There will be lots of happy talk at this week’s fall meeting of the World Bank and IMF, with an abundance of celebration and number-polishing. But lest we forget the reality that is the dicey world economy, we’ve prepared a special report from our experts on the “Dangerous Game.’’
In this expose, we learn the big central banks have boosted their balance sheets fourfold to €10.4 trillion. Twenty years ago, central bankers moved 20 percent of national GDP through their balance sheets each year; today, it is up to 80 percent. Stoked by low interest-rate strategies, governments are piling on debt like there’s no tomorrow. The big crash isn’t being held at bay; it’s being provoked. Central bankers are the only fire departments that extinguish a blaze with gasoline.
ECB President Mario Draghi likes to imply that criticism of his stewardship is just a German obsession. But he’s wrong. U.S. Nobel Prize-winning economist Joseph Stiglitz takes aim at Draghi’s amazing money machine in an interview with my colleague Torsten Riecke. “I think negative interest rates are stupid,’’ Stiglitz said. They only shrink a bank’s capital, hinder the sale of credit and weaken the economy. Conclusion: A mistake is a mistake, despite the motives. Or as they say in Italy: „La strada dell’inferno è lastricata di buone intenzioni:“ The way to hell is paved with good intentions.
Deutsche Bank’s steep decline is unsettling the executive floors of Germany’s biggest companies. According to our information, top managers at several DAX firms are talking about a rescue plan with the German chancellery and finance ministry. Several corporations may buy shares of Deutsche Bank if it’s forced to raise money through a capital increase. The message is clear: Deutsche Bank is not for sale – at least to the outside world. Put another way: The bank is not loved, but it’s needed.
Finance ministries across Germany can rest assured: They can continue to legally nab tax evaders by buying their stolen account details on the black market. The European Court of Justice confirmed this private-eye tactic, rejecting a complaint from a tax-cheating husband and wife. The finance minister of North Rhine-Westfalia, Norbert Walter-Borjans, should celebrate. He loves to buy stolen account CDs to enrich his state with millions in back taxes and penalties. Some say Social Democrats can’t handle money. They’re wrong. There’s no better return these days than on a stolen tax account CD.
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