SocGen CEO Dismisses Rumors, Says France Is Not US - He's Right, It's Worse And Bank Run Is Likely In Progress Now!

Posted by: Reggie Middleton

Post date: 08/11/2011 - 10:08

Here is the next installment of the public evidence of a bank run in France. This is literally a carbon copy of Bear Stearns/Lehman Brothers, just on a larger scale. Listen to that sucking sound. It'... 

 

 

 

 

 

Germany’s Best-Selling Tabloid Bild's Front Page Encourages Readers To Buy Gold

Bild Zeitung, is Germany’s biggest- selling newspaper, is the best-selling newspaper outside Japan and has the sixth-largest circulation worldwide. Bild encouraged German people to invest in gold as the global debt crisis continues to deteriorate and cause turmoil in global markets. “While the companies listed on stock exchanges have lost over the past 14 days, about $8 trillion dollars in value, the price of gold climbed to a record high.” “While money can be printed, gold reserves are limited. To date some 150,000 tonnes of gold have been mined.” Gold “is better than cash,” the newspaper said. “While any amount of money can be printed, gold is limited,” making it “one of the safest investments in crisis times.” The article is interesting as gold has remained taboo is much of the non specialist European press and media and was only briefly covered in recent days due to the deepening crisis and succession of new record nominal highs. German demand for gold has been very robust in recent years and the Germans experience of the Weimar hyperinflation means that they are very aware of the risks posed by today’s excessive money printing and global currency debasement.

Following Tremonti Speech In Parliament, Serial Halts Of Italian Banks Resume

Not even an hour after Tremonti addressed parliament discussing the various ways Italy would have to reform in order to meet European demands for austerity, the now traditional serial collapse of Italian banks resume, with the halt of the unholy trinity Unicredit, Intesa, Banca dei Monte Pasci, as well as Mediobank ensuing. Concurrently the same Italian weakness appears to have spread to France where BNP falls over 5% and SocGen down over 6%, affecting financials across the Eurozone, and sparking visions of a repeat of yesterday's collapse in European markets led by the fins. And while there is the usual plethora of rumors as to what may be responsible for this renewed weakness for now it is best not to speculate for fear of black helicopters, what is certain is that Italy's main opposition leader is setting the stage for a rerun of Greek daily strikes, by objecting to the balanced-budget plan at the heart of the Italian deficit cutting program. As Reuters reports, Italian opposition leader Pierluigi Bersani on Thursday rejected proposals for a blanket constitutional rule forbidding budget deficits but said his party was ready to support rules for greater budget discipline. Bersani said his party was ready to support measures to reinforce discipline in public finances but said it made no sense to impose unrealistic constraints on policy. "First, let's not talk about things that don't exist in any place in the world," Bersani said during a hearing of the parliamentary constitutional committee. "Balancing the budget in the constitution -- well, we don't intend to castrate ourselves for centuries from any possible economic policy." "So let's find a solution that has flexibility." Translation: we now have at best a few weeks before the strike (and riot) cam moves from Syntagma Square to Piaza Navona. As for Italian (and French) bank halts: our advice - don't exhale or the entire thing will collapse, and the smallest rumor will bring the European financial sector to a screeching halt yet again.

Today's Crunch Catalyst: Asian Banks Commence Cutting Credit Lines To French Banks, Sparking Self-Fulfilling Prophecies

Remember how we joked (but were dead serious) that the IMF is now simply a figurehead organization, and the real global bailout cop is China? Well, that may not be the case for much long. Reuters has just broken news that at least one bank in Asia, and five other in process, has cut credit lines to major French lenders "as worries about the exposure of French banks to peripheral euro zone debt mounts, banking sources told Reuters on Thursday." Why is this worrying? Because as is by now well-known, the PBoC has been as aggressive a buyer in the primary market of European market as most European banks, which as is well-known immediately turn and pledge said debt as collateral to the ECB for 100 cents on the euro, and the fact that its proxies are now quietly withdrawing from the European market as lenders of last resort, is probably far worse news than a rumor that the S&P may cut France.... What happens next is well known to anyone who lived through the fall of 2008: credit lines withdrawn means investors dumping stock in droves, means depositors staging physical money runs, means more credit lines withdrawn, means immediate liquidity crunch, means rumors of insolvency, means self-fulfilling prophecy, means scramble to get funding first from ECB, then from Fed, but by then contagion has spread and the entire financial system is in danger of imploding, means several trillion in FX swap lines activated to prevent a run on the dollar, which also happens to be the funding currency, means another scramble to bail out capitalism.

"Banks Cut" - Merrrill's Pukes All Over Europe's Banks

As if Europe needed any more fuel to the raging fire that has seen Italy collapse (remember ASSGEN: stock is halted, and CDS is 270-280, 100 bps wider than where we recommended it), futures plunge, and French banks resume the position, here is Merrill's report titled, apropriately enough, "Banks Cut" in which Bank of Countrywide Lynch analyst Gary Baker, CFA explains why he is "lowering bank weighting to neutral." We expect a witchhunt focued on Gary, which will culminate with him facing a court martial and/or tribunal for daring to tell a few ounces of truth about Europe's banking system.

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For Those Not Watching CDS Implode, It Is Heinous

IG16 is 125.5 +10 as I type.  Could be 5 bps different by the time I finish writing.  Main is being quoted on 2 bp markets.  I'm seeing IG16 quoted on anywhere from 1 to 2 bp market.  Typical bid/off is 1/2 a bp.  HY16 is down 1 3/4 points again, but shockingly is still being quoted in 1/4 pt markets by most dealers.  It could be a bright spot when the weakest of weak is actually holding on to some liquidity.  Maybe have some people looking for the bottom in that market. SOVX is trading on 6 bp markets, and fins in Europe are all over the place.

Daily US Opening News And Market Re-Cap: August 11

The European equity market remained volatile during the session, with some stability seen in French banks in early trade after Societe Generale's CEO rejected yesterday's market talk that the co. is in trouble, and as the French/German 10-year government bond yield spread retraced all of its widening yesterday. However, as the session progressed, apprehension revisited on the back of market talk that BNP Paribas may incur a loss of further USD 713mln on Greece, together with a three-month hike seen in the ECB's overnight deposit facility yesterday, which highlighted banks reluctance to lend. This resulted in a renewed sell-off in French and Italian bank shares, and financials became the worst performing sector in Europe. In other news, the Eurozone 10-year government bond yield spreads narrowed helped by a PBOC adviser saying that China is willing to keep buying European debt, together with market talk of the ECB buying in the Italian and Spanish government bonds. Elsewhere, CHF weakened across the board in early trade on the back of market talk of the SNB conducting currency swaps in the market. Also, USD/JPY recovered somewhat, after an earlier approach towards its all time low of 76.24, however there was no official confirmation of a BoJ intervention. Moving into the North American open, markets look ahead to key economic data from the US in the form of jobless claims and trade balance, together with housing and trade balance figures from Canada. In fixed income, 5-year TIPS refunding announcement, allied with USD 16bln 30-year Note auction are also scheduled for later in the session.

NYT Reports Eurowide Short Selling Ban Imminent

Proving once again the nobody ever learns from the past, and is guaranteed to repeat the worst mistakes thereof, the NYT has reported what Zero Hedge noted less than a day ago when we said that a "Eurowide short selling ban now appears imminent" with a report that "Europe Considers Ban on Short Selling." What this means is that transatlantic panic is really about to spike, and the next imminent step is a total collapse of European capital markets. European regulators should be bound and quartered for even considering this stupidity which will destroy price discovery and lead everyone to dump their holdings ahead of a resumption of the Lehman bankruptcy PTSD flashbacks. Also making short covering impossible will remove the only natural downside market buffer. Oh well, if they want to blow themselves up, so be it.