"We're Now Seeing Bubbles Everywhere" - Deutsche Bank Boss Urges End To "Era Of Cheap Money"

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."

Comments

The Wizard BaBaBouy Wed, 09/06/2017 - 09:46 Permalink

The banksters have been buying gold with their inflated QE while suppressing the price and telling us its a barbaric relic.Oil for gold-backed Chinese Yuan is ready. Dave Kranzler explains how crude oil will now sell for something that can’t just be printed out of thin air or double-clicked into existence… http://www.silverdoctors.com/headlines/world-news/fund-manager-warns-ch…

In reply to by BaBaBouy

LawsofPhysics Wed, 09/06/2017 - 08:50 Permalink

These bankers and financiers have been giving themselves FREE MONEY (NIRP/ZIRP) for DECADES and continue to do so!!!Meanwhile, you must perform real work and face real risk....Let me be clear, so long as you accept their FIAT currency, NOTHING changes!"Full Faith and Credit"

brushhog Wed, 09/06/2017 - 09:03 Permalink

After pasturing my cows this mourning I took a walk through the woods. Found an edible mushroom called 'hen of the woods'. A 6-8 pound specimen. Going to cook it up in a soup this afternoon! Life is good.

Lady Jessica Wed, 09/06/2017 - 09:00 Permalink

Kabuki theatre:  A beginner's guide.Perplexed actor DB walks on stage mouthing the words "central banks" and "bubbles".  Conveniently omits he is a primary dealer of largest of said banks and also a time bomb financial liability for the German Federal Republic and by extension the European Union.Compliant chorus (aka mass media) gives account of actor's gestures without any critical commentary whatsoever.DB continues to grimace perplexedly.[end scene].

dark fiber Wed, 09/06/2017 - 09:32 Permalink

Wait until after the German election when the mess in Europe breaks out for the whole world to see.  Then we will talk about the strength of the Euro.

Fireman Wed, 09/06/2017 - 09:05 Permalink

The tsunami of toxic derivative shit is mounting and is going to wash the Dusche Bank and all its bankster scum down the sewer.Prep now or suffer the eternal consequences. After the tsunami of fiat filth crashes look forward to the satanist banksters festooning the remaining lamp posts of our so-called Western democracies along with their pedophile political garbage enablers and presstitute apologists.   https://staticseekingalpha2.a.ssl.fastly.net/uploads/2015/10/5/8266001-…

gregga777 Fireman Wed, 09/06/2017 - 09:34 Permalink

"After the tsunami of fiat filth crashes look forward to the satanist banksters festooning the remaining lamp posts of our so-called Western democracies along with their pedophile political garbage enablers and presstitute apologists."

It'll be time to party and grill some steaks on the BBQ while admiring the hanging corpses.

In reply to by Fireman

Dump Wed, 09/06/2017 - 09:06 Permalink

Jamie Dimon said the same thing a few months ago.Looks like banks have pigged out on free money, can't stuff any more debt into Joe Public.So they need a new menu - higher interest rates to boost margins and net interest income.He'll be Cryan soon when DBs derivatives book implodes. 

rrrr Wed, 09/06/2017 - 09:06 Permalink

1. Actually, money is likely to get a lot cheaper.2. What's really sobering is that these guys are not smarter than you and me.3. What really concerns them is their position in their professional life.

To Hell In A H… Wed, 09/06/2017 - 09:13 Permalink

Now that the top 1% has had 93% of the QE money, bought hard assets, land, precious metals and fine art, these fuckers are now preparing the brain-dead for phase 2. The money-masters have overseen the biggest transfer of wealth from the bottom to the top 1%, in the history of mankind and where is the united front against this daylight robbery?Oh, silly me. There isn't any. 

Batman11 Wed, 09/06/2017 - 09:29 Permalink

Does Mario’s fix just mask the problems building behind the secnes?His fix of buying bonds does keep bond yields down at the periphery and stops the Euro being ripped apart by market forces.Target 2 imbalances are building behind the scenes as private investors, companies and banks off-load their potentially loss making bonds onto the ECB.The forces that act to pull the Euro-zone apart have longer to work while this temporary solution masks the problem. "historically the German D-Mark had been strengthening since its introduction in 1948 against the currencies of its neighbours, and this reflected – and compensated for – increased German competitiveness. Their weakening currencies allowed German trade partners to keep their export industries in business and their workers employed. By introducing a single currency, future revaluations of the German currency were disallowed. This amounted to a de facto future devaluation of German purchasing power, revaluation of the currencies of the other European countries, and hence would render non-German economies less and less able to compete against German exports over time."Germany gets an under-valued currency that keeps making it stronger.The Club-Med nations get an over-valued currency that keeps making them weaker.The longer these forces are left to act, the worse it gets.Free markets would soon see an end to this financial aberration, the ECB is stopping the markets doing what they would naturally do, and is probably storing up ever growing problems for the future.Plus the bubbles.