Qatar, Clinton, Murdoch and a Dept of Justice demand for US scale-down of Deutsche operations
What can it all mean? The Slog pieces together some of the evidence suggesting that the politics of Deutsche Bank go much further and deeper than most people realise.
Zero Hedge ran a piece last Friday saying the Qatar government was ‘getting worried’ about the options for Deutsche Bank – in which Qataris have a large interest. ZH lifted the story from the Wall Street Journal (a Murdoch newspaper), but the angle was later denied by Qatari sources, who are now suggesting the opposite: that if DB’s John Cryan opts to raise money, they’d be enthusiastic investors.
The situation became confused as Merkel once again ruled out any State help for a bank that does appear to be losing peer credibility at a rate of knots. However, sources inside the DoJ – and outside, in the New York banking community’s legal sector – confirm this morning’s associated rumour: that a major element in the ‘deal’ being negotiated over at Justice is an insistence that Deutsche ‘scales down’ its operations in the US.
The Qatar investors are firm in their conviction that DB’s asset management division must be retained, as it is far and away the most profitable part of the operation. I understand that the Qataris asked Cryan for an assurance about this, and this was willingly given by the CEO….whose Middle East chief last week said he was confident of enormous expansion in the region.
But this in turn set off a flurry of articles with similar phrases along the lines of Cryan ‘probably has little choice but to revisit previously unthinkable options, such as offloading part or all of Deutsche’s lucrative asset management unit.’
Several key elements are in play here: the strategic role of Qatar in providing a port for oil to go to the West, not Putin; the ownership of the Wall Street Journal; US banking protectionism; the Presidential election; and the delicate banking situation in the eurozone.
While there are seemingly conflicting desires for different outcomes, four consistent threads may suggest what’s really being knitted here:
- Somebody wants to cut off Deutsche’s main profit line in the US
- Somebody would prefer not to have a leaking isotope going critical in US markets in the coming weeks
- Somebody wants a potentially powerful bank focused on the Middle East in general, and Qatar in particular
- Somebody wants Deutsche to become a non-European problem
Nothing is simply explained any more, but taking each “somebody” in turn, a pattern – if not the garment itself – emerges:
- Wall Street would very much like to corner as much of the asset management business as it can. The global business cycle, after eight years of QE, is on the verge of correcting the asset bubble: there are fortunes to be made from selling at or near the top – in the last few months, for example, Wall St firms have been big sellers of UK property assets. There are even bigger sums to be made from betting Bear on assets.
- Wall Street has been by far the biggest single sector of Hillary Clinton’s financial support during the US Presidential election. A big failure in the US banking system followed by a massive stock market correction would be Clinton’s biggest nightmare…and a gift from Heaven for Trump, much of whose populist rhetoric is aimed at the financial sector.
- Clinton’s most voluble media supporter is Rupert Murdoch. He has enormous business interests in Qatar, and he wants them safeguarded – not least his massive investment behind Fox news as the main reporting hub during the 2026 World Soccer Cup. As well as Fox, Murdoch is also the publisher of the Wall Street Journal….and the source of the story about the Qataris getting nervous. He would like nothing better than privileged access to a solvent bank more or less running the show in a region where he has huge investments. The allegations of sharp practice against Deutsche over the demise of media rival Leo Kirch and his estate clearly involved the Newscorp boss: during the 2015 trial about it in Germany, it seemed likely at one stage that Murdoch himself would be called upon to give evidence.
- Hillary Clinton is a pro-EU hawk who will do everything she can to restore stability in the Union – be that by removing loose cannons like Deutsche, or forcing Britain to abandon Brexit. Her time at the State Department was largely focused on the safety of the Qatar pipeline, and drove many of her more ruthless actions there. As I noted earlier, Murdoch is also a huge fan and campaign contributor. American strategy in Europe and the Middle East can be simply expressed: regional hegemony as part of her goal of US dominated globalism.
In the last hour, that other bastion of the neocon Establishment Bloomberg has started pumping out the line that John Cryan is “under increasing pressure” to scale down his business in the US, specifically in the asset management sector.
Words like “round up the usual list of suspects” spring to mind.