Friday, September 30, 2016
Watch the Banks
Germany's Deutsche Bank is in trouble. Pressure is being put on the German government to bail it out. Let's see how that sorts itself out. Right now the politicians don't look like they want to do a straight bail out. Anyone remember Lehmans?
The bank caught my attention because I wonder if it will be the final straw that brings down the financial house of cards. There's a lot of unsustainable financial things in the worlds, everything from the overblown derivative market to real estate speculation in Canada and China.
At any given moment something “too big to fail” is going to fail. Then it will be a scramble to see who can get what they can out of the system. There is no way that all debts are going to be paid. A lot of that debt is going to be student loan debt, so that's a plus . . . I guess.
Anybody have any idea why the US bailed out the banks in 2008? Yeah sure, the banks are big political players and the politicians take care of their own. However, the banks do a lot more than buy off politicians. They are the key to keeping the economy going, at least the way it's currently set up. Everything from the drilling of oil to the planting of seed relies on the banks.
If all they were doing was being the middle men between investors and those in need of loans, it wouldn't so bad. That's a solid and valid function of banks. Unfortunately, that sort of work is unexciting. While the pay is steady it's not crazy sky high lucrative -like all the speculative things they've gotten into.
In 2008 they were bailed out of all those bad decisions to keep the economy moving along. Will Germany be willing to do the same? They many not even be allowed to under German law. Could be interesting.
Of course, I'm not a financial advisor. What I am is just some guy with a good front row seat to the sh*t show. We appear to be in for some interesting times.