|The News Line: Editorial
Tuesday, 19 March 2019
Germany’s two largest banks in merger talks, creating Europe’s biggest ‘zombie bank’
LAST weekend the two largest German banks, Deutsche Bank and Commerzbank, entered merger talks in a last desperate measure to delay a banking collapse of massive proportions.
Although the government claimed it would approve such a merger – despite concerns that anything up to 40,000 jobs could be lost – the truth is that it is the finance ministry that has been pushing for these two failing banks to merge in one giant cost-cutting exercise that, it is hoped, will prevent both from crashing and driving the final nail into the German economy which is on the brink of recession.
While the German government proclaimed merger of two failing banks would create a ‘national champion’ to spearhead an economic revival, the reality is that giant Deutsche Bank has lost money hand-over-fist since the international banking crash in 2008.
This can be seen in the collapse of their share price, with Deutsche Bank shares being sold 90% below the price before 2008. Commerzbank, rescued by the German government which owns 15% of the bank, has managed to outdo even this, with its shares trading at 96% lower than pre-crash levels.
Not for nothing did the International Monetary Fund award Deutsche Bank the title of ‘the most dangerous bank in the world’; saying that, of those banks big enough to bring the financial system crashing down, Deutsche Bank was the riskiest. On paper the bank is valued at 1.1 trillion euros, but its real assets are estimated to be only a tenth of that figure.
While Commerzbank, which is portrayed more as a local German bank rather than an international trader, is up to its neck in buying up Italy’s sovereign debt. With Italy facing a sovereign debt crisis this is increasingly becoming toxic for the bank.
It is not surprising then that the German government, driven by the banks, is demanding that the Italian coalition government immediately stops its policy of relaxing austerity by pushing up government borrowing and, instead, cuts Italy’s budget deficit to the levels demanded by the Eurozone – a move that has inflamed the Italian working class and brought Italy into conflict with Eurozone bankers.
Both banks, in common with every other bank, are just a mass of toxic bad debts which in the past they could parcel up as secure loans to be bought and sold internationally in the so-called derivatives market. When one goes the lot crashes – as we have already seen when Lehman Brothers bank in the US collapsed in 2008 under the weight of massive debt.
This merger will not stave off a crash. Instead of creating a ‘national champion’ to lead some economic renaissance for bankrupt German capitalism it has, as one analyst put it, created a giant ‘zombie bank’ that can bring down the world banking system. While Merkel boasts of never bailing out failed banks, her government has been instrumental in forcing countries like Greece, and now Italy, to bail them out instead through savage austerity.
The German and French banks were bailed out by Greek workers under the guise of state bail-outs from the IMF and European Central Bank. Of the 310 billion euros in the three bail-outs only 5% of that went to the Greek economy, the other 95% went in debt and interest repayments to keep the French and German banks from going under.
Workers and youth throughout Europe are being revolutionised by austerity and will not tolerate seeing their lives destroyed in order to keep the banks from drowning in their debts.
The issue directly posed to the working class by this crisis is that capitalism can no longer survive except through a savage class war to impose its banking and economic collapse firmly on the backs of workers and youth.
It is a bankrupt system that must be smashed through socialist revolution with the working class taking power and advancing to socialism where the banks and industry will be expropriated under a planned socialist economy. This demands the building of revolutionary parties of the Fourth International in every country to lead the socialist revolution to victory.
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