Submitted by Taps Coogan on the 6th of May 2019 to The Sounding Line.

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Geopolitical Futures‘ founder and Chairman, George Friedman, recently spoke with Grant’s Interest Rate Observer about his growing concerns over Germany’s economy and banking sector, which increasingly remind him of Japan in the late 1980s.

 

Some excerpts from George Friedman:

“Germany is, from out point of view far more than Italy, the danger point in Europe. It exports 50% of its GDP. A 5% drop in its exports is a 2.5% in GDP. It’s largest costumer right now is the United States is now, or shortly in the future going to go into a recession, a normal one, and Germany is extremely vulnerable in terms of its dependency on exports. In addition to that, it’s banking system is behaving very oddly. It’s hard to understand how exactly a booming economy can have such a banking system and it reminds me of Japan in 1988 and 1989. The banking system was going South and Japan was surging exports trying to hold everything together, and Germany is starting to look like that a lot.”

“Normally the commercial banks that finance exports, that finance industry should be doing quite well given the numbers the Germans are putting out on their economy. They should not be in trouble. Obviously these banks have acted in odd ways, perhaps making irresponsible investments. But normally, as in Japan, you saw a situation where the economy appeared to be doing extremely well and the city banks, as they were called then, were falling about and when you see this juncture between the banking system and the economy, you have to start wondering, especially when its the very large banks. Deutsche Bank isn’t just any other bank, it’s the bank and it’s been staggering for a while…”

There is more to the interview, so enjoy it above.

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