Wednesday, November 23, 2016

The Opening Shots Of A U.S. - Europe Trade War?

American banks like Goldman Sachs, whose London offices are pictured here, will be forced by the new EU requirement to raise billions of euros to keep operating in Europe, according to the Financial Times. AFP

Japan Today/AFP: EU takes on U.S. in tit-for-tat bank row

BRUSSELS — The EU will require big foreign banks operating in Europe to set aside billions in reserve funds in a tit-for-tat move against the United States that could also affect post-Brexit Britain, according to a draft proposal seen by AFP.

The European Commission, the executive body of the 28-nation European Union, on Wednesday will announce a series of new banking regulations that will include the new requirement.

“We are actually mirroring what the U.S. has already done,” a European source said in advance of the announcement of the new capital requirements.

The U.S. in 2014 angered Brussels when it suddenly required major European banks—such as Germany’s Deutsche Bank—to park billions in the United States in case problems at their subsidiaries threatened to involve the U.S. taxpayer.

Read more ....

Update: EU to retaliate against US bank capital rules (Financial Times)

WNU Editor: This is all happening without a Donald Trump in he White House. One can only imagine on what will be happening when he is finally sworn in .... and on how he will handle this "tit-for-tat" trade fight.

1 comment:

B.Poster said...

This would seem a sensible precaution to have the banks store a certain amount of money in the foreign country where they do business in case there are problems. This is especially so in the case of the EU.

The EU is an unstable entity and is ultimately doomed to failure anyway. As such, it behooves anyone doing economic planning to have a plan in place for this as clearly there will be "problems" with the banks that will affect "taxpayers" when it does ultimately fail.

In light of BREXIT and the fact that EU leaders seem to have learned NOTHING from this as they seem to be doubling down on the policies that caused this in the first place, it seems even more imperative to require these banks to park a certain amount of money in the countries where they wish to do business. Any government not insisting on this would seem to be imprudent.

For EU leaders the choices are do you want a "hard landing" or do you want to work toward a "soft landing" when the EU falls? The landing cannot be prevented. At this point, it appears they are going to have a "hard landing."

Btw, Mr. Trump seems to be backing off of most his campaign promises. Perhaps the realities of being POTUS are setting in and he is coming to terms with the fact that some things he promised simply cannot be done. As such, I would not really expect his policies regarding the EU or the banks to be much different than those of Mr. Obama.