German Bank Chief Economist Calls 150 billion
Europe risks a new banking crisis. David Folkerts-Landau, chief economist at Deutsche Bank, therefore, a huge EU bailout program suggests. Private creditors should not participate.
The chief economist of Deutsche Bank calls a multibillion dollar bailout for European banks. The institutions should be equipped American-style with fresh capital. At that time the government had stepped in 475 billion dollars. "In Europe, the program must not be so large. With 150 billion euros can be European banks recapitalize," said David Folkerts-Landau of the "Welt am Sonntag".
In particular, Italy and the condition of local banks prepare the experts worried. The publicly rumored capital requirement of EUR 40 billion is expected to be calculated more conservatively, so Folkerts-Landau. The bank rescue it deems such urgency that it it also takes a possible break with the rules of the new Banking Directive in purchasing.
Folkerts-Landau: "Europe is seriously ill"
This prohibits State aids when previously have done their part to save not private creditors and shareholders. Such a bail-in is not politically feasible because it would take a lot of private savers in Italy and possibly even also could elsewhere trigger an onslaught of creditors and customers of the banks. "Strictly to keep yourself on the rules would cause greater harm than they suspend" said Folkerts-Landau.
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 proximity to dangerous deflation. "Europe is seriously ill and needs to address very quickly the existing problems, or face an accident," said the chief economist.