We are now in Europe at a point where banks are barely making any profits. Not all, but most of it. Of all the mutulal savings banks still make the biggest profits. (1)
Why is that?
Usually, banks make a good part of their profits with loans, that is, with interest from the lending business. Currently, however, we have zero interest rates from the central banks, so that interest rates are falling dramatically overall (2).
In addition, we see an escape in real estate. Investors have to go somewhere with their money, there is no interest, so buy anything that is not screwed down (3). Even in shrinking regions that are massively affected by emigration, real estate prices are rising.
What does not rise, and it does not rise forever, is the productivity of our economy. This is partly due to the inner devaluation in Germany, with which one has pressed the wages, on the other hand, on the state interventions, such as when again employment guarantees are given for companies that are actually broke. Hartz IV and the euro are a terrible combination.
It’s now cheaper to hire someone who folds cartons than to develop a machine that does that.
Another point is the target balances. Zero interest is always good only for the debtor, but we are creditors and will not get them back around 1 trillion euros – that’s a number with 12 zeros (4). The goods are still gone, they were delivered. Give away, so to speak.
In this already strained situation, it is in the car industry. This industry is one of the pillars of our economy. 7.7% of total business management comes from this industry, well over 800,000 workers work in this industry (5). And this industry is being destroyed. However, the 800,000 workers have loans, houses, families who buy one. Without the jobs, entire tracts of land go into poverty.
The rest of the manufacturing industry has considerable problems, but no one wants to see. Bottleneck management (6) is the name of their problem because that is their production. You simply switch off the power supply when the wind blows too much or too little, the sun is shining or not. But you can not build on it reasonable production. That will not do. The factories that produce aluminum do not complain just like that, they are regularly „managed without discrimination“ – that is with a lead of 15 minutes disconnected.
If, in this situation, one of the major banks goes bankrupt because its equity capital is being attacked or a major borrower goes down, we see a financial crash against which Lehman was a child’s birthday party.
One bank will carry the next, one will discover the lazy loans that the zero interest rate policy has made possible. This will be like a house of cards. From day to day the real estate market will burst, like a balloon bursting when picked with a needle. So fast the whole inflation will disappear at once.
The state will try to save the banks. That will not be as discreet as before. He then needs so much money that it will flow into all markets and become effective. We will get inflation, high inflation. Tomorrow’s target balances will be gone – that’s the second the Euro is going to break. There will be deflation at high inflation. You will not be able to keep the current state expenditures – of which also, if nothing is produced and which becomes more and more expensive. What will happen to our new citizens remains to be seen.
It is the scenario of Weimar. And again the system question will be asked.
1 https://www.handelsblatt.com/finanzen/banken-versicherungen/bilanz-2018-sparkassen-verdienen-2-2-milliarden-euro-und-stechen-die-grossbanken-aus/24071248.html?ticket=ST-5129593-ooDOGsEnjvjbdtUIBlMB-ap2 und
All links retrieved on July 6, 2019