[A-List] Global economy: ECB intransigence

["John Gulick" <john_gulick@xxxxxxxxxxx>]

MK wrote:

Here's another commentator bewailing "Dim" Wim Duisenberg's inability to
lower interest rates in the eurozone ...

JG writes:

On a somewhat related point, in Saturday's _NYT_ there was a piece on
retrenchment at Commerzbank and profitability problems at other mammoth
Geman banks (Deutsche, Dresdner) that in the 1990's diversified into global
investment banking and other similar operations. Perhaps the author's DWSR
biases were simply showing, but he channeled the CEO of Commerzbank to claim
that the big financial houses were suffering in part because the domestic
market is fragmented and quasi- and fully public banks (at the city and
regional level) deal with housing loans, infrastructure loans, and the like.
Consequently the author of the article and the top guy at Commerzbank seemed
to be endorsing domestic
financial market "reform" along the lines of Reagan in the early 80's and
Clinton (i.e. Rubin) in the mid-to-late 90's. Is there serious political
pressure to deregulate and reregulate German financial markets to shore up
the balance sheets of the German-based TNB's, or was this article simply the
mooting of an idea ? If the former, would this redound to the advantage of
the DWSR, or would the basic premise be opening up new territory for
German-based TNB's so that they can better compete with New York-based TNB's
? What would be the impact of domestic financial market deregulation on the
ability of German productive capital to raise funds by borrowing from the
big banking houses, their preferred sources of fictitious capital (if I'm
not mistaken) ? In other words, do demands for German financial market
liberalization play into the hands of a hegemonic U.S., or would it be
a weapon for the EU in its two steps forward-one step back rivalry with the
U.S. ?

Please forgive the ignorance contained herein: I am still flummoxed by the
money circuit of capital.

John Gulick

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