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Thread: Are We Going To Get a Run?

  1. #1
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    Are We Going To Get a Run?

    Banks wobbly?


    US prinhting money?

  2. #2
    Vulture of The Western World Eric's Avatar
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    Re: Are We Going To Get a Run?

    Quote Originally Posted by robmcg
    Banks wobbly?


    US prinhting money?
    Many think so - according to what I have read, the actual liabilities of many major US banks are enormous. The Fed can, of course, print more money for the government to loan these banks, but that just creates more paper, not more wealth.

  3. #3
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    Re: Are We Going To Get a Run?

    More IndyMac fun:

    Police ordered angry customers lined up outside an IndyMac Bank branch to remain calm or face arrest Tuesday as they tried to pull their money on the second day of the failed institution's federal takeover.
    http://www.wral.com/news/national_wo...story/3209132/

    Note that these were mainly customers who had deposits in excess of the FDIC insurance limit of $100k.

    The deal is, a run can happen on any bank in the US at anytime, simply because banks practice fractional reserves. If the bank has $500 million in deposits, a large percentage of that (90% in the US) is out at any one time in loans. If more people than expected show up to withdraw their money, the bank has a liquidity crisis, and must borrow money quickly in order to pay out deposits, or go under.

    So what happened at Northern Rock, and what is happening at IndyMac, could happen to any bank, even in good times, if enough customers feel their money would be better living somewhere else (at another bank, or in their mattress).

    http://en.wikipedia.org/wiki/Fractional-reserve_banking
    http://www.federalreserve.gov/moneta...reservereq.htm

    Chip H.

    Former owner: 2012 Honda Civic LX, 2006 Honda Ridgeline RTL, 2000 Honda CR-V EX, 2003 MINI Cooper S, 1992 Honda Accord LX, 1999 Mercedes ML-320, 1995 VW Jetta GLX, 1991 Mercury Capri XR2, 1981 Mercury Zephyr, 1975 Chevrolet Impala

  4. #4
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    Re: Are We Going To Get a Run?

    Thanks Chip,

    America appears to be in a bit of a mess.


    Dubai and Norway seem now to be owners of vast amounts of money, but they haven't got a clue what to do with it.

    Imagine if America had embraced turbo-diesel or similar small cars when it embraced and effectively subsidized SUVs. Wouldn't need about half your fuel consumption and then would have money to actually invest in wealth-production... and some oil-producers would have less clout.

    but you guys don't like gummint, some sort of romantic hangover from 1776, so you eschew things like good small cars, and deserve every bloody thing you get.

  5. #5
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    Re: Are We Going To Get a Run?

    Plain old-fashioned greed is the root cause of the housing meltdown.

    This caused people to look on buying a house in the same way as buying a lottery ticket that's 'a sure thing' to return Big Money.
    Which obviously didn't happen.

    If you get a moment, look up the tulip mania from the 17th century. Same thing, only with houses.

    Many individuals grew suddenly rich. A golden bait hung temptingly out before the people, and, one after the other, they rushed to the tulip marts, like flies around a honey-pot. Every one imagined that the passion for tulips would last for ever, and that the wealthy from every part of the world would send to Holland, and pay whatever prices were asked for them. The riches of Europe would be concentrated on the shores of the Zuyder Zee, and poverty banished from the favoured clime of Holland. Nobles, citizens, farmers, mechanics, seamen, footmen, maidservants, even chimney-sweeps and old clotheswomen, dabbled in tulips
    Chip H.

    Former owner: 2012 Honda Civic LX, 2006 Honda Ridgeline RTL, 2000 Honda CR-V EX, 2003 MINI Cooper S, 1992 Honda Accord LX, 1999 Mercedes ML-320, 1995 VW Jetta GLX, 1991 Mercury Capri XR2, 1981 Mercury Zephyr, 1975 Chevrolet Impala

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