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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?


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.”


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Reader Comments (11)

By the way, the site was flying today - 44,000 unique visitors and approximately 85,000 pageviews.
Sep 29, 2011 at 12:07 AM | Registered CommenterDailyBail
Help Identify This NYC COP Who Allegedly Committed Acts Of Brutality Against #OccupyWallStreet Protestors

Sep 29, 2011 at 12:23 AM | Registered CommenterDailyBail
The Shadow Scholar

The man who writes your students' papers tells his story

You've never heard of me, but there's a good chance that you've read some of my work. I'm a hired gun, a doctor of everything, an academic mercenary. My customers are your students. I promise you that. Somebody in your classroom uses a service that you can't detect, that you can't defend against, that you may not even know exists.

I work at an online company that generates tens of thousands of dollars a month by creating original essays based on specific instructions provided by cheating students. I've worked there full time since 2004. On any day of the academic year, I am working on upward of 20 assignments.

Sep 29, 2011 at 12:27 AM | Registered CommenterDailyBail
Sep 29, 2011 at 12:28 AM | Registered CommenterDailyBail
Sep 29, 2011 at 12:29 AM | Registered CommenterDailyBail
Since The Daily Bail is constantly on the spot with unbiased,. timely, and factual reporting I have added your feed to be syndicated via my Headlines section and to automatically tweet any new posts you write to my Twitter followers.

Seriously, keep up the good work.

Sep 29, 2011 at 5:09 AM | Unregistered CommenterAlexander Higgins
Just for laughs...(you guys will like this)

Sep 29, 2011 at 5:31 AM | Unregistered CommenterCanuck
Canuck...oh dear god, that was beautiful...thanks for that...front page clip for sure.
Sep 29, 2011 at 8:17 AM | Registered CommenterDailyBail
Alexander, thanks.
Sep 29, 2011 at 8:17 AM | Registered CommenterDailyBail
@Alexander Higgins

Don't brag on DB, He'll get the BIG HEAD & won't speak to us. ROFLMAO

Damn! I'm not PISSED today.
Sep 29, 2011 at 12:14 PM | Unregistered CommenterTR
By the way, Canuck, that video is already taken off YouTube
Oct 2, 2011 at 1:33 PM | Unregistered CommenterEnough already

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