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PIMCO's El-Erian Drops The F-Bomb: "French Banks Are Down To 1% Capital, Institutional Panic

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posted on Oct, 1 2011 @ 06:51 PM
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dailybail.com...

Hold on to you skirts ladies, this will be a bombshell when Europe opens in several hours.


El-Erian just screamed 'shut their ass down' from New York to Paris.

French banks have 1% capital. No polemic is needed. This is a solvency and liquidty crisis.

Notice below the bold quote from the CEO of the world's largest bond fund. Not to overstate the obvious, but 1% capital ratios imply leverage of 100:1.

Calling Helicopter Ben...Sarkozy would like you at the launch pad, immediately.

How soon does Bernanke's central bank rain dance begin?

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FT via Marketwatch

Meanwhile, high-profile warnings over the state of Europe’s banks, particularly in France, came from a variety of sources.

Mohammed El-Erian, chief executive of bond fund giant Pimco, warned in an op-ed in the Financial Times published Thursday that French banks could tip Europe back into recession.

Private institutions around the world have sharply reduced short-term lending to French banks, while a plunge in bank shares since August has left bank equity trading at a 50% discount to tangible book value on average, he wrote.

At the same time, El-Erian noted that the ratio of market capital to total assets for the sector has fallen to 1% to 1.5% — far short of the range of 6% to 8% typically seen for healthier banks.

“These are all signs of an institutional run on French banks,” he wrote. “If it persists, the banks would have no choice but to de-lever their balance sheets in a very drastic and disorderly fashion.”

edit on 1-10-2011 by leo123 because: (no reason given)




posted on Oct, 1 2011 @ 08:05 PM
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Wasn't Buffett recently asked to provide cash to European banks to which he has said no. If this it true Greece is the least of their worries. The Bernank may parachute some cash in here, compliments of the already distraught US taxpayer. November is really warming up to be an interesting month with Greece out of bailout funds end of October, the unusual emergency broadcast system test in the US and the possibility of Congress implementing vast cuts to programs should the super committee fail to meet their objectives. Hope your strapped in.

brill



posted on Oct, 1 2011 @ 08:24 PM
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Oh anyone surprised we have another problem that can only be solved by printing money or ending the world?



posted on Oct, 3 2011 @ 12:18 AM
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Let's see what this bombshell provides.



posted on Oct, 3 2011 @ 12:32 AM
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I cant stand these bombshells anymore


Lets get it over with so that we dont have to keep reading news like this in the papers anymore. Let the world go bankrupt is what I say



posted on Oct, 3 2011 @ 12:58 AM
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Originally posted by MasterGemini
Oh anyone surprised we have another problem that can only be solved by printing money or ending the world?

It's already being minted, it's called the Amero.
2nd.



posted on Oct, 3 2011 @ 01:30 AM
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Originally posted by Fett Pinkus
I cant stand these bombshells anymore


Lets get it over with so that we dont have to keep reading news like this in the papers anymore. Let the world go bankrupt is what I say

They are just rumors, there have been a few for the last three months. I don't know where it comes from but it's obvious some people want France to get into trouble.



posted on Oct, 4 2011 @ 12:44 PM
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France, Europe's biggest remora fish, irrelevant on the world stage and G7 laughing stock (along with UK and Italy) makes me wonder why anyone would invest in its banks?





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