by David Kranzler
Investment Research Dynamics
The global financial system is close to going supernova.
Both Credit Suisse and Deutsche Bank stocks are hitting all-time lows. Both are collapsing despite billions in Central Bank – Fed, ECB, Bundesbank, Swiss National Bank – monetary support.
Deutsche Bank had been advertising a 5% interest rate to customers in Belgium on 90-day deposits of at least 50k euros . Bank deposits are essentially “loans” to a bank from the depositor (creditor). This implies that the rate that DB had to pay to attract deposits is equivalent to a triple-C rated credit (although the 10-yr junk bond rates for double-B rated bonds are around 5.5%, keep in mind that DB is paying 5% for 3-month money). This is the unmistakable sign of a company that is collapsing.