Let us leave Dippy Denny to NF's tender mercies and his inevitable fate and write of more important matters.
The DT business section reports today that the state owned Landesbanks, one for each German State so 11 in all are in trouble through getting involved in leveraged excess and straying from their home patch. Alas it is the same old story of fallen bankers and fast derivatives. Landesbanks remit was to boost regional industry and finance family run Mittelstand firms that are the heart of the German manufacturing economy. To that end they had a state guarantee for their liabilities but alas that guarantee also extends to covering their losses in foreign fields. This could even bankrupt the guaranteeing state!
One cannot overemphasize the importance of these banks to the German economy. They are more important than the infamous larger Dodgy Bank, Dreadful Bank, Comical Bank and Hypothetical Bank. Landesbanks are truely the heart of the German economy. Frau Merkel will slaughter her PIGS but if the Landesbanken fall then Germany falls.
Coming closer to home the story in the same organ that Ivan Pictet, head of the Geneva banking association, has warned that if Switzerland gives up its banking secrecy laws the Swiss financial sector will reduce by 50% from 12% to 6% of Swiss GDP. Customers are already withdrawing their money because of concerns about tax probes from the EU and US. The Swiss know how important it is to keep their competitive advantage in this area. The EU will be applying pressure with talk of level playing fields etc. I am sure the Swiss will resist this and call the EU's bluff but I am equally sure HMG will cave in to EU pressure. They always do. The Swiss have a great Ace in the Hole in that the EU political class do not like paying tax either and have squirrelled away money in Switzerland. No bank security is perfect as I am sure M Pictet will remind Barosso.