Nasdaq · August 18, 2011
The day European banks could not find dollars
-5.22%
single-day change vs previous close
Part of a longer stretch
Five months around a downgrade
near the end of it · 2011-04-29 → 2011-10-03, -18.71% over the whole period
What happened that day?
- The Nasdaq fell 5.22% on the day
- It emerged that a European bank had borrowed dollars from the European Central Bank, meaning it could not get them in the market
- European banks took deposits in euros and lent in dollars. If dollars cannot be found, assets have to be sold
- This is exactly the mechanism that broke in 2008. The problem was maturity, not price
- US data was weak the same day and European bond yields rose again
- The slide ran into early October, ending when the ECB opened long-term lending to banks
Sources
Every figure on this page is recomputed from the original daily closing prices and checked against them at build time. The account of what happened is written from the sources listed above.