Byrne's Eye View

So the CEO of Deutsche Bank announces that everything's fine, and as a followup one fund manager and commentator notes that "Every positive statement from a member of the financial sector helps to relieve investors," which is, as it happens, a positive statement from a member of the financial sector.

This statement is less than meaningless. Like all investment banks, DB can pay down their on-balance-sheet liabilities (commercial paper, in this case) by selling off their off-balance-sheet assets (reputation, favors owed). So when the CEO says he has no trouble raising money, it can mean anything from what he actually said to "This time next year, we're going to be worth book value less future overhead."

What these companies really need is an Ombudstrader. The Ombudstrader wouldn't have a defined job; he'd just have an office at the company and a slightly restrictive employment contract -- except for a cost-of-living stipend, all of his compensation would be deferred by ten years, and it would all have to be invested according to his pronouncements. So if he says "The market is fine; DB is doing well," he's obligated to buy a certain amount of DB stock, and some index futures. If he's worried about not having anything to retire on, he might sell some off -- in which case the optimistic CEO would have to answer to a completely fair critique.

This would work too well for anyone to actually try it. Part of the CEO's job is to reassure investors that everything is okay. The problem with that is that every so often, it means investors are paying someone to lie to them.