This Is How Much Liquidity Deutsche Bank Has At This Moment, And What Happens Next

From Zero Hedge:

When Citi’s note exposing DB’s undercapitalization came out, it had precisely zero impact on the price of DB stock. Why? Because as we said above, capitalization – and solvency – tends to be a largely worthless, pro-forma concept. However, when Bloomberg reported today that select funds have withdrawn “some excess cash and positions held at the lender” the stock immediately plunged: the reason is that this had everything to do with not only DB’s suddenly crashing liquidity, but the pernicious feedback loop, where once a source of liquidity leaves, the departure tends to spook other such sources, leading to an outward bound liquidity cascade. Again: just ask Lehman (and AIG) for the details.

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2 Responses to This Is How Much Liquidity Deutsche Bank Has At This Moment, And What Happens Next

  1. G.A. Couthon says:

    Can we trust ZH? I hear Andy disapproves.

    Like

  2. Fec says:

    He has a point. Lots of biased reporting by professional investors. As you probably saw, DB stock went back up after a message from the DOJ regarding the fine.

    Like

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