Deutsche Bank's Chief Economist Calls For €150 Billion Bailout Of European Banks

Tyler Durden's picture

The cards have been tipped, and it appears Italy's Prime Minister may have been right.

In the aftermath of Brexit, much of the investing public's attention has turned to Italian banks which are in desperate need of a bailout as a result of €360 billion in bad loans growing worse by the day (and not a bail-in, as European regulations mandate, as that would lead to an immediate bank run) to avoid a freeze and/or collapse of Italy's banking sector. This has pushed stock prices - and default risk - on Italian banks to record levels. So far Italy's bailout requests have mostly fallen on deaf ears, as Germany's political leaders have resisted Renzi's recurring pleas for a taxpayer funded rescue. However, as we have alleged, and as the Italian Prime Minister admitted last week, the core risk for Europe is not just the Italian banking sector but the biggest bank of all in Europe: Deutsche Bank.

Recall last Thursday, when speaking at a joint news conference with Swedish Prime Minister Stefan Lofven, Matteo Renzi said other European banks had much bigger problems than their Italian counterparts.

"If this non-performing loan problem is worth one, the question of derivatives at other banks, at big banks, is worth one hundred. This is the ratio: one to one hundred," Renzi said.

He was, of course, referring to the tens of trillions of derivatives on Deutsche Bank's books.

Today, we got the most definitive confirmation yet that the noose is tightening not only around Italy, but Germany itself (where as we reported on Thursday, Europe's Bank Crisis Arrives In Germany as €29 Billion Bremen Landesbank On The Verge Of Failure) when none other than David Folkerts-Landau, the chief economist of Deutsche Bank, has called for a multi-billion dollar bailout for European banks.

Speaking to Germany's Welt am Sonntag, the economist said European institutions should get fresh capital for a recapitalization following a similar bailout in the US. What he didn't say is that the US bailout took place nearly a decade ago, in the meantime Europe's financial sector was supposed to be fixed courtesy of "prudent" fiscal and monetary policy. It wasn't. 

As Landau says the US helped its banks with $475 billion dollars, and such a program is now needed in Europe, especially for Italian banks. In other words, just because the US did it, now it's Europe's turn to ask for more of the same.

"In Europe, the bailout does not need to be so large. A €150 billion program should be enough to help European banks recapitalize," said David Folkerts-Landau. He adds that 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 "dangerous" deflation.

"Europe is seriously ill and needs to address very quickly the existing problems, or face an accident," said the chief economist.

The Deutsche Bank expert said he is particularly worried about Italy and the condition of local banks, where the €40 billion in funding needs is said to be "conservative." He said that the bank bailout is so urgent that it should permit Europe to violate the bail-in rules of the new Banking Directive. The economist notes that such a bail-in is not doable and is politically unfeasible because it would hit people's savings and may cause a bank run in both Italy and elsewhere. We find it strange how nobody thought of this before the rules were implemented, or rather how impairing savings was only a problem when "second-rate" European citizens such as those in Cyprus and Greece were affected. Now that Italians and even Germans are in the cross hairs, suddenly "it is time to change the rules."

His conclusion: "Strictly adhering to the rules rules would cause greater harm than if they were suspended."

Our only question is whether Deutsche Bank's chief economist is more worried about the future of Italy's banks, or that of his own employer.

In the meantime, we look forward to the next pan-European bank bailout, now that even Germany's biggest bank has thrown in its support behind the proposal, which means Merkel and Schauble's resistance will promptly evaporate in the coming days as insolvent banks across Europe once again get rescued by taxpayers, in the process further escalating populist anger at the treatment of banks, leading to more Brexit-like events and the further fragmentation of Europe.

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hedgeless_horseman's picture


Congressman Brady

Finally, our family approached him, introduced ourselves, told him where
we live (in his district) and exchanged warm greetings.  I asked,
"Considering that you voted for both TARP bills in 2008, the most recent
of many tax-payer bailouts of bank shareholders, and considering that you reported owning more than $100,000 of JPMorgan Chase Common Stock and Employee Stock in 2007, Congressman Brady, what is your position on the Federal Reserve Banks being responsible for regulating and supervising the very same banks that own them, such as JPMorgan Chase?



Bailout is the name of the game.

Privatize the gains, socialize the losses.


6.  Read The Creature from Jekyll Island: A Second Look at the Federal Reserve - 5th Edition, by G. Edward Griffin.

Harlequin001's picture

What, you mean give another 150 bil of our money to bankers?

It's ok, I can wait till you try and squeeze all this new money into 'my' gold and silver.

I'll take my fair share of it then...

Cognitive Dissonance's picture

It ain't your money. It was electronically 'printed' by the ECB, so it's their money.

It is, however, your debt.

Harlequin001's picture

Cog, when they try and squeeze this lot into gold and silver, it becomes my money then.

Not before, and not after, but it definately becomes 'my money' at that point...

Cognitive Dissonance's picture

You and I know this. But the central bankers really do think the way I illustrated above.

It is their 'money' and our obligation....cus they're doing it to save the little people.

Stainless Steel Rat's picture
Stainless Steel Rat (not verified) Cognitive Dissonance Jul 10, 2016 9:58 AM

And finally, monsieur, a wafer-thin mint.

Cognitive Dissonance's picture


I'd rather eat cake. But thanks for the offer. :-)

Stainless Steel Rat's picture
Stainless Steel Rat (not verified) Cognitive Dissonance Jul 10, 2016 10:01 AM

As in "eet ees not as big as zee American bailout..."

hedgeless_horseman's picture


Deutsche Bank's Chief Economist Calls For €150 Billion Bailout Of European Banks


How much DB stock does this asshole own?

How much did he receive in compensation since the last bailouts?


conflict of interest noun   1.  the circumstance of a public officeholder, business executive, or the like, whose personal interests might benefit from his or her official actions or influence:

Cognitive Dissonance's picture

He doesn't 'own' any.

On the other hand, his blind trust(s) is/are overflowing.

<And how much will his 'blind' trust receive after the next bailout?>

BaBaBouy's picture

""He was, of course, referring to the tens of trillions of derivatives on Deutsche Bank's books.""

How Much Of This $$$ is on GOLD Shorting ?????????????

What is GOLD liability of Bank ???

Stainless Steel Rat's picture
Stainless Steel Rat (not verified) BaBaBouy Jul 10, 2016 10:26 AM

A mint's worth.

jcaz's picture

150B buys you about two weeks, Dave-

Then what?

bamawatson's picture

then all will be fixed. everything will be fine

Manthong's picture

Yeah, bail out the banks again, asshat…

The US Fed did it with ECB swaps for you in 2008, and you pricks got richer.

Now it’s pass the baton to the ECB again.

God forbid anything should actually be done to help the local economies.

Lore's picture

Why is there no talk of debt elimination?  I don't see it mentioned anywhere. 

Mr. Magoo's picture

Who is this Chief economist??

Looks like  Max von Sydow

BaBaBouy's picture

""He was, of course, referring to the tens of trillions of derivatives on Deutsche Bank's books.""

IF Its Not BACKED by GOLD, Its Fiats Play Monopoly Paper ...

Rabbi Chaim Cohen's picture

"Deutsche Bank's Chief Economist Calls For €150 Billion Bailout Of European Banks"

Of which Deuche Bank is going to need roughly €149B... ahem... every year... ahEM ad infinitum.

Déjà view's picture

Kevin Brady-R Tx. another tough big talking RINO politician. Hedgeless, why keep sending those spendthrifts to D.C.? 

Tejas on state/local level is far from being fiscally conservative.  

hedgeless_horseman's picture



The same reason as everywhere else...

“A democracy cannot exist as a permanent form of government. It can only exist until the people discover they can vote themselves largess out of the public treasury. From that moment on, the majority always votes for the canidate promising the most benefits from the public treasury, with the result that democracy always collapses over a loose fiscal policy--to be followed by a dictatorship.”


-Alexander Fraser Tytler

Déjà view's picture

Just as i thought...Bring Home The Bacon. No hope emulating from Texas...

Probably name a bypass or loop after Brady.

I suggest you do an article about Texas spendthrift finances. I presume you know Texas has second highest state/local debt absolute and per capita of all states.

hedgeless_horseman's picture


Probably name a bypass or loop after Brady.

Even more disgusting, in a fit of Stockholm Syndrome, we will surely name a school after him.

I see it now, Kevin Brady Elementary, home of The Fighting Fascists.


Stainless Steel Rat's picture
Stainless Steel Rat (not verified) hedgeless_horseman Jul 10, 2016 12:42 PM

Given the brainwashing attempted on my kids in Conroe's schools, it would be truth in advertising.

bob_bichen's picture

"truth in advertising"  -- we were writing the words AT EXACTLY the same time!

bob_bichen's picture

I prefer "Home of Mr. Nitro and the Dynamiters"

Believe it or not the "mascot" of the high school in Glendale California is the "Dynamiters" represented by a dancing stick of dynamite known as "Mr. Nitro."

I don't think the "dynamiters" in Glendale would mind sharing their mascot with schools named after those who blew up the financial system.  Sounds like Truth in Advertising to me.

JohnR's picture

Neither the Justice Department nor the FBI  found any evidence of wrongdoing...move along, please


auricle's picture

Of course you have to say we all need one, when it's really only you that needs one. 

SuperRay's picture

So who are all the deadbeats not paying their loans? And does the bank taking all of their assets as a result of their failure to repay the loans? Or do they just loaned the money to themselves and keep it. Tyler should put out a list of all those recipients of bankster cash

pitz's picture

Its not so much that people aren't paying loans (although there's certainly some of that).  Rather, the loans were not priced properly, employees have been taking excessive compensation which depletes bank capital, and firms like Douche Bank dealt in derivatives that often have nothing to do with actual loan performance (ie: a credit default swap can be predictive of default, but isn't an actual default unless a default actually happens!).

Calmyourself's picture

SSR one of the most fun reads I ever had, love Harry Harrison. One wafer thin mint, just one Mr. Creosote, just one wafer thin mint... BOOM>>>>

Harlequin001's picture

True, but not my problem.

and since we just Brexited, I don't think we Brits should be involved in this at all...

and if we are we need to Article 50 first thing on Monday morning...

Cognitive Dissonance's picture

Serious question without snark or disrespect.

Do you think the British PTB will actually ever enact article 50 and begin the process? And if they do, will they actually complete the process?

I have my doubts, but would like to hear an opinion from someone actually informed and on the ground.

dicksburnt's picture

referen-dumbs? haven't we seen this before in Greece? 

dark fiber's picture

Britain is a true European country.  Greece is more like something like a Central African failed state.  There is no comparison between the two.

Harlequin001's picture

Yes I think they will. I don't think people actually grasp what this is about. According to the media, the Brexit vote was about immigration, and I don't doubt that for many it was, but that just masks the underlying problem in that we no longer had control of our borders, and as such we had no choices.

The underlying issue for 'Brexiters' always comes down to sovereignty in one form or another, whereas those who voted for 'remain' voted for ... what? Grants and loans from Brussels? I don't know, but understand this, I am not British by popular vote. You cannot vote away my nationalism, and I will not become French or German or 'European" by democratic vote. This is one issue where the 'will of the majority' holds no sway whatsoever, so there really was only ever one outcome for the referendum, leave, or surrender, which for me was civil war. I will not be told I am no longer British regardless of the majority. And I am not alone. Neither will I forget this vote. This vote brings legitimacy to my claims, and those others like me.

This was the Battle of Britain on paper, and we didn't lose. We patriots will not forget, and now that we have the vote we have to do the hard bit and make sure that we finally win.

I'm still trying to work out whether Cameron was the worst traitor the country has ever known, or whether he was secretly a patriot who saw his last chance to screw the establishment and get us out, and took it; I think he was a traitor, but it could go both ways. Farage et al should be knighted.

Of course, the good thing is that immigration was cited as an issue, so whether we can even remain within the EU with open borders is very much a matter for debate. I don't think we can, but as a traveler for 16 years and most of it outside the EU, I really think the setting aside of Schengen is a small price to pay for what we get, which is freedom.

If Brexit is not implemented then I would return to the UK and campaign on my own if I have to, to get it done.  I won't be alone, so yes, I think it will be done, eventually, inevitably.

My Days Are Getting Fewer's picture

Don't sweat bullets.  Cameron did what he was told and put the exit up for a public vote.  Forget the reasons why.  He knew it would pass.  He immediately resigned.  Proves everything.  He did not have make the plebiscite.  He did not have to resign.  Will probably be named to run the RBS. A good soldier does not disappoint Queen and Country.


Lets Hang Parliament's picture

Cog - depends who we get as PM. Theresa May and the answer is no Article 50, Andrea Leadsom as PM and we stand a chance but no guarantees as TPTB would bring as many guns to bear as they could which in fact is what they are doing to get May elected. May is just more of the same old staus quo pork barrelling elite bo**locks. If we invoke article 50 then there is no turning back according to the Treaty but when did that ever stop a "well paid" politician...

The vote has certainly divided the country. As a Brexiteer I am now considered a Nazi, racist, paedophile, murdering scum bag, which might be considered an improvement by some of my mates! The problem is...very few people really understand the issues involved. It should not have been about immigration or the economy but about the failed experiment that is the EU and the euro and the fact that the eurocrats that run it are more economical with the truth than Hilbillary!

Keep smiling and stacking!

Harlequin001's picture

What people fail to grasp is that I, as an ordinary chap and non racist, would vote National Front if it was 'our' National Front rather than 'Remain', because at least if it was 'our' National Front, I could do something about it. If remain had won, I could not.

Like Winston said, 'We will never surrender!", and do not doubt, this was a vote to surrender.

HowdyDoody's picture

If May gets selected, you go from being led by a pig fucker to be led by a mad cat lady.


DaNuts's picture

There is an about turn, it is article 51.

Ignatius's picture

"Debt free money is the civil rights issue of the 21st century."  --  Damon Vrabel

Escrava Isaura's picture

Cognitive Dissonance It ain't your money. It was electronically 'printed' by the ECB, however, your debt.


Labeling it “Your Debt” misses the big point, in my opinion.


The most correct way, again, in my opinion: QE is electronic money, mainly, for the 20%, because there’s no way that any economy can grow its GDP or credit any longer. A great example is Saudi Arabia that needs to borrow, because its oil can not grow/sustain Saudi’s economy any longer.



NotApplicable's picture

I always refer to it as odius debt.

My name is not on a single one of those bonds, therefore I'm not liable.

Ghordius's picture

cog makes an excellent point: "It ain't your credit. it was electronically printed by the ECB"

credit is the other side of debt. every debtor has a creditor, every debt starts with a credit

now, for an American to have a eur-denominated debt, he would have to incour it by accessing to an eur-denominated credit, first


back to the article: remember TARP? remember Hank "Tanks in the streets" Paulson? he asked for roughly 950 billions... and got them, in his second attempt

then he said to us in europe we would have to do a TARP, too, in the same range. just saying, just remembering

JohnGaltUk's picture