Chart of the day

This, originally from Bloomberg and then picked up by FT alphaville and many others, is attracting a lot of attention:Despite some rather histrionic claims that it `proves' the bailout is inadequate and much more money is needed, I am not so sure. For one thing, banks are deleveraging, so they will need less capital. For another, various tricks are being employed, such as the FED's forebearance of capital requirements for the Bear portfolio at JPM. So the argument that the system needs as much capital as before right now is not clearly correct. Of course, capital requirements will go up eventually. But at the moment I tend towards the idea that supervisors are willing to tolerate a less well capitalised banking system at least while the crisis lasts. The banks might need more capital than is available in the bailout in due course but I am not convinced that they need it immediately.