HERALD-TRIBUNE / NYT: …Although its shares closed slightly up on Friday, Société Générale’s stock has fallen more than 40 percent since mid-July and helped pull European bank stocks down earlier in the week. That volatility is a big reason that France on Thursday night imposed a temporary 15-day ban on short-selling — negative bets — against financial and insurance company stocks…
Jitters about the bank’s stability reverberate in New York and around the world because, among other things, Société Générale is one of the biggest global players in equity derivatives — financial instruments meant to protect investors against price plunges in stocks. It does business regularly with the likes of Goldman Sachs, JPMorgan Chase and Deutsche Bank.
“They have significant outstanding derivative exposures, which makes them systemically important,” said Kian Abouhossein, an analyst covering European banks for JPMorgan Chase. “They are important to the financial system, not just in the U.S. or Europe, but globally.”… (more)
EDITOR: What is implied above is that world’s banking community is a house of cards. If Société Générale is allowed to fail, it will expose other major banks to immense losses that they can hardly afford and remain solvent, especially since they are holding real estate and many other assets at the cost of acquisitions rather than at market value. We are at the brink of another round of bank bailouts with their ‘recovery’ indirectly funded with tax payer money.
