us...just in case. And if they do lower into the waves and start motoring off, they are not abandoning us but actually putting their own lives at risk to go and seek help.

Lying fucking cocksuckers only give a shit about one thing and that is THEIR asses.

Herd behavior my butt. This herd is in the chutes at the packing house with only one way to run...our demise.

Cattender's picture

And the band played on...

WillyGroper's picture

<<<This herd is in the chutes at the packing house with only one way to run...our demise.

I think you're right. Get a load of this & check out the comments.

The most frightening to me is the sheer number of agency's with access to you alleged private info. HIPAA HIPAA HOORAY

Tenshin Headache's picture

"We must not again flatten all risks now. Transported the herd behavior."

Well that's clear enough.

Goldilocks's picture

Men Without Hats - Pop Goes The World
http://www.youtube.com/watch?v=3zUUtf7gOe8 (3:56)

El Hosel's picture

Better send them some of our rose colored ponzi... Risk must not be acknowledged at any cost.

Ghordius's picture

the BundesBank is always the spoilsport. it's a tradition. a good one, actually

can you imagine the FED warning against too high valuations of stocks? the last time they did it was some oblique mumbling about "animal spirits"

that was before Ben Bernanke started to be proud of high Russel 2000 valuations

AdvancingTime's picture

Have we been lulled into complacency by the extraordinary actions taken by central banks and governments over the last six years? This is a key question we must face. Have these actions really worked or merely masked over major flaws and problems? 

And just for fun, consider that by not demanding the right kind of growth and by throwing money at problems we have only delayed and added to festering issues that face us in the future. In what most of us view as a fast moving world many people have come to think if a financial crisis doesn't occur today or in the next few weeks it is simply not going to happen at all. More on the subject of complacency in the article below.