Deutsche Bank exec puts European bank bailout at €150B, to start

Things must be turning for the worse economically, since central banks are starting to whisper helicopter money.

The markets are expecting the Bank of Japan to issue some 10 trillion yen to the masses to spur spending and to cheapen the currency even more on the back of Prime Minister Abe’s re-election.

Of late the yen has strengthened to levels against the British pound and euro post-Brexit that are uncomfortable to the BOJ and traders abroad instituting yen carry trade.

Meanwhile in Europe, all the talk is for the bank bailout, with Deutsche Bank’s chief economist coming out with a note suggesting that  €150 billion should shore up the troubled institutions.

“In Europe, the bailout does not need to be so large. A €150 billion program should be enough to help European banks recapitalize,” said David Folkerts-Landau, chief economist for Deutsche Bank said over the weekend.

A report largely ignored in the US has Folkerts-Landau  comparing the €150B to the $878B in US bank bailouts post-Lehman.

Now, since Deutsche Bank is a major player in the troubled bank arena, Folkerts-Landau must know than much of that €150B will wind up in DB’s coffers by noon the first day, because the illiquid German national bank is also the counter-party to much of the bad paper being proffered by Italian banks, including Monte Paschi.

Nevertheless, it’s morning in America with pre-markets higher on the back of the June jobs report.

The 287K number will surely be revised down hard next month after the Democratic convention and the speeches on how the economy looks so much better. It would not surprise me to see that fall to below 50K, with the revision stating the number included  Verizon strikers returning to work. But that will be in August and the revision will get no headlines, just like the May number was revised to 11K from the horrible 38K originally reported from the largely Democratic-controlled Bureau of Labor Statistics.

But all is not well, as gold and silver prices move higher on a percentage basis to stocks.

 

 

 

 

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