DEUTSCHE Bank, the largest and most important bank in Europe, sacked its British born chief executive John Cryan after just three years in the job, a sacking that marks the latest stage in a terminal crisis that is gripping not just Deutsche but every other bank throughout the world. In 2015 Cryan was brought in to ‘turn the bank around’ after it came within a hair’s breath of collapsing in the wake of the banking crash in 2008.
In 2016 the International Monetary Fund (IMF) released a report stating that Deutsche Bank ‘appears to be the most important net contributor to systemic risks in the global banking system’.
Cryan, like all his predecessors, failed miserably to reverse this collapse of the once mighty bank and his forced departure is a sign of the desperation that is gripping the entire capitalist banking system.
In the past three months, Deutsche Bank has reported ongoing annual losses. In February it posted losses of £1.9 billion.
If two years ago the bank only appeared to be the most important contributor to a complete collapse of the world banking system, then today we can say this is now a certainty. The bankers are not blind to this crisis. However, they are determined that it will be the working class that pays for it. This was made clear in a report issued by Deutsche Bank’s European strategists issued in January entitled ‘The Next Financial Crisis’. In it they identified 11 things they predicted would cause a banking collapse in the next year.
Principally, they identified as the major cause, the ending of Quantitative Easing (QE), the policy adopted by central banks after 2008 of printing trillions of dollars, euros and pounds of worthless paper money and handing it to the banks to keep them from collapse. Since 2008 more than $10 trillion (over £8 trillion) has been electronically conjured up by the four largest central banks to pass on to the banks to keep them going – this has been paid for by the most vicious austerity cuts inflicted on workers in Britain, Europe, the USA and across the world.
The only solution for the banks, as this report makes clear, is for the central banks and governments to carry on with austerity, and to carry on printing money, and inflating the world debt bubble, even at the risk of it bursting. They also recognise the real dangers of this – namely that workers ‘will no longer tolerate’ austerity cuts imposed to pay for all this free money, and will rise up in revolution. They point to the meteoric rise of anti-austerity parties across Europe that have destabilised the old capitalist political order following the Brexit vote in Britain.
One thing is certain. The only way that Deutsche Bank can limp along is through another gigantic bail-out, paid for by the working class in Germany and across Europe. Workers’ response to this will bring down the already weakened coalition government of Angela Merkel, and other EU governments with it.
In 2016 Merkel gave a solemn pledge to German workers and the entire Eurozone that she would never bail-out Deutsche Bank. Breaking this pledge will destroy her politically and create a massive political as well as financial crisis throughout Europe. Bailing-out Deutsche, however, is an absolute necessity as it is so entwined with every other capitalist bank across the world through all the wild speculations, the dressing up of bad debt as ‘assets’ that are traded throughout the banking system.
Deutsche is at the centre of a spider’s web of bank deals, known as derivatives, which involve packaging toxic assets and trading them between banks. When Deutsche crashes, it will bring the rest down with it.
The working class will not tolerate being driven into the ground by austerity cuts that dwarf anything since 2008, or seeing their wages, savings, and pensions swallowed up to cover the bankers debts. The working class, already rising up against austerity, will be rapidly forced to the conclusion that capitalism and its banks are bankrupt and that the only way the working class can assure its future is through the victory of the socialist revolution in Europe, and throughout the world, replacing capitalism with a socialist society where the banks and industries are expropriated and organised as part of a planned socialist economy.
