You can't just let them be when they struggle because you'll end up paying double. It doesn't mean that banks don't end up "paying" especially if there was misconduct but it's not as simple as just giving them a cold shoulder.
If a bank is insolvent, as it looks like Deutsche Bank is, you've _already_ lost your money.
"You can't just let them be when they struggle because you'll end up paying double."
Bailing them out means paying double if they lose your money making stupid loans or ridiculous bets and then they get bailed out with taxpayers' money. They were already in deep trouble eight years ago and were bailed out. What did they do with that lifeline? Placed even more ridiculous bets with it, bringing in the bonuses but expanding the bank's debt to a whopping $42 trillion.
Besides, banks aren't special. They're businesses like any other. They need to go bankrupt if they make stupid business decisions.
"It doesn't mean that banks don't end up "paying" especially if there was misconduct but it's not as simple as just giving them a cold shoulder."
No of Wall Street executives prosecuted for the financial crisis of 2008: 0.
Once you can't use an ATM, can't pay bills with direct debit, can't do anything then you've effectively lost your money. The problem is that DB is a commercial high street bank, and not only that it's one of the biggest banks in the world and across Europe.
Overall all the banks in Europe are in a mess http://ei.marketwatch.com//Multimedia/2016/09/28/Photos/NS/M... and it's not entirerly due to their fault, the negative interest rates implemented by the central banks didn't really help.
Please save us the sentiment which is actually likely to be out of place here because people have somewhat incorrect analogy to wall street and 2008 and say the banks are guilty, their employees/managers are criminally negligent and they should be put on trial.
DB isn't LB on many levels, it's haunted by it's ghosts, but what plagues it and every other major European bank is not the same, and in this case they aren't the only body at fault, the policies of the ECB and the local central banks in Europe so far were pretty devastating for the banks.
I disagree. Banks form the foundation of the infrastructure of the capitalist system. Failure of banks has a large effect on the businesses that rely on that system to operate.
That's the dictionary definition. What you're talking about is "the free market" - which is not the same thing as capitalism.
Treating them as the foundation of the infrastructure of the capitalist system and therefore somehow exempt from regulation, the law and the market is why the global economy is in such a mess today. There are no consequences any more to bad decisions by the global banks. They keep getting bailed out and bailed out and into more and more debt. One day the can will no longer be able to be kicked down the road.
So, I would say, for most people in a country, if a single bank fails, you have nothing to worry.
If many banks fail, this is another story as they insurance pool of the banks may dry out.
Greece was a nightmare people don't really understand what was going on and the fact that they couldn't use an ATM, couldn't pay their bills, but at least that was a country wide issue.
When you get a similar situation but when one out of X people is left hanging in the wind because their bank has failed it would be considerably worse since there would not be a single unified emergency solution to cover them (in greece people stuck it out, there was even bartering, local stores had credit ledgers etc, GL getting credit from your local supermarket because your DB debit card won't work anymore), and when more banks start to fail because their investors and creditors lose faith and pull out (which is what happened to LB) it would make things worse and worse.
It's less than 20 days by law in my country and almost everything is done without depositor's input -- money are transferred to another bank and you simply come there with your ID to take your money in cash or open an account in another bank. I really wouldn't mind to wait a week or two as opposed to billions paid of tax money.
http://www.baltictimes.com/news/articles/30019/
So this isn't a case where a government let a bank fail, this is the traditional bailout mechanism for failed banks - the government buys them out.
This is what Latvia did with Parex, what the Netherlands did with SNS and Fortis, what portugal did with BPN and the list goes on and on and on.
For the most part no one let a bank fail the same way that the US did with LB, and no one would really want to try that with a commercial high street bank.
"When banks knowingly engage in irresponsible, or in Deutsche's case, criminal behavior it's people who end up losing money" is the spin I would put on it.