(ZEROHEDGE) – Yesterday, while attention was still focused on the U.S. banking system and the ongoing botched response by the Fed and especially the Treasury's senile Secretary, who more than two weeks after SIVB collapsed, have still not been able to stabilize confidence in banks – thereby assuring the U.S. is about to slam head first into a brutal recession, just as Biden ordered to contain inflation, as U.S. consumer spending is now in freefall – we pointed out that something bad was taking place in Europe: the credit default swaps of perpetually semi-solvent banking giant Deutsche Bank were quietly blowing out to multi-year highs.
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Well, we didn't have long to wait before everyone else also noticed and this morning it's official: the crisis has shifted to Germany's and Europe's largest TBTF bank, with even Bloomberg now writing that Deutsche Bank "has become the latest focus of the banking turmoil in Europe as ongoing concern about the industry sent its shares slumping the most in three years and the cost of insuring against default rising." The bank – which has staged a recovery in recent years after a series of crises that nearly brought it down – said Friday it will redeem a tier-2 subordinated bond early. And while such moves are usually intended to give investors confidence in the strength of the balance sheet, though the share price reaction suggests the message isn’t getting through, and the stock plunged 13% in German trading while DB's CDS has exploded to level surpassing the bank's near-collapse in 2016, and is about to take out the covid wides.