It's deja vu all over again. The stock of a humongous American bank, Bank of America (BAC), is collapsing. This is stoking fears that Bank of America will go bust, taking the whole economy down with it.
Why is Bank of America's stock tanking? Because the market thinks Bank of America is worth much less than Bank of America's management says it is.
In fact, in what is fast becoming a formal law of bank-stock thermo-dynamics, the more the bank insists that everything's fine, the more investors take this as a signal to run for the hills.
Meanwhile, the more the bank's stock drops, the more expensive and painful it will be for it to raise cash if and when it finally admits that the market was right all along (the next formal law of bank stock thermo-dynamics being that the market is generally right.)
Read more: http://www.businessinsider.com/bank-of-americas-stock-collapse-2011-8#ixzz1VrZ1mjSU
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