29 September 2016

Economic and Political Intrigue Surrounding Deutsche Bank, Apple and the European Union

In a previous piece, we mentioned the German-French project to form a new military command which has frustrated and angered Washington. NATO Secretary General Jens Stoltenberg gave tepid support to a new Brussels command in a public statement but it's clear this is a move on the part of Berlin to consolidate power in a moment of US weakness.

While it is marketed as a means to strengthen NATO, it's clear the new command is meant as a means for Berlin and Paris to begin a process of escaping its domination. The fear of a Trump administration also fuels these actions.

At the Bratislava Summit, the now impotent UK delegation protested this move, but it's clear that larger forces will have to work to stop Berlin and Paris.

The US Justice Department has been gunning for Deutsche Bank, a foundation of the German economic establishment and had already threatened to levy heavy penalties. Everyone knew it would be in the billions of dollars.

In anticipation of this (it would seem) the EU went after Apple for tax avoidance and issued fines totaling some $14.5billion.

The US (it would seem) responded by almost tripling the anticipated Deutsche Bank fine, raising it to some $14 billion dollars which would drive the bank into insolvency.

This tit-for-tat battle over corporate interests echoes and parallels the larger developing political struggle. In fact they're inseparable and that in itself is a lesson regarding the nature of the Establishment and its power.

The breaking of Deutsche Bank which would result in Merkel's downfall and possibly jeopardise the Euro itself. It would send shockwaves across global markets. The US Establishment knows this and it is clearly sending a signal to both Brussels and Berlin.

Is the US engineering Merkel's ouster and the end of German aspirations?

Is this a mere threat, a signal to Germany (and France) to return to their proper place? Deutsche Bank will undoubtedly negotiate the fine down to a more reasonable number but Brussels and Berlin will have to capitulate to Washington demands.

Everyone is puzzled by Merkel's failure to construct a 'bailout' for Deutsche Bank. It's not at all shocking. She's in a real bind. Merkel who is already under political threat from the Right and facing an election in 2017 does not want to feed the notion that there's a crisis, which there certainly is. In fact its magnitude cannot be overstated and yet only those watching the financial sector are even aware of it.

If Merkel intervenes, it looks like another corrupt administration coming to the rescue of greedy and irresponsible bankers and then the German public gets to reckon with their tax money going to a bank bailout and even worse, most of the money ending up in the hands of Washington. Of course Washington's bailout of AIG in 2008 resulted in a lot of US tax money flowing into Germany and Deutsche Bank. The threats of the Justice Department also serve as something of a reminder if not revenge.

A Merkel intervention and bailout would also be humiliating and destroy the perception of Germany as the ascendant European leader and it would decimate its moral standing. Not long ago Merkel and her compatriots were busy lecturing the delinquent and irresponsible nations of Southern Europe about fiscal responsibility and integrity. They were forced into austerity as a consequence of German finance's bailout of their economies. In truth the German state and in particular Deutsche Bank proved just as guilty, irresponsible and corrupt. The bank was a key player in the lead-up to and causes of the 2008 financial crisis. And the corruption by no means stopped there. The bank has a somewhat sordid history involving numerous schemes and scandals (such as Libor) as well as ties to the BND, Germany's intelligence agency.

How the US Deep State fits into this arrangement is another story and rather complicated. At this point we can only speculate how it and figures like Uhrlau are part of the larger Deutsche Bank story. This may be a case of 'flip and spin' betrayals and house-cleaning in order to rectify a situation that was getting out of control.

Another aspect to consider in this struggle is that the White House also gains leverage over Apple as they are trembling (with rage), and desperate for political intervention vis-à-vis the EU and its fines.

It gives the White House an occasion to say something like, "Sure, we'll help you, but maybe you can help us eh?"

Of course when you have figures like Ann Novelli in the State Department, that probably helps.

Apple (along with Google) hasn't exactly been cooperating on the level the US government would like to see.

As an aside, the Arstechnica article dating from 2013 concludes with a line on Yahoo! and their plans (or lack thereof) for encryption. It should have served as a warning and harbinger of what was to come. The 2016 'hack' has put the company in jeopardy and now the Verizon deal looks like it may fall apart.

Everyone is already aware of the Apple's encryption battles with the NSA. The US government is not going to aid them without extracting something in return.

These events afford Washington an opportunity to solve multiple problems at once.

It's a dangerous game as the world banking system is hardly stable and Central Banking's interest rate tool-kit is all but neutralised.

These tensions between Washington and Brussels/Berlin have also been magnified by the TTIP collapse. Washington really wanted that deal to go through. Its failure along with Brexit have generated a scramble and no doubt these setbacks play a part in the growing Deutsche Bank and Apple crisis.

The European Establishment and in particular Germany are trying to move toward more autonomy. This is due in part to the immediate threat of Trump and the chaos of the 2016 political cycle, but it is also an attempt to capitalise on the sudden weakening of the US hand. Europe has long wanted to emerge from Washington's shadow. The September 11 attacks only tightened Washington's noose on Europe and as the years have passed, the resentment has grown. The European Establishment sees a chance and they're trying to take it. But it may be backfiring as it is all too clear... Washington is not going to sit idly by and let Europe slip away.

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