Economic
war is playing out between Germany and the US…and Germany’s
Deutsche Bank is sinking
Tit-for-tat
$14 billion fines between the US and Germany is nothing more than
economic warfare.
ALEX
CHRISTOFOROU
2
October, 2016
Germany
is learning the hard way what it means to go up against the United
States corporate machine.
After
the European “powerhouse” country tried to flex its economic
muscle by imposing a $14 billion EU “back tax” fine on Apple, the
US DOJ (one week later) coincidently slapped Deutsche Bank with a $14
billion settlement fee for the investigation into the German bank’s
trading of mortgage-backed securities during the financial crisis.
Deutsche
Bank is now facing extinction as three weeks of volatility in the
stock price has sent its shares to all time lows.
German
politicians are now waking up to the fact that they are on the
receiving end of a US economic attack…a retribution for Germany’s
hubris in actually believing they can impose a “back tax” fee on
one of America’s most powerful corporation.
Zerohedge
reports that German parliament’s economics committee chairman Peter
Ramsauer, in an interview with Welt am Sonntag, said the move against
Deutsche…
–“has
the characteristics of an economic war”, adding that the US had a
“long tradition” of using every available opportunity to wage
what amounted to trade war “if it benefits their own economy”,
and the “extortionate damages claims” being made in the case of
Deutsche Bank were an example of that. According to the German
politician, the threat to force Deutsche Bank to pay a $14 billion
fine over its mortgage-backed securities business before the 2008
global crisis “has the characteristics of an economic
war.”“Extortionate damages claims” in the case are an example
of that, said Ramsauer.
Another
German politician, Merkel ally and MEP Markus Ferber suggested, as we
did, that the Deutsche Bank investigation is a “tit for tat
response” from the US Department of Justice after Brussels imposed
a record €13 billion penalty against Apple’s tax misdoings in
Europe. It’s not just Apple however: earlier this year, Germany’s
Volkswagen agreed to pay $16.5 billion in the US for cheating on
American diesel vehicle air pollution tests between 2008 and 2015.
The fines still risk growing by billions and VW needs to recall
85,000 vehicles.
Meanwhile,
German Economy Minister Sigmar Gabriel was not too pleased with
Deutsche Bank CEO John Cryan, over his recent comments regarding the
bank’s downward spiral.
Cryan
told employees his bank was suffering from market speculation, after
Deutsche stock plunged to an all-time low last week. “I did not
know if I should laugh or cry that the bank that made speculation a
business model is now saying it is a victim of speculators,”
Gabriel said on Sunday.
Zerohedge
adds that no help should be expected for Deutsche Bank anytime soon,
not from the German state and not from the US DOJ …
Late
Friday, media reported that Deutsche and the US regulators were close
to a settlement of $5.4 billion, which pushed the stock six percent
higher. The report has been largely denied, not only following
reports that Cryan is only now set to fly to the US to negotiate the
deal in Washington, but because Deutsche Bank has an obligation to
confirm the rumor if it were true. Meanwhile, Moody’s said it would
be good news for bondholders if the settlement was $3.1 billion.
Fines as high as $5.7 billion would erase 2016 profitability, but not
fatally damage the German bank.
German
parliamentary budget spokesman for the ruling conservatives Eckhardt
Rehberg has ruled out state aid for Deutsche, saying its risky
business abroad has resulted in billions of euro in penalties. “At
the present time I would rule out any capital help. That would not be
the right way to go,” said the politician.
The dragon begins eating it's own tail.
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