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Collapse Of Entire Global Banking System Is Underway Signals CEO Of Worlds Largest Mutual Fund

Thursday, September 29, 2011 6:39
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PIMCO CEO signals the collapse of entire global banking system underway as a panic driven institutional bank run drains French banks of nearly all their capital.

PIMCO’s CEO tells the Financial Times that the institutional bank run on French Banks has left them with as little as 1% capital against the total assets reported on their balance sheets and institutional panic in the global financial system is underway

If this is true, we are looking at the collapse of the very foundation of the entire European banking system which in turn means the collapse of an essential pillar of the entire global banking banking system

Seriously, the Europeans have been pulling their money out of banks for weeks and so have many of the world’s most important corporations. Don’t be a fool and wait until the last minute to do the same.

I provided complete background context to this story when it became evident that the bank run that started Greece had spread into French banks, then across Europe and even into China.

Global Market Meltdown Worsens: Corporations And China Join In On Global Bank Run

Global Financial Meltdown Worsens - Bank Run Goes Global

The Global Financial Meltdown has dramatically worsened as Corporations and China Jump Aboard The “Institutional” Global Bank Run As Banks Fall Apart As Their Seams.

Earlier today the world saw a global financial meltdown as investors dumped everything from stocks to commodities and literally everything in between.

Global Financial Meltdown: Investors Dump Nearly Everything Amidst Worldwide Market Crash

Global Meltdown - Investors Are Dumping Everything

Major Stock Market Indexes, Commodities, Currencies And Everything In Between Is Being Dumped By Investors Across The Globe In The Midst Of A Global Financial Meltdown.

The financial markets across the globe are facing one of the most massive sell-offs in recent memory.

The Dow Jones Industrial average has sold off over 467 points today. When and when you add that on top of 284 point drop following yesterday’s crash FED’s statement, which announced operation ‘twist’ and warned of significant downside risk and strains in global financial markets, we have a 751 point drop in the DOW since 2:45 PM est yesterday, which is the largest 2 day slump since 2008.

There are an endless parade of economic statistics many of which are the worse since the Great Depression and World War 2 era. We have also seen 111 of the s&P 500 hit fresh 52 week lows, a drop in global currencies – beside the dollar, oil dropping into the high $70 per barrel range and gold plummeting over 5% to trade in the low $1,700 per ounce range.

Business Week points out the massive crash in U.S. stocks immediately below while CNBC points out further below that this in fact a global meltdown – investors are dumping everything.


Read The Rest…

While today’s sell off was monumental and in fact is on course for the 3rd worse week on Wall Street ever, the sell-off was on the heels of the FED’s economic outlook. Today’s Global Financial Meltdown is about to become much worse as a slew of news reports out today reveal the run on the European banks has spread to include corporations and institutions pulling their money out of banks and China finally arriving at the party.

However, it appears as PIMCO’s CEO tells us, that instead of dealing with the crisis, officials chose to deny it by reiterating for days now that the French Banks did not need to be re-capitalized.

Well, it appears the statements from officials in France were outright lies.

The Daily Baily Reports on a new article from the Financial Times:

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.”

Read The Rest

To be clear, the run on the banks and the collapse it will cause is already underway and “If it persists” the French Banks will have “no choice but to de-lever their balance sheets in a very drastic and disorderly fashion” which means forget about the plans of propping up or bailing out Greece, Ireland, Portugal, Italy and Spain.

In fact, such an event in happening in “very drastic and disorderly fashion” would trigger a Lehman style collapse wiping out any hope of those nations being able to pay off their debt.

The resulting financial turmoil drag down Germany and the entire Euro-zone resulting in sovereign debt defaults in many of those nations as well.

From there the counter-party risk turns to contagion and drags down banks in Great Britain, China and even the U.S , resulting in the greatest economic crash in the history of man kind.

The question is will officials fess of to reality or continue to pretend the patient is not sick until he reaches the point where his vitality can no longer be preserved.

Source: Collapse Of Entire Global Banking System Is Underway Signals CEO of World’s Largest Mutual Fund ©
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Total 7 comments
  • Anonymous

    will the people have guts enough to imprison the bankers after they destroy the world ? and never forget, the politician you voted for helped them, you are to blame.

  • Anonymous

    What is this babble about bank reserves and capital? So long as the People (depositors)and media BELIEVE the bank exists it exists. The real problem is that the wizards and seers ie hedge funds are losing confidence in themselves and each other. My friend and medium advisor talks about a cascade of lies that may require a financial lock down to correct. “The sooner the better,” she says. YIKES I say. Thanks

  • Tim Bravo

    The author of this piece warns us not to be fools and wait for the collapse to pull our money out. Um, if there’s a global economic collapse, what difference does how much money you have make? NONE. All of us pulling our money out of the system would only hasten the event.

    Either the author is a moron or a schill.

    And either way, it doesn’t matter. It will all be over soon, for the better. Be not afraid.

  • Anonymous

    BRING IT ON! We need a clean sweep! The system is completely corrupt & broken. We need to indict the real criminals of 911. The 99% of humanity needs TOTAL debt amnesty & then we can reset Earth’s doomsday clock with a whole new set of rules based on reality instead of profit for the few psychopaths sitting on top of a collapsing dung heap.

  • Don't be hating!

    Dont be fooled people. The Elite/Cabal want a finacial meltdown to happen. This is part of their NWO plan. They want panic/fear/riots/protest/and crime to rise so they can implement Martial Law against mankind. Meditate and let our consciousness combined so we can help this planet evolve. Say no to the NWO! Peace to all.

  • sjsrana

    The Reason for MELTDOWN:

  • sjsrana

    Need more proof,
    Even professionals are indicating something serious therefore buying PUTS or selling futures:
    Professionals betting against the markets!

    SHORTS on S&P Over 11 Million…………

    Perhaps they are all protesting “BANKS GOT BAILED OUT, WE GOT SOLD OUT!”

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