Friday Sept 30, 2016
See our post yesterday illustrating that the markets needed to reverse to keep the bear case alive. And they did so right at resistance.
Now we need a news calamity to get everyone worried. Deutshe Bank is providing just that.
Friday Sept 30, 2016
A run on a bank occurs when depositors fear they cannot recover their money.
In a frenzy many demand their deposits in full. Of course in a fractional banking system, most deposits are loaned out with perhaps less than 10% actually held in cash.
So a demand by 10% of the deposits for return of their money can collapse a bank.
Deutsche is now facing a $14 B fine from the US over its mortgage backed involvement. And there are rumors hedge funds are moving money out of the bank.
And so bank share prices are falling around the world.
Recall that Deutsche was involved with KPMG in the sale of tax shelters back in 1999. Perhaps we have a tone at the top problem here.
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