BNP Paribas leveraged 27:1



Jean-Pierre Chevallier reports on his Business économiste monétariste béhavioriste blog, that BNP Paribas leveraged: 27!.

The real leverage of BNP Paribas is … 27.2!



Indeed, the French bank counts in its equity item 2: Undated Super Subordinated Notes eligible as Tier 1 capital which are actually a form of liabilities related interests subject to some conditions.



Société Générale Leveraged 50:1





The real leverage of Société Générale is… 50!



Indeed, the French bank counts in its equity item 2: Equity instruments and associated reserves which are actually different forms of liabilities related interests subject to some conditions.



Equity published in item 1: Sub-total equity, Group share should be reduced by Equity instruments and associated reserves (item 2) to determine the true equity at fair value (item 3) i.e. 22,535 billion of euros.



Total liabilities are equal to total assets (item 4) less the true equity at fair value (item 3): 1,135.473 billion of euros.



So, the leverage is the ratio of total liabilities on equity: 50.4 i.e. a Tier ratio at 2.0%.



Société Générale did not respect the rules of prudential borrowing as they were defined by Alan Greenspan.

Blaming the Shorts

Societe Generale did not even say what they were denying. The bank simply denied everything. Whatever the rumors are, I assure you at least some of them are true. This denial sounds just like Lehman's denial to me.

Things matter When They Matter

Sorry State of Affairs of US Banks

Global Financial System is Bankrupt

Simple Facts of the Matter

Central banks can print money but not capital. Central banks can initiate "swaps" but swaps are temporary. Of the money central banks do print, they cannot give away, they can only lend it. Right now, there are no takers of printed money as evidenced by excess reserves deposited at the Fed. Those excess reserves will not eventually flood the system with cash, spawning off a 10-1 multiplier as many think.

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