posted on Jan, 3 2010 @ 03:59 PM
This is cheap, the consequences of having a Northern Rock (bank) situation, where one customer decides to withdraw their savings in cash, another does
the same, and before you know it there’s a queue on onto the high street. Pedestrians (with savings at the bank) see the situation and join the
queue. Soon everybody, at every branch, everywhere is demanding their savings in cash.
Having seen one bank go down, and knowledge of the wider situation the American public are edgy. The following days the Queue Growth Symptom spreads
to other banks (we would all rather be safe than sorry).
Soon banks run out of bank notes, when more are delivered there still isn’t enough.
You see this on the evening news, and you’re thinking “I wonder how long that £40 I withdrew on Tuesday is going to last me”.
Meanwhile shares have plummeted world wide, so too have, bonds and commodities. This is because throughout the U.S other banks have also been selling
their assets in order to raise cash, in order to meet their legal obligations to their depositors.
But there’s a problem!
The investments that (if sold) on Tuesday and that would have (ideally) covered 100% of bank liabilities, are on Wednesday only able to cover less
than 75% of that. All Indications are that (if not sold by Monday) they’ll only be able to cover between 5 and 10% of the banks liabilities.
So indications are it would be smart to sell on Thursday!
But foreseeing the crisis (from history books), the government shuts the stock exchange.
This means it takes a while even to receive what’s left of your savings. But it’s urgent to get them out, because otherwise hyper inflation will
destroy the value of the notes you once had in your hands.
The government did the wrong thing with its economic stimulus package, since (unlike last time) there has been very little in the way of productive,
national infrastructure to show for it.
But the only conspiracy from my view is: why the hell, didn’t they save Lehman Brothers? If they had done that there would be no crisis.