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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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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Related story:

• BERNANKE TO THE RESCUE IN EURO BAILOUT REDUX: European Christmas In September As World's Central Banks Announce Global Dollar Free For All

• Hedge Fund Manager Kyle Bass Tells David Faber: "EU Bailout Will Cost France And Germany Their AAA Ratings"

Comments

[DailyBail]

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[DailyBail]

Help Identify This NYC COP Who Allegedly Committed Acts Of Brutality Against #OccupyWallStreet Protestors

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[DailyBail]

The Shadow Scholar

The man who writes your students' papers tells his story

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[DailyBail]

Police rough up anti-Cheney protesters

http://rabble.ca/news/2011/09/police-rough-anti-cheney-protesters

[DailyBail]

"Fast And Furious" Just Might Be President Obama's Watergate

http://www.forbes.com/sites/realspin/2011/09/28/fast-and-furious-just-might-be-president-obamas-watergate/

[Alexander Higgins]

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.

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Alexander

[Canuck]

Just for laughs...(you guys will like this)

http://www.youtube.com/watch?v=aWyrjwXoIqA

[DailyBail]

Canuck...oh dear god, that was beautiful...thanks for that...front page clip for sure.

[DailyBail]

Alexander, thanks.

[TR]

@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.

[Enough already]

By the way, Canuck, that video is already taken off YouTube