This is not helping French bank stocks today.
PIMCO’s Mohammed El-Erian has a dramatic post up at FT on the various signs of trouble in French bank land.
You have reports of banks not trading with French banks. You have equity prices at 50-% of books, and stories about CEOs going around the world for cash.
Here’s the money quote:
These are all signs of an institutional run on French banks. If it persists, the banks would have no choice but to delever their balance sheets in a very drastic and disorderly fashion. Retail depositors would get edgy and be tempted to follow trading and institutional clients through the exit doors. Europe would thus be thrown into a full-blown banking crisis that aggravates the sovereign debt trap, renders certain another economic recession, and significantly worsens the outlook for the global economy.
If Europe doesn’t fix this fast, all hell could break loose.
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