PIMCO's El-Erian Drops The F-Bomb: "French Banks Are Down To 1% Capital, Institutional Panic Underway"
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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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.”
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Reader Comments (11)
http://blog.alexanderhiggins.com/2011/09/28/identify-nyc-cop-allegedly-committed-acts-brutality-occupywallstreet-protestors-72111/
The man who writes your students' papers tells his story
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http://chronicle.com/article/The-Shadow-Scholar/125329
http://rabble.ca/news/2011/09/police-rough-anti-cheney-protesters
http://www.forbes.com/sites/realspin/2011/09/28/fast-and-furious-just-might-be-president-obamas-watergate/
Seriously, keep up the good work.
Alexander
http://www.youtube.com/watch?v=aWyrjwXoIqA
Don't brag on DB, He'll get the BIG HEAD & won't speak to us. ROFLMAO
Damn! I'm not PISSED today.