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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?
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.”
Originally posted by MasterGemini
Oh anyone surprised we have another problem that can only be solved by printing money or ending the world?
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