Deutsche Bank, “stock market crash in the absence of any new news”
“The Deutsche Bank story seems fascinating to me. The stock market crash occurred in the absence of any new news. It’s as if the investors woke up with a shock: everyone, sell Deutsche Bank, for heaven’s sake”. A Republic Barry Eichengreen, expert economist from Berkeley former consultant to the IMF.
So what happened can be interpreted “with a generalized and irrational crisis of confidence in the banks. At this point, no one can be said to be calm. Of course, there are those that run more risk starting with the Americans, but not only those, which still have important investments outstanding in Treasury bonds that are not suitably ‘hedged’ and therefore equivalent to latent losses. Added to this are supervisory and management shortcomings. I repeat, the problem does not only concern American banks, as we saw yesterday. It’s like an Agatha Christie mystery: when a new crisis erupts, it will be an open hunt for the culprit. The usual suspects are many: managers, controllers, rating agencies“.
With respect to possible similarities between the Credit Suisse and Deutsche Bank cases, they “all go back to the past. Even the German institute has had problems of bad management, imbalances between balance sheet assets and liabilities, clumsy investments that have led to capitalization and liquidity problems: but it’s all outdated stuff, which now seems resolved. This is what is fascinating, let’s say surprising: seeing traders speculate against a bank based on such superficial affinities, as if they didn’t live in reality”.
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