Paul Joseph Watson
You know it’s bad when Yahoo.com features a story about fiscal armageddon
You know things are bad when Yahoo.com, the most trafficked website in the world and usually a purveyor of mindless celebrity gossip, cooking tips and dating advice, features a top story about how Americans could lose their bank deposits following the collapse of Lehman Brothers.
For the Internet giant to prominently report that there is already a “slow motion run on banks” is indeed a landmark event, and precludes even the most ignorant American from claiming they were not forewarned about the unfolding economic catastrophe.
The article points out that although the Federal Deposit Insurance Corp. guarantees individual accounts up to $100,000, the FDIC fund only has about $50 billion to “insure” about $1 trillion in assets across the nation’s financial institutions.
When Americans realize the fact that banks are “going to run out of money”, the article nonchalantly states, a run on the banks will accelerate.
The warning comes from top economist Nouriel Roubini, of NYU’s Stern School and RGE Monitor, who correctly predicted the severity of the credit crunch. Roubini says there is already a “slow-motion run on retail banks” occurring nationwide.
He advises that people with accounts over $100,000 in value should at least spread them out among different firms.
The use of such inflammatory language like a “run on the bank,” especially from the most visited website on the entire planet, is phenomenal and other news websites as well as financial advisors have been cautious to use such terms in an effort to prevent panic.
For example, we read in today’s Seattle Post Intelligencer that, “Sara Hasan, an analyst with Seattle’s McAdams Wright Ragen Inc., said she didn’t even want to use the word “run” — as in “run on a bank” — during an interview, because “these are very touchy times.”
Other advisors are more up front with their warnings.
“First off, go ahead and make a run on your banks. If you have money with a brokerage firm or bank that is in trouble, get your money the heck out of there!” writes Joe Ponzio.
“In reality, I don’t want to cause a run on the banks; but, I won’t prevent one by saying that everything is fine and that you should wait until it is too late. My recommendation: Move your important savings and checking accounts to banks that have a higher likelihood of weathering the storm,” he adds.
By Dan White
Could it happen to an Irish bank?
For anyone who doubted that we were living through the worst financial crisis since 1931, the extraordinary events of the past week have provided the definitive answer: In the US, investment bank Lehman Brothers went bust while insurance giant AIG has effectively been nationalised.
On this side of the Atlantic HBOS, was forced to agree to a takeover after investors lost confidence. The speed of HBOS’ collapse was truly terrifying.
The fall of HBOS is a crushing blow to Scotland. HBOS was formed from the 2001 merger of the Bank of Scotland and the Halifax, Britain’s largest mortgage lender, and had its headquarters in Edinburgh.
The Bank of Scotland was formed in 1695, only two years after the Bank of England. For many years it performed a quasi-central banking role in Scotland, similar to that of Bank of Ireland, which yesterday announced it was having its final dividend.
And then, in two crazy days, 300 years of history were swept away. HBOS will now disappear into an enlarged Lloyds TSB, which will have gross assets of more than Stg£1 trillion (€1.27 trillion).
Could it happen here? Is it possible that the tsunami which swept away HBOS could do the same to one of the Irish banks? Yes it could. Forget about the ornate marble banking halls. If a bank has the confidence of the markets, then it will have no difficulty securing capital and deposits. However, as soon as that confidence goes, a bank is done for.
banks never have enough cash on hand if all of their depositors look for their cash back at the same time.
once confidence is lost this model goes into meltdown
This is known as a “run” on a bank and is what happened to Northern Rock in September 2007
If they fail we too could end up losing our financial independence.