Investment banks could not compete with such rates and could not sell bonds and other products to German companies. So they got the Landesbank public status to be labelled as unfair competition, and to be dismantled.
Thus the Landesbanken could no longer loan cheaply, as their own funding cost increased, and they then lost markets to investment banks. Forced to go look for other sources of income, they went to invest their (more expensive) money into riskier stuff.
Thus, to open German markets to investment banks (mostly US and mostly based in London), a cheap and reliable source of funding for the German economy was eliminated. In the long run, we're all dead. John Maynard Keynes
It seems that Globalisation is something of a one way street where the imperial power is never the loser...
Bingo. But what exactly is the imperial power? I would submit that in the US it is not in DC.
As for Jerome's conspiracy, don't dismiss it too quickly. Consider, the Landesbank deregulation came well after the first rounds of UK deregulation under Dame Maggie had failed to produce the advertised results and Garn-St. Germain had utterly destroyed the US thrift industry, and it was contemporaneous with the greatest cave-in to libertarian speculative finance theory ever, namely Gramm-Leach-Bliley (There were a few of us at the time who warned what would happen, but most of us were hicks from the US Midwest, so what did we know?). Now that all of those theories have generated nothing but epic fail and the destruction of local sources of capital for the benefit of major banking houses, we know that the Austro-Chicago "brain trust" that sold this snake oil was in fact shilling for the Ueberklass. I doubt there was a unified conspiracy of Dan Brownian proportions, but there were a lot of people who all belonged to the same country clubs and who were all working toward the same goal, namely controlling as much of the money supply as possible to the detriment of those of us who didn't belong to those country clubs.
As for the condition of the European banks, I honestly don't see how they can be worse off than the US banks, given the latter remain wholly addicted to the various forms of fraudulent financing they've ginned up over the last quarter-century.
