Huge losses at Germany’s second largest bank “could have repercussions for Angela Merkel”
Almost 50 days until Germany’s general elections, Germany’s Chancellor Angela Merkel still looks invincible with the double digit lead in polls over her Social Democratic rival, Martin Schulz. If Islamist terror attacks or the migrant crime wave, both resulting from her open borders policy, have failed to affect her electoral prospects, the economy could sink her political ambitions.
A looming banking crisis could “down Merkel”, believes the British newspaper Daily Express. Record losses made by Commerzbank, the country’s second largest bank, may “spell disaster for” Merkel’s re-election bid.
London-based Daily Express writes:
Germany’s second biggest bank has recorded catastrophic losses while the German economy suffers which could have repercussions for Angela Merkel.
Commerzbank recorded massive losses of more than €400 million (£361m) yesterday and is huge reversal of last year’s €380million profit. The 147-year-old Frankfurt-based giant has slashed 9,600 of 45,000 jobs and has earmarked a further €807 million (£720m) to mitigate against job cuts following severance agreements with works councils. (…)
The news comes as Deutsche Bank said the eurozone’s largest economy has outperformed in recent years, but the trend is deceptive and could come to an abrupt halt.
Stefan Schneider, head of the macroeconomy team at Bank Thinktank Deutsche Bank Research, said: “The German economy is already growing above its potential for the fifth year in a row.” But he also warned that the boom is deceptive – and Germany will soon be facing a rude awakening.
The failing banks could be a blow to Angela Merkel, who is hoping to be reelected in the country’s autumn elections.
While Germany’s health services face huge deficits, government is expropriating citizens’ health funds to finance migrant welfare. Going by this very logic, government may soon have to slash old-age pensions to pay unemployment benefits to millions of migrants unfit or unwilling to join the workforce. “An increasing number of old people in Germany face the risk of being stuck in poverty in the coming years,” reported German public broadcaster Deutsche Welle earlier this year, quoting a study conducted by Germany’s Bertelsmann Foundation.
Poverty, too, is on the rise. “[P]overty rate breaking new records in Germany, even as GDP continues to grow,” reported Deutsche Welle, citing German Central Bank data.
In February, one of Merkel’s own senior advisers slammed her open borders policy for being economically unsustainable. According to Merkel’s senior economic adviser Professor Hans-Werner Sinn, Germany won’t be able to cope with high migrant influx, given its economic costs involved. The migrants let in by Merkel between 2015 and 2016 alone are going to cost at least $400 billion to the taxpayers, Sinn said, referring to a study conducted by the German economist, Professor Bernd Raffelhüschen.
The German newspaper Die Welt reported Raffelhüschen’s findings last year:
The positive trend [of economic growth] gets reversed if one takes into account the long-term costs of refugee influx of 2015. According to [economist] Bernd Raffelhüschen, it would cost around €878 billion.
“The policy makers must ensure the best possible integration [of refugees in the society], in order to lower the cost to some degree,” the economist warned. If the second generation [of these refugees] cannot be integrated into the workforce at par with the native population, this costs will rise up to €1.5 trillion. [July, 2016; translation by Author]
Merkel’s re-election chances may look strong for now, but 50 days is a long time in an election cycle.
Her short-sighted open doors policy for migrants will impact generations to come in Europe. The ordinary German voters may not feel the pinch—or the full ferocity of the bite—just yet. The question for now is whether or not these ominous economic signs leading up to the September elections will impact Merkel’s re-election bid?
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