Once again, while our rapt focus has been on the real life drama of Trump vs. Hillary the economy continues to be sidelined. In particular, the performance of our biggest and ‘brightest’ banks.
In 2007, as bank shares began their infamous plummet, Citigroup shares dove from a high of $557 to just $15, Bank of America went from $54 to $3, Deutsche Bank from $160 to $22 and Credit Suisse from $78 to $20, JP Morgan Chase from $52 to $15 and Wells Fargo from $37 to $8.
What is interesting is the performance since then.
Deutsche Bank is in the proverbial twalette. Shares are trading in the $13 range and speculation is that it is sinking much like the Titanic. Gross Revenues are actually up since 2007, but write-offs and expenses are eating up the company. Convicted of LIBOR manipulation, and fined $2.5 billion in 2015, management would seem a bit dicey. Managed by ‘co-CEO’s, Fitschen and Jain’ until 2016, the bank has gone from being the largest foreign exchange dealer in the world as of 2009, to a potential complete cave in 2016. Jain joined as a co-CEO in 2011 while Fitschen became CEO in 2009, the same year Fitschen was being investigated for sales tax evasion… Not a good choice mate.
As co-CEO’s their compensation packages continued to rise as the bank continued to tank. Reaching about 7.5 million euro’s apiece (about $10 million each), employment rose as shares fell, pensions rose as shares fell, and write-offs rose – as shares fell. The new CEO as of this year is a Brit by the name of John Cryan. And anxiety reigns as the bank continues its perilous slide into the abyss.
Wells Fargo. In 2009, Wells Fargo shares tanked from $40 to about $8. However, today the stock trades at $47.90 and has been as high as $57.94. A success story! But greed is greed no matter where you are in the CEO business. John Stumpf, CEO since 2007, has a reported compensation package well over $23 million, which is 473 times the median wage, the bank has been mired in a number of lawsuits including discrimination, tax avoidance, political activism, making loans to unqualified individuals, etc…
And while revenue continues to rise and CEO compensation and incentive packages increase annually, employee benefits have tanked with a tremendous portion of employees making just $15 per hour.
That being said, why is one powerhouse failing and the other skyrocketing?
Deutsche Bank is linked heavily to European countries whose EU contribution is significantly less than their expenditures: Greece, Estonia, Ireland, Latvia, Lithuania, Luxembourg, Hungary, Poland, Portugal, Romania, Slovenia, Slovakia, Belgium, Bulgaria, Croatia, Cyprus, Malta, and Czech Republic. These countries borrow and spend upwards of 6 times their contributions to the union. It is a farcical game of pockets or find the ball beneath the cups when the ball isn’t even there, because slight of hand magic has removed it from the table completely.
Deutsche Bank is simply a microcosm of what is happening to the EU.
Of 28 countries, including the UK, contributing to the EU Commission, 19 countries (68%) operate each and every year in the red. In essence, France, Italy and Germany will now be tasked with propping up the entire European Union given BREXIT.
Credit Suisse, another European banking powerhouse once traded at $80 per share. It fell to $20 at the peak of the crisis… and has continued to fall since – standing at just $11.60 per share today.
So while the massive immigration of refugees is credited with the coming fall of Europe, the fact is, they are simply the icing, the fall had already started and has been steadily gaining momentum. The impact? A devastating ripple… This is not a coincidence, it is well planned and a shift is in the making – will it be the new and improved Ottoman Empire? Or something else, something beyond our imagination. Something good? Something evil?
And while France and Germany have seemingly been the main targets of ISIS ( no coincidence), I imagine Italy will find itself the next victim. Bringing down the support system and infiltrating it with chaos is – the Art of War. As in – Buyer Beware…