I saw this article a few minutes ago, and wanted to share it. It highlights a 50:1 leverage by SocGen. I do not know the validity of this argument, and I am not changing my current strategy around it (because I am not a banking expert).
I always intended on taking an SPY Put trade as the SP500 approached 1220, but due to this leverage argument (that can be seriously exploited by the rumor mongers), I took on small protection near 1200 (what I think is very light resistance). The current level already acted as an intra-day resistance, and barring any developments tomorrow, it should be breached. But CNBC has pretty much set up a potential sell off tomorrow by constantly emphasizing a meeting tomorrow between Sarkozy and Merkel (which was planned weeks ago, and seems not to be as big of a deal as CNBC is making it).
If the EU banks are really a concern, the EU leadership must come to an agreement on a solution very quickly.
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