Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: carranza2 who wrote (77858)	8/17/2011 3:11:50 AM
From: critical_mass	Respond to of 217830

Thanks for posting Lewis's piece. I enjoyed reading it, but he seemed to fall into the trap of viewing Germany as a country bound by some principles of order and rectitude which may not be as pervasive as he assumes. The banker who was influenced by his trust in US financial system must have been asleep during the "dot-com" bust just a few years earlier when hucksters like Mary Meeker and Henry Blodgett were privately using the same scatological terms to describe internet stocks as those used to describe CDOs, etc. The notion that Lewis's contact in the Finance Ministry is representative of some sort of loyalty preventing government officials from working in the private banking sector ignores the fact that former head of the Bundesbank, Axel Weber, was considered to take the helm at Deutsche Bank and eventually took the head job at UBS. Since roughly 45% of Germany's export go to the Eurozone, Germany can either continue financing its customers or it can suffer a drop in the demand of its products and watch unemployment increase. While the economic statistics coming out of Germany are currently markedly better than the rest of the Eurozone (save yesterday's GDP number), the vulnerability of Germany's export situation is rarely discussed. People have been seduced by the label "export champions" without thinking about the ultimate consequences from the imbalances. As another example, someone recently posted a CNBC interview with Jim Grant in which he estimated that the leverage at Deutsche Bank was around 40-50, i.e. significantly higher than its American peers. Even Germans who invest are not aware and seem to repeat the idea that their banks are responsible, well capitalized and conservative. If a solvency problem arises, not only will the economic consequences be severe, but there would be significant loss of public trust in an institution which is considered stable. The shock would be huge.