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And news from Germany is that Deutsche Bank intends to shrink its balance sheet by a fifth. Another sign that financial deleverage is still in full deflationary force.  And at time virtually every country in the Eurozone is in recession or flirting with it, what is the ECB doing. Mopping up 'excess' liquidity by letting LTRO mature. Shrinking the base money supply. Theoretically the ECB is committed to an 'expansionary' monetary policy. Asmussen has stated rates will stay low and the ECB is 'technically ready' to let the deposit rate go negative. But what impact are very low interest rates going to have if banks are committed to shrinking their balance sheets so their equity gearing rises above 3%. In the US they realizes that low interest rates wouldn't work as long as the banks were under capitalized. The 'broken string'. But it still doesn't seem to have seeped in to the minds of Europe's central bankers. May be all that excess liquidity isn't doing much good but may be they should have considered an 'operation twist' and provide a lot more longer term lending.