Morning Briefing Global Edition

Too Big to Think

For those tracking the spread of global financial giants, Wells Fargo is the new American banking superpower. In a wide-ranging interview with Handelsblatt, CEO John Stumpf talks balance sheets and empire building, which he said doesn’t concern him.

“If the financial sector is in crisis,” he asked, “is it better to have 500 banks to deal with, or five?” We thought “too big to fail” was bad, but being too big to think is worse.


And being too important to trust to the free market is dangerous. Angela Merkel is fumbling her renewable energy policy by micromanaging the marketplace. Subsidies of 9 euro cents per kilowatt hour for wind and solar operators fueled a glut of electricity and a taxpayer-subsidized gravy train for alternative-energy millionaires.

What followed was the collapse of the domestic power market and ever-bigger bills for consumers. The state is stepping in to cap subsidies at 2,500 megawatts a year. If Merkel expected the German government to be more forward-thinking than the market, she has her answer.


Those yearning for signs of economic growth to start the summer may be left a little deflated today. The Federal Statistical Office is expected to report that consumer prices in Germany fell 0.1 percent in May from a year ago, which technically speaking is an improvement from last month’s 0.3-percent drop in April.

On cue, the European Central Bank is revving up to buy €80 billion worth of corporate bonds in June in an attempt to kickstart euro zone inflation. Somehow this seems counterproductive and unnecessary. The ancient Greek physician Hippocrates said it best: “First, do no harm.”


For the first time since the Greek debt crisis erupted in 2010, the country’s four biggest banks are returning to profit. Eurobank reported a net profit of €60 million in the first quarter; the National Bank of Greece €87 million. The balance sheets could open the Greek financial system to more ECB liquidity and fewer capital controls.

After banks in Athens shuttered their doors last summer when the cash supply ran dry, these latest figures may brighten the mood at euro central in Frankfurt.


Got milk? For Germans, the more pressing question may be “Got local milk?” Profits have disappeared for dairy farmers as production has tripled, and big discount retailers like Aldi and Lidl have driven prices lower. If this goes on much longer, milk will soon become an exotic import. The government’s answer to the industry’s woes? A milk summit.

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