Saturday, 27 December 2008

Pot. Kettle. Black

Top banker accused by bishop of financial 'idolatry'

Speaking to the Berliner Zeitung newspaper, Bishop Huber argued bankers had a duty to look beyond the short term: "Never again should a Deutsche Bank chief executive set a profit goal of 25 per cent." Such goals drove up profit expectations to unsustainable levels and amounted to "a form of idolatry", he said. "In the current circumstances, money has become a god."

Only when the church renounces its 'worldly goods' will it be in a position to preach about false gods.... until then money and religion are two sides of the same coin.

Saturday, 20 December 2008

Swindler’s List

Heres the weekend special for this week:

"It's Kristallnacht Two!" An Ethnic Cleansing in America

Uncle Sam is the biggest Ponzi operator of all, with the added magical power denied Madoff (unless forgery was among his talents) of being able to print money at will. CounterPunch tip of the week. Wheelbarrow stocks. Buy ‘em while the price is right. Soon Americans will be needing wheelbarrows to put the money in to go shopping. A vast new wheelbarrow industry could be part of Obama’s recovery plan. Collapsible wheelbarrows for the soccer moms to get in the back of the Volvo. Electric-powered wheelbarrows. Hybrid wheelbarrows from GM. Gold-plated wheelbarrows from the Defense sector.

Bankrunwatch like the wheelbarrow stories....

Sunday, 14 December 2008

10 days and counting

The story of unusual happenings in the gold market keeps running:

Backwardation That Shook The World

On Friday, December 12, backwardation on gold was still in force at an annualized discount rate hovering around 2% in the December contract, and 0.3% in February contract.

Holders of physical gold, now on fully-fledged strike, are offered a strike-pay by the futures market, and the offer is left on the bargaining table, but the strikers still won't budge. There it is: the gold basis went negative, gold has been in backwardation for over a week, and physical gold is still not coming out of hiding.

Backwardation also gives a signal to those who are not so fortunate as to have some of the precious yellow in hand. It tells them to be prepared for a thunderous collapse of the international payments system, worse than the collapse of the twin towers of the World Trade Center. Backwardation means the inevitable contraction of the world economy, the beginning of an era of diminishing enterprise and employment, an era of snowballing business failures and poverty. Printing more irredeemable promises to pay will make this condition worse, not better.

I am still not sure where this is all leading.... but if things turn out as the writer of this article suggests then maybe a run on the banks will be the least of our worries.

Tuesday, 9 December 2008

Backwardation buzz

After seeing this article on the backwardation of gold prices it now seems that the mainstream have picked up on the story:

The gold backwardation theory

Checking in today and backwardation is still in place. At 1430 GMT Tuesday December 9 spot gold was trading at some $768 while Comex futures were at 766.40.

No small call, Fekete is essentially calling the end of the fiat-dollar system - just as the US Treasury sells 3-month bills at the lowest level since 1929, and CDS spreads on sovereign debt continue to wander - hmmm does he have a point?

It certainly sounds like the talk of conspiracy theorists.

Except that this article was written for the Financial Times!

Sunday, 7 December 2008

More light reading

Deflation virus is moving the policy test beyond the 1930s extremes

Another fatuous article by the same journalist as the previous posting. The interesting part - as always - are the comments. So good in fact that i thought i would cut n paste a few:

What planet is this Ambrose guy on? I keep having this nightmare that I have been transported to a parallel universe where everybody in power has gone mad and is trying to destroy the world. I am running around trying to find someone with any sense who isnt obsessed with lowering interest rates. And then I wake up and - wait a minute - oh my God it wasnt a nightmare. This is really happening!

This thought has crossed my mind too - why are the mainstream media running all these scare stories?

So this is what all sensible people should do: (1) wait for the value of a �1,000,000 house to fall to,say, �600,000 borrow �600,000 to buy it and then 2) wait for the arrival of hyperinflation to wipe out the real value of the loan. Brilliant!

Nice idea - just be careful you don't loose your job or you will end up with nothing.

Deflation is a symptom not a cause surely. The causes are many of course. I would say a main cause to be the fractional reserve system with money creation through debt. Last and not least the people have been blinded and fleeced equity cannot flourish.

There we are again - the fractional reserve system and money as debt - fiat money has no 'real' value.

Note also that for the first time in history in December 2008 gold prices went into backwardation. Anyone who has actual gold won't sell at any price denominated in worthless paper. I don't know what will happen, but the greatest probability is that whatever happens isn't going to be pretty. Gordon Mugabrown should remember we savers have votes as well.

For more info on gold backwardation read this article. Maybe i should start 'gold/silver bullion run watch' cos by the time the banks start failing there wont be any 'real' money left to buy with your cash.


No... not the aging british cruise liner but the 'next big idea' of the worlds central bankers:

ECB cuts to 2.5pc and mulls "printing money"

I try to find a bit of light reading for a sunday evening - this article is so good that i intend to cut n paste the whole thing....

The European Central Bank has slashed interest rates by three-quarters of a point to 2.5pc in the boldest move since the launch of monetary union and hinted at revolutionary action to head off a severe slump next year as the economic crisis ravages the car, steel, and machine tool industries.

Revolutionary action - i very much doubt that!

"Tensions have increasingly spilled over from the financial sector to the real economy," Jean-Claude Trichet, the ECB's president, said. He added: "Global and euro-area demand are likely to be dampened for a protracted period of time."

Poor old Trichet is feeling tense as people in the 'real' world are finding out that from now on things will be a bit 'damp' !

Sweden's Riksbank went even further, stunning the markets with a cut of 175 basis points to 2pc. The Swedish authorities are deeply alarmed by the collapse of vehicle sales at Volvo, as well as the large exposure of Swedish banks to the property crash in Eastern Europe
"We're moving towards a world of zero rates in Europe and the G10 countries, perhaps as soon as the second half of next year," said Michael Klawitter, a strategist at Dresdner Kleinwort.

Zero rates... or zero work?

Mr Trichet said the eurozone is likely to contract by 0.5pc next year amid a "hardening" of the credit markets. This is a dramatic reversal from the ECB's forecast of an economic rebound published in September. The bank has undoubtedly been startled by the latest PMI confidence data, which has a good record as a leading indicator and is now pointing to a brutal contraction of 2.7pc year-on-year in early 2009.

Startled? wtf... they havn't a clue. Economic rebound my @$$.

In France, President Nicolas Sarkozy unveiled a €26bn (£22bn) stimulus package of tax cuts and state spending to fight unemployment. It includes €1bn in loans for the French car industry, which is shutting a string of plants for up a month to clear an unprecedented glut of unsold vehicles. The state will build 100,000 new homes to keep construction alive.
Mr Sarkozy said the goal of restoring France's dilapidated public finances to good order could wait for better times. "Not doing anything now would have cost us much more. We're not going to sacrifice the present for the future. This crisis is an ordeal, a painful ordeal and a terrible ordeal, but we have to keep faith," he said.

The financial crisis is turning all religious for the French - painful ordeals and sacrifice all round.

Italy needs a stimulus package even more badly but is having to tread with care as markets fret over some €200bn of Italian state debt that must be rolled over next year. The yield spread on 10-year bonds has risen to 123 basis points over German Bunds. Giulio Tremonti, Italy's finance minister, insisted yesterday that state bonds were at no risk. "Buy them. They are absolutely solid".

Go on... go ahead and buy them... you can always trust the word of a politian.

Mr Trichet signalled for the first time that the bank is considering some form of "quantitative easing" (QE), the term used to describe the emergency measures pioneered by Japan during its Lost Decade and now being adopted by the US Federal Reserve.
"We are supplying liquidity on an unlimited basis. We will continue to look very carefully at the situation of the market and if needed we will take new decisions," he said, when asked about QE measures.

Here we are - QE - also known as printing more money - now apparently on an unlimited basis. Just so you know.

Julian Callow, Europe economist at Barclays Capital, said the ECB had been caught off guard as the crisis gathered pace this year but is now beginning to catch up. "They are still being too hesitant given the gravity of what is happening. Even so, it seems they are now preparing for quantititave easing and undoubtedly have other tricks up their sleeve," he said.

Yes far too hesitant... lets get on with it!! QE will do the trick. If not the conjuror will never fail to amaze!

The Maastricht Treaty prohibits the ECB from injecting stimulus by purchasing the government debt of the eurozone's fifteen states debt – a method known as "monetizing the deficit", or more crudely as "printing money".

Welcome to Weimar World - where wheelbarrows are wallets. Monetize. You know it makes sense.

But it can achieve the same effect by mopping up sovereign debt, mortgage securities, or even company debt on the open market, as the Fed has already begun to do. At the moment the ECB accepts some of these assets as collateral in exchange for loans, but it has not yet hit the atomic button by buying them outright with its own freshly-minted fiat money.

Ahhh... at last - the magic words fiat money... and the one big question no ones talking about - where does all this money come from? Watch this for some of the answers.

Thursday, 4 December 2008

The silent type

Just spotted this lightweight, heavily anicdotal piece about how the public are reacting to risk:

Where Safety-First Investors Are Putting Their Money

Figures released this week by the Bank of England suggest we could be seeing the beginnings of another bank run – as depositors head into the safest investments they can find. Except this time, the consequences could be a whole lot nastier. Because it’s not just one bank that has lost the trust of its customers. It’s the entire British banking industry....

No queues are forming outside any branches. No CEO memos are being read out to anxious customers. But, behind the scenes, depositors have started fleeing for the exits…

I’m reminded of a conversation I had with a friend two months ago. He was telling me he’d just that day transferred the bulk of his money into his wife’s account. Not only that, his mother and his sister had done the same.

“I’ve engineered my own mini bank run,” he told me. “I’m not proud, but it’s worth it for the peace of mind.”

What are you doing to protect your money?

Tuesday, 2 December 2008

Ice Storm

The latest reports from Iceland show that the local population know who to blame for their country's financial problems:

Protesting Icelanders storm bank, streets, over economy crisis

Reykjavik - What began Monday as a celebration of Iceland's 90th birthday since its independence from Denmark in 1918 turned into protests by several hundred people who stormed to the central bank in anger over the government's handling of the financial crisis.
Monday's protestors pushed into the Central Bank foyer, loudly demanding the resignation of Central Bank chief David Oddsson.

You can also see a video of the days events here.

Monday, 1 December 2008

Running Ahead

Most of the respondents on the bankrunwatch poll have now withdrawn their money from the bank for the first time since i started this blog. I dont know how significant this is as the numbers are low....

Saturday, 29 November 2008

Out of Africa - Zimbabwe

A guy goes shopping with a wheelbarrow full of Zimbabwe dollars. On the way to the shop, he is mugged – the muggers overturn the barrow, tip out the cash and make off with the wheelbarrow.

The financial situation in Zimbabwe has not changed much in the five years since this article was written.... in fact things have only gotten worse.

"Council has since resolved to offer free graves to those who have died of cholera since most people are finding it hard to get cash to pay for the graves," it quoted the town clerk as saying. A grave in Harare costs an average of $30, a teacher's monthly salary at the current exchange rate.

Free graves anyone?

Thursday, 27 November 2008

Background reading #2

The Five Stages of Collapse - a thought provoking article by someone who has studied the timeline of collapse in the USSR and has now seen the same thing happening across the world.

If the US government has to lend banks over 200 billion dollars a day just to keep the whole system from imploding, then the term "crisis" probably doesn't do justice to the situation. To keep this game going, the US government has to be able to sell the debt it is taking on, and what do you think the chances are that the world at large will be snapping up trillions of dollars of new debt, knowing that it is being used to prop up a shrinking economy? And if the debt can't be sold, then it has to be monetized, by printing money. And that will trigger hyperinflation. So, let's not quibble, and let us call what's happening what it looks like: "financial collapse".

Stages 2 and 3 - commercial and political collapse, are driven by financial collapse, and will overlap each other. Right now, it is unclear which one is farther along. On the one hand, there are signs that global shipping is grinding to a halt, and that big box retailers are in for a very bad time, with many stores likely to close following a disastrous Christmas season.

Shipping rates are down 99% and the stores are already closing ... welcome to stage 2.

In addition, it also makes sense to keep an eye out for signs of environmental collapse. This article about the 73% fall in zooplankton could have dramatic effect on those of us at the top of the food chain:

The ongoing disappearance of zooplankton, amphibians, butterflies, and bees is tied directly or indirectly to the continuing growth of our own species—both in population (there are nearly seven billion of us large-bodied omnivores, more than any other mammal) and in consumptive voracity (water, food, minerals, energy, forests—you name it).

The financial meltdown tells us these trends can't go on forever. How the mighty have fallen! - the Masters of the Universe reduced to begging for billion-dollar handouts in front of a television audience.

Next will come a human demographic collapse (resulting from the economic crisis, with poor folks unable to afford food or shelter), as mortality begins to exceed fertility.

Wednesday, 26 November 2008

Iceland - Latest

A near-riot and parliament besieged: Iceland boiling mad at credit crunch

One young man climbed on to the balcony of the Althing building, where the president appears upon inauguration and on Iceland's national day, and hung a banner reading: "Iceland for Sale: $2,100,000,000" – the amount of the loan the country is getting from the IMF.

A separate group of 200-300 people gathered in front of the city's main police station, throwing eggs and demanding the release of a young protester being held there. Police in riot gear used pepper spray to drive back an attempt to free the protester during which several windows at the police station were shattered.

Gudrun Jonsdottir, a 36-year-old office worker, said: "I've just had enough of this whole thing. I don't trust the government, I don't trust the banks, I don't trust the political parties, and I don't trust the IMF."

Could be a sign of things to come as the people realise that borrowing more money from the IMF won't solve anything. Iceland leads the way.... and others follow.

Tuesday, 25 November 2008

Debt is as dangerous as heroin

Is Britain going bankrupt?

The cost of insuring against the bankruptcy of the British state has broken out - upwards - over the last month. Yes, credit default swaps (CDS) are dodgy instruments, but they are the best stress barometer that we have.
Today they reached 86 basis points, near Portuguese debt in the league table. For good reason. Alistair Darling has had to admit that the British economy faces the most sudden economic collapse since World War Two, and the worst budget deficit of any major country in the world.
Ok, this is a lot lower than Iceland, Ukraine, Hungary, and other clients of the IMF, but is significantly higher than Germany (35), USA (43), and France (49).

As usual the the comments shed more light on the real state of the country than the article.

Sunday, 16 November 2008

fruitwood-smoked quail and a chanterelle-jussed tomato, fennel and eggplant fondue

Whats on the menu tonight?

Let the people eat cake

WASHINGTON (MarketWatch) -- The most powerful people in the world will dine on roasted rack of lamb, fruitwood-smoked quail and a chanterelle-jussed tomato, fennel and eggplant fondue, while millions of people around the world lose their jobs, their homes and their hopes.

Sounds nice... where's my recipe book..... eat (like) the rich!

Running in second place

The runners are picking up speed... keep an eye on them in the next few weeks!

Monday, 10 November 2008

Baltic Bank Bust

News of a run on a major bank in Latvia:

Latvia takes over Parex after run on bank

Parex, Latvia’s second largest bank with 3.1bn lats ($5.6bn) in assets, was forced to seek protection from the state after clients panicked and it lost 60m lats in deposits at the end of last week.

Wednesday, 5 November 2008

Walking in the Alps

Seems that even the prestigious swiss banks no longer provide a safe haven for depositors cash:

Customers pull their money out of ailing UBS

Switzerland's largest bank, UBS, has reported record outflows in the third quarter as clients seek security in other financial institutions.

UBS said outflows from its core wealth management business totalled a record SFr49.3 billion and a further SFr34.4 billion was taken out of its Global Asset Management business.

Thursday, 30 October 2008

Kuwait if you want...

Another gulf state in trouble:

Worried Gulf Bank depositors withdraw savings

Worried depositors withdrew savings from Kuwait’s Gulf Bank on Monday, one day after the institution’s shares were suspended because of significant losses it made through derivatives.

“Some people are withdrawing their money but it’s understandable, especially small customers who are afraid. To be honest we expected that to happen,” Fawzy al-Thunayan, a senior official at Gulf Bank, told the Financial Times. “We are prepared in full for whatever happens and the central bank is supporting us in full.”

He declined to say how much money had been withdrawn, but said it was half of the previous day, when people queued outside the bank’s branches.

Monday, 27 October 2008

Gulf of credibility

New reports of bank runs in the Gulf state of Oman:

Gulf Bank Customers Withdraw Deposits After Losses

In the first signs of a bank run in the Persian Gulf, some Gulf Bank depositors panicked and demanded their money, Fawzy al- Thunayan, general manager for board affairs, said in an interview today from Kuwait. ``We can't blame them,'' he said.

Khalid Al-Matrook, a 33-year-old civil engineer, was among customers standing outside Gulf Bank's head office in Kuwait City today. He said he was frightened by yesterday's news of the currency defaults.

``I am withdrawing my 12,000 dinars now and I am not going to spend one penny of it,'' said Al Matrook, sipping coffee outside the bank building.

Friday, 24 October 2008

Capitulation - its the name of the game

Watch the video and make your own mind up:

Roubini says 'Panic' may force market shutdown

Indeed, we have now reached a point where fundamentals and long term valuation considerations do not matter any more for financial markets. There is a free fall as most investors are rapidly deleveraging and we are on the verge of a a capitulation collapse.

What matters now is only flows - rather than stocks and fundamentals - and flows are unidirectional as everyone is selling and no one is buying as trying to buy equities is like catching a falling knife.

Hundreds of hedge funds will fail and policy makers may need to shut financial markets for a week or more as the crisis forces investors to dump assets, New York University Professor Nouriel Roubini said.

Markets close... and the US presidential elections are 'delayed'?

Smart KSF customers withdrawing millions in run up to collapse

More details on the the knock-on effects of the liquidity problems at the Icelandic banks:

Desperate KSF customers withdrawing millions in run up to collapse

DESPERATE depositors were withdrawing between £30 million and £40 million a day from their accounts in the days before the collapse of Kaupthing Singer & Friedlander.

This doesnt sound desperate... it sounds sensible considering the situation that the rest of the depositors are now in.

If today's hearing is not adjourned, KSF (IoM) will be formally wound up and the government's depositors' compensation scheme will take effect, with up to £150 million of taxpayers' money potentially being called on to pay individual depositors up to £50,000 in compensation.

The hearing was ajourned until November 27... more on this story next month.

Sunday, 19 October 2008

Pakistan bank run

Heres the latest from Pakistan - watch for more developments on this story this week:

World economic crisis pushes Pakistan close to collapse

Pakistan's creditworthiness rating is the second-worst among nations ranked by Standard and Poor's, superior only to that of the Seychelles. Last week, the country's president, political novice Asif Ali Zardari, felt compelled to offer public assurances that "Pakistan is not going bankrupt."

Consumer confidence has eroded steadily. In Karachi, Islamabad and other major cities, there has been a run in recent days on foreign-currency accounts held in Pakistani banks.

Friday, 17 October 2008

Ukraine bank run

UKRAINIAN BANK RUN: Account holders at Prominvestbank try to get their money at an ATM in Kiev. Source: Sergey Dolzhenko / EPA

Seems like the citizens of the states of the old USSR know when its time to get their cash out of the bank:

Ukraine tries to stifle mounting run on banks

Worried Ukrainians pulled money from banks today as the government headed into talks with an International Monetary Fund delegation about getting help with the country's financial troubles.

"There were these rumors and I decided not to wait," said Lyudmila Kudinova, 49, who withdrew 10,000 hryvna from her account at a downtown office of the Khreshchatyk bank today and immediately converted it into $2,000 in U.S. currency.

Prominvest, which has been taken over by the government, and Nadra, which has survived thanks to a government loan, have limited ATM withdrawals to $200, according to customers and bank officials.

Several Nadra ATMs had no cash in them today.

"Of course I am worried," said Svetlana, who declined to give her last name. She tried to withdraw 5,000 hryvna ($1,000) from an ATM at Raiffeisen Bank Aval in the center of the capital, but was limited to just 1,000 hryvna ($200).

Worried savers have withdrawn some $1.3 billion dollars since the beginning of the month.

Rushing to the bank

Now we see the start of a bank run - Russian style:

Run on Russian bank heightens fears

Globex on Wednesday banned depositors from withdrawing their money as confidence in the Russian banking system began to show signs of ­evaporating.

Globex, a mid-sized retail bank with assets of $4bn (€2.95bn, £2.32bn), is the first Russian bank to experience a run on deposits during the crisis. It lost 13 per cent of its deposits last month, according to Maxim Raskosnov, an analyst at Renaissance capital, and a further 15 per cent this month according to Emilya Alieva, Globex’s vice-president.

Globex confirmed that the ban on withdrawals had been in effect since Tuesday and blamed “demand from depositors, many of whom explained their wish to transfer their money to VTB or Sberbank”.

Whatever next... people wanting to withdraw their money from one bank and transfer to another. Whos money is it anyway?

Tatyana Sadovskaya, the director of a branch of Khnati Mansisk Bank in the city of Nizhnevartovsk, on Wednesday told Interfax news agency that in response to rumours of her bank’s insolvency: “People have formed long lines at cashiers and at bankomats, people are taking their deposits and closing their accounts.”

Another day, another queue.

Thursday, 16 October 2008

The ice has melted

First the Icesave account holders were unable to access their accounts... now their accounts have disappeared:

Icesave accounts disappear from website

Thousands of Icesave customers have been shocked to find that there is no evidence online that their accounts still exist.

Customers who need to claim back money will need to provide proof of the balance of their Icesave savings. However, those holding Isas cannot even find that proof online.

One Icesave customer said: "I have substantial savings with Icesave, having chosen the bank because of the good rate and its 'easy access' terms. Now, I can view the balance on one of my accounts, but my Isa appears to have vanished.

Maybe the bank has found a new way of not paying up - make the customers vanish.

Tuesday, 14 October 2008

Direct Action Video

Just found this video on youtube - direct action hollywood style!

REP Freedom Force Bank Run!

Saturday, 11 October 2008

Time to oil up the wheelbarrow

For some more background info on the underlying problems of the fiat money system have a read of this:

Confidence Is Leaving the Fiat Money System

Were it not for ever greater increases in central bank money and the market expectation that governments are about to make taxpayers shoulder commercial banks’ huge losses, the fiat money systems would presumably collapse right away.

Under fractional-reserve banking, banks keep just a fraction of their immediate payment obligations (basically sight deposits) in the form of cash. As a consequence, they cannot meet all their payment obligations should customers whish to withdraw their sight deposits all at once.

However, banks enjoy a privilege granted by the government. Central banks, the holders of the money supply monopoly, can provide banks with whatever amount of cash is needed. With central banks acting as lender of last resort, the chances for a bank run, initiated by private savers, have been greatly reduced.

When central banks form an international cartel — with the purpose of preserving the fiat-money system — domestic banks wouldn’t default, even if their payment obligations are denominated in foreign currency (which the national central bank cannot produce): central banks would simply lend money to each other.

So who are the major players in this internetional cartel... democratically elected representatives responsive to the needs of the worlds population... no i thought not. Seems like we have two possible outcomes: Total Domination or Hyperinflation.

The clueless will be left cashless

After The Market Crashes, The Bank Run Stampedes Will Begin

When people realize that the money they thought they had in the stock market is gone, when they realize that their credit lines have been cut and when they have no cash on hand left to pay for fuel, groceries or medicine there will be a stampede at your local bank. The first ones to get there and pull out some or all of their cash will get their money; the lazy, the ignorant, the socialized, the optimists, and the clueless will be left cashless.

Couldnt put it better myself.... dont be cashless.

Death Spiral

Ministers can throw our cash at crisis, but can't stop crisis

Last week we nearly saw a run on the entire UK banking system - an event only forestalled by Alistair Darling's rescue package on Wednesday. The chancellor is having a good war, so far. His unflappable calm - which I saw at close hand at a reception at Downing Street last week at the height of the crisis - is a real asset to the government. He must have known about the bank run as he nibbled canap├ęs with hyper-ventilating hacks. But he looked as if he'd just dropped in on his way to the opera. Not that he appeared complacent. No-one can accuse Darling of failing to appreciate the gravity of the situation because of that Guardian interview two months ago when he warned us this could be the worst financial crisis in 60 years. He was not wrong.

It's a sobering thought, but Alistair Darling will now forever be associated with one of the greatest economic catastrophes of modern times. His face will adorn every website devoted to the Great Crash of 2008. That curry he bought to feed his team on the night of the rescue has already become part of history as the "balti bail-out". Economists and historians will now assess his every move and word. Remember hapless Tory chancellor, Norman Lamont, outside the Treasury on Black Wednesday 1992 standing next to a dumpster and trying to sound calm while his hair was blowing in what seemed like a financial hurricane. Further back, Philip Snowden had the misfortune to be Labour's chancellor during the 1929 crash and Great Depression, and is hardly a congenial role model for Darling. Snowden imposed a fiscal crackdown and split the government, and the Labour Party, with his call to cut unemployment benefit. He never recovered. Let's just not go there.

... so benefit cuts on the horizon. Interesting to see that one play out in the uk.

UK saver survey

UK savers to put cash under the mattress

One in six UK savers are considering withdrawing their savings from their bank or building society, with some having already removed their cash for personal storage.

I was only going to post my survey once a week but see how the bankrun-o-meter has changed in 3 days:

Safe n sound

Savers vault from the banks to a safe place at home

Anthony Neary, a partner at Safe Shop, an internet-based sales company, said: “We’ve had three recent calls from people saying that they want to take their cash savings out of the bank and put it into a safe. One was withdrawing £50,000, another £10,000 and the other £4,000. I was staggered. But the last week has seen a sea change in public opinion.

For the rest of us - stuff your money under the mattress.

We want cash!

Selling frenzy persists

"We are not used to seeing stocks implode and Treasuries sell off," said Josh Stiles, senior bond strategist at IDEAglobal. "People are saying they don't even want to be in Treasuries now, they need the cash."

So now the investors are prepared to take a huge hit on their savings and are selling everything - even though the markets have fallen by 29% in the last 12 months.This week alone the FTSE100 fell by 21%. The same is happening in markets across the globe.

Better cash today than nothing tomorrow.

Wednesday, 8 October 2008

Bank confidence survey - LATEST

Iceland: £4 billion theft from uk depositors

Icesave: It is the smaller saver who stands to lose the most

But today for the first time, ordinary deposit holders, who have simply put their money in the bank, woke up to find they could no longer get their hands on their money – and more worryingly still, there are question marks over whether they will see this cash again.

So will the FSCS step in to help if Iceland is unable to meet its statutory obligations? At present it doesn't look like it. A spokeswoman for the FSCS said: "Icesave is not a British bank. We are obliged to top up the compensation to £50,000 but only above £16,000."

In other words if you have £50,000 in the Icesave – and Iceland's compensation scheme does not pay out – at least you will get £34,000 refunded. But if you have £10,000 or £15,000 in the bank you lose the lot.

Tuesday, 7 October 2008

Silent Running

UK Bank Clients Making ‘Silent Runs’ On Deposits

Banks have always lent more than their clients hold on deposit, leaving the risk that none would have enough cash to pay out if they all turned up at once. Back in the 1930s, depositors faced losing all their money if a bank collapsed.

Attilio Vianello, now 98, remembers how in the 1930s he had just started a job at Credito Veneto, a small bank based in Padoa, Italy, as the crisis spread beyond Wall Street to Europe.

"Banks were going bust from one day to another and the vast majority of people did not manage to rescue their savings because once they knew, it was too late. They would find the doors already shut," he recalled.

The electronic equivalent of this would be a server failure, or a Web site shutdown. But executives point out that in any silent run -- made possible by electronic money transfer whether through the internet or wholesale networks -- the most damaging aspect is the speed at which business customers can move.

Icesave web site is still down ... i think we can safely say that they are the first bank to go bust - 2008 style. See article below.

Ice Block 2

Imagine if your internet banking home page looked like this.... well for 300,000 uk depositors.... IT DOES!

Icesave savers warned on accounts

Customers of the Icesave internet bank have been warned they will probably have to claim compensation for money held in their savings accounts.

Icesave has 350,000 savers in the UK and Netherlands, with about £4.5bn of deposits.

So... no chance of getting your money out via normal means and depositors will have to wait until the icelandic government can find someone to lend them enough to put in the compensation scheme so it has some funds before there is any chance you will see your money.

Ice Block

So here we have it at last... depositors unable to withdraw their savings. Sounds like the runners are on the blocks:

Q&A: What now for Icesave depositors?

The 300,000 UK savers with £5 billion deposited in Icesave, the Icelandic internet bank, today found they were blocked from withdrawing any money from their accounts.

Q: When will I be able to withdraw my money?
A: Nobody knows.

Q: How likely is that scheme to be able to pay out, given the upheaval in the Icelandic banking system?
A: Good question. The Icelandic scheme has only £88 million in the kitty to cover deposits totalling £13 billion.

Q: What happens if the Government can’t pay the compensation bill?
A: An Icesave spokeswoman says that, as a last resort, three other Scandinavian governments - Sweden, Norway and Denmark - would back Iceland in an emergency.

If i was a financial advisor i would be telling ALL my clients to WITHDRAW ALL SAVINGS IN CASH immediately.

Monday, 6 October 2008

Iceland is melting

Never mind run on the banks... it sounds like people are starting a run on the supermarkets:

The party's over for Iceland, the island that tried to buy the world

On Friday the queues at the banks were huge, as people moved savings into the most secure accounts. Yesterday people were buying up supplies of olive oil and pasta after a supermarket spokesman announced on Friday night that they had no means of paying the foreign currency advances needed to import more foodstuffs.

Bankrupt banks.... and now bankrupt nations - where will it end?

Sunday, 5 October 2008

Learn to walk before you run

Walking - transferring savings from a deposit account in a high street bank to another bank perceived to provide greater security. Nationalised banks, post office accounts and foreign banks (esp. Irish) have all seen increases in new accounts.
Run - withdrawing savings in cash from a deposit account in a high street bank.

Brits rush to 'guaranteed' banks

No rush... only the wealthy out 'walking'!

Losing interest v losing savings

Savers losing out in flight to safety

Banks and the Treasury claim the move will cover up to 98% of savers, but that leaves 1.1m people above the threshold and they own at least 40% of deposits by value, according to investment bank Credit Suisse. This means some £500 billion of savers’ deposits remains unprotected.

In the midst of the worst financial meltdown since the Great Depression this token increase in protection by the Government looks feeble and inadequate. Confidence inspiring ?......quite the reverse. Comment by Anthony Fisher on the article above.

A case of too little, too late? in the area!

Sunday evening... feet up after a busy week(end) and heres one to mull over as we get ready to start the week:

Bill Hicks - It's Just A Ride

Happy crashing folks, enjoy the ride, you deserve it, you all forgot that you could delegate authority to the various “political leaders”, but you could never delegate responsibility, you are responsible for your own lives, regardless of how well meaning the political actor you backed could have turned out to be. Comment by w.smith on the article below.

Top story of the week

Smoke, mirrors ... and how a handful of missed mortgage payments started the global financial crisis

But underneath all the jargon is a fundamental truth about banking: that it is based on a kind of confidence trick. It's called "fractional reserve banking". Alone among commercial institutions, banks are allowed to create value out of nothing - in other words, they are allowed to lend out money they don't have.

A good article that explains how we have got to where we are.

Monday, 29 September 2008

Todays top story in the US

Your watching .....
And now its over to our correspondent with the latest on the top story in the US:

Bailout Bill Fails in House Vote Amid Defections in Both Parties

WASHINGTON -- The House of Representatives delivered a stunning defeat to legislation designed to rescue the nation's troubled financial system, sweeping aside a call from President Bush to "send a strong signal" of confidence to markets at home and abroad.

Seems Gordons Curse worked again!

After the vote, House Minority Leader John Boehner (R., Ohio) said there would be an effort to bring back another bill, with further changes. "We've got to find a true middle ground," he said. "We need everybody to calm down and relax and get back to work."

Well.. there you have it... you heard it first here on everything going to be allright... just calm down... relax... take it easy.... AND GET BACK TO WORK!!!

"These are the votes that separate the men from the boys, and the girls from the women," said Mr. Boehner, who choked up as he spoke.

Poor chap... its hard to lie and keep a straight face.

The measure was brought to the House floor after several days of sometimes testy negotiations, and a marathon series of talks over the weekend. The effort was spurred by Mr. Bush's surprise declaration more than 10 days ago that the financial architectural (sic) of the country was faltering, and in need of immediate repair.

Not sure if this is a typo or Georges typical incomprehensible utterings. By the way... who was surprised - George or the journalist?

Sunday, 28 September 2008

We need a New World Order

Just saw this ... havnt had time to read it all but sounds like this is what the games all about - Consolidation leading to Total Control:

We need a new Global Monetary Authority

The GMA’s board would have to include central bankers not just from the US, UK, the eurozone and Japan, but also China, Saudi Arabia and Brazil.

Democratically elected, representing all, providing sustainable finance..... no i didnt think so!

In terms of US and international politics, a Global Monetary Authority is probably an idea whose time has not yet come. That may change as today’s crisis evolves.

.... into something that not even the banking elite could have imagined!

This is the BBC in London...

It looks like the uk is on a war footing now as a new bank failure is announced first on the BBC:

U.K. to protect Bradford & Bingley; BBC reports nationalization

Prime Minister Gordon Brown and Chancellor of the Exchequer Alistair Darling ``have worked right through this weekend to sort out the problems we're facing,'' Hoon, a parliamentary officer, told Sky News today. ``I'm confident that in due course there will be a statement from the Treasury about Bradford & Bingley. We will act to ensure that the interests of depositors are properly protected.''

So Gordon and Alistair have sorted out all the problems over the weekend.... i wonder if they rembered to phone George?

A spokesman for the U.K. Treasury said discussions about Bradford & Bingley are ``ongoing.''

The Treasury dont know whats happening.

A voicemail message left on the cellphone of Bradford & Bingley spokesman Tony McGarahan today wasn't immediately answered. Late yesterday, he said the company was working with regulators ``to clarify the bank's future.''

And neither do B&B.

The spokesman was probably out looking for a new job.

Tip n Run UPDATE2

Seems like Fortis has allready 'gone':

EU, Belgian officials press to keep Fortis open

Phones at the bank and insurer went unanswered Sunday. Fortis has dual headquarters in Brussels, Belgium, and Utrecht, Netherlands.

And in the same article this is what it had to say about private bank accounts:

Marianne Thyssen, leader of Belgium's Christian Democrats — one of the partners in a shaky governing coalition — said offering deposit guarantees was necessary to restore faith in Fortis.
She told VRT television Sunday that "the current government stands behind, we guarantee that savings accounts are insured for 100 percent." Yet under Dutch and Belgian law, only the first €20,000 (US$29,000) in bank accounts are insured.

Sounds alot like they are trying to calm the masses!

PS Just heard that Fortis is Belgium's largest private sector employer and that approximately half of households bank with them. Sounds big.

Tip n Run UPDATE1

Never mind next week... my prediction of bank failure at Fortis seems to have developed faster that i expected:

With fate in balance, Fortis faces bailout or takeover

If a takeover proved impossible, "the Luxembourg government (would) take an important role in Fortis, the Belgian government would do the same thing and the Dutch government," he said. Luxembourg Budget Minister Luc Frieden.

The article also confirms the Bradford & Bingley story:

Amid concerns over Fortis, the BBC reported that British bank Bradford & Bingley would be nationalised soon and quickly sold to another bank or banks.

Suddenly everyone is nationalising their banks... what can it mean?

Anxious Minority

Latest bank failure in the uk over the weekend:

How to distribute the pain

Bradford & Bingley went down quietly. There were few queues outside the branches. The bank's staff turned out on Saturday to help the anxious minority of savers to withdraw cash.

Oh well... thats alright then. I thought for a moment that the nation's biggest lender to landlords had just gone to the wall!

Saturday, 27 September 2008

"We've got a ... retail bank run forming in this country" UPDATE

For more detailed information on the FDIC see this article:

FDIC May Need $150 Billion Bailout as More Banks Fail

FDIC's Secret List

The FDIC knows which banks are at risk; it has a watch list with 117 institutions. The agency won't disclose their names because doing so could cause depositors to panic and pull out all of their funds.

It won't take many more failures before the FDIC itself runs out of money.

“We’ve got a … retail bank run forming in this country”

The latest from the US.... not looking good:

Federal bank insurance fund dwindling (AP)

The Federal Deposit Insurance Corp., whose insurance fund has slipped below the minimum target level set by Congress, could be forced to tap tax dollars through a Treasury Department loan if Washington Mutual Inc., the nation's largest thrift, or another struggling rival fails, economists and industry analysts said Tuesday.

The reason that Washinghton Mutual was sold off cheaply to JP Morgan.

"We've got a ... retail bank run forming in this country," said Christopher Whalen, senior vice president and managing director of Institutional Risk Analytics.

Scare monger... or inside information? Time will tell.

Shouting "THEATRE" in a crowded fire

Heres a couple more stories on the bigger 'bank run' taking place in the financial markets:

Shouting fire in a crowded theatre

We are, in effect, suffering from a giant bank run, albeit on financial institutions that aren’t called banks — and aren’t regulated like banks.
Bank runs come in two kinds.
In some cases, the bank run is a pure self-fulfilling prophecy: the bank is “fundamentally sound,” but a panic by depositors forces a too-hasty liquidation of its assets, and it goes bust. It’s as if someone calls “fire!” in a crowded theater, provoking a stampede that kills many people, even though there wasn’t actually a fire.
In other cases, the bank is fundamentally unsound — but the bank run magnifies its losses. It’s as if someone calls “Fire!” in a crowded theater, and there really is a fire — but the stampede kills people who would have survived an orderly evacuation.
We’re in the second case. The Fed has spent the last 7 months trying to assure people that there isn’t any fire. But there is.

For a comment on this article see here.

Time to get your running shoes on!

Customers lose faith in the security of their bank deposits

Almost half of all Britons fear that their money is not safe in the bank

... and the other half are overdrawn!

Friday, 26 September 2008

Tip n Run

All financial blogs seem to be written by people who think they know whats happening in the financial markets so i thought that i would join the tipsters and try a bit of crystal ball gazing.
Trying to predict which bank will fail next - not easy - as they are all in dire straits!

Fortis takes a pounding as shares continue to plummet

Newspaper reports from Holland suggested Fortis would have to sell off some of its core activities to raise liquidity and there were also reports of a run on branches of ABN Amro, the Dutch consumer banking operations of which Fortis purchased last year.

The end of the world as we know it and i DONT feel fine

ECB’s Wellink who is in Chicago at a Chicago Fed conference had to cancel his speech and fly home – Fortis owns part of former Dutch bank ABN-Amro.

So there you have it - a bank share price at 13 year low... selling assets to raise liquidity.... and a big cheese in the European Central Bank hastily cancelling planned engagements.

Oh ... and theres allready reports of a run at some of its subsidiary bank branches. We will see how things go next week.

Fallen Heroes

Wa Mu fails, taken over by JP Morgan

The collapse of the Seattle thrift, which was triggered by a wave of deposit withdrawals, marks a new low point in the country's financial crisis.

Another day, another bank.

Wheres my money?

This crisis requires a radical solution - an ethical bank

Consumers are even worried about their bank deposits. Andy Hornby, chief executive of HBOS, admitted in a memo to staff that one of the reasons for merging with Lloyds TSB was that depositors were taking fright at the bank's share price falls and had started to withdraw their money. Before the Northern Rock debacle last September, Britain had not experienced a run on a bank since 1866. But consumers have now become so nervous that some started pulling their money out of Britain's biggest mortgage lender because of short-term volatility in its stock price.
While it may be a rational decision for one person to withdraw their savings from a weak bank, if everyone does it that bank is doomed. A run on a bank also exposes the myth at the heart of the financial system - our money is not there tucked up in an underground vault. Banks are not able to return everyone's money at once and if we do not maintain faith in them, the financial system starts to crumble.

When the runners start running theres nothing the bank can do!

Hong Kong Update

Hong Kong rattled as rumours trigger two-day run on the Bank of East Asia

Total withdrawals from BEA on Wednesday were estimated at HK$2 billion by analysts at DBS Vickers Securities – a manageable 0.7 per-cent of the bank’s HK$300 billion deposit base.

Banks have a required reserve ratio of funds to cover depositors withdrawls - most chinese banks have a 10% ratio so 2 billion of withdrawls is equal to approximately 7.5% fall... manageable or not?

Wednesday, 24 September 2008

Hong Kong Phooey

Heres some links to the story so far:

Snapshots of the Hong Kong Bank Run

Hong Kong bank mobbed by savers

Bank Run Watch: The Run on the Bank of East Asia

More later...

Warrens out...

Warren Buffett (US number one billionaire) has stopped selling private bank deposit insurance. Whats he worried about?

Berkshire Hathaway abandons bank deposit insurance

How much is in the kitty?

The Financial Services Compensation Scheme (FSCS) provides a guarantee to bank depositors for the first £35,000. They make a levy on the banks who pay into a contingency fund to cover payouts. This time last year (september 2007) there was only £4.4 million. So you had better be in the front of the line!

Heres some comments on the situation.

Anyone know how much there is in there now?


FSCS - what do you mean you havnt heard of it! read this now if you want to be up to speed. These are the people who say they will give you back all your bank savings (up to a maximum of £35,000) in less than 6 months .... SO LONG AS YOU DONT HAVE A MORTGAGE WITH THEM!

Memo to self - sell house, buy food.

How safe is my money?

Is your money safe? Read our Q&A

Gives a mainstream overview from the point of view of the bank depositor.

Background viewing #1

You tube - customers queue at Northern Rock (uk) 2007

You tube - Its a Wonderful World (us) 1930s

You tube - Northern rock Panic (uk) 2007

You tube - Uk bank crumbles further (uk) 2007

Look and Learn - it could be coming to a bank near you!

Background reading #1

This will help you understand the mind set of the people in charge (taken from a comment on this article).

... I've been helped by understanding Political Ponerology. This is a branch of psychology that brings together biology, sociology and politics to reveal the scientific method behind the madness. Ponerology was born out of the ashes of WWII and the subsequent totalitarian experience of the USSR.There are basic facts that all people of conscience need to grasp, fast. 6% of any given population are born genetic psychopaths. Bu then why do some fall under their spell and other not? The vast majority of 'paths remain undetected as they manipulate and plunder their way through human relationships consuming our emotional and financial energy. In this sense, they are 'successful'. They insinuate themselves into networks throughout society by sharp observance of our behaviour and mimick/act to get what they want: power over others - in fact, the pinnacle of achievement for a psychopath is TOTAL AND RUTHLESS DOMINANCE OVER 'THE OTHER'.Political Ponerology expands this dynamic out onto the societal scale to explain that periodically a concentration of psychopaths (thanks to negative selection - think 'Old Boys' Network' taken to its extreme) coalesces 'at the top' to form a 'Pathocracy' wherein 100% of key positions of a state are run by people who have a permanent and incurable deficit in their worldview.The USA is a whisker away from this becoming an open reality. Things will turn nasty. Americans must realise that their leaders are not really at war with an maginary 'Al-Qaeda': they are at war against Americans. The unwinnable wars are a diabolical strategy to kill off strong males that might get in the way of the 'Paths' conquests at home.How whave they done it? Through religion. Chris Hedges and Katherine Yurica have done great work to chronicle the rise of 'Dominionism'. Palin comes out of 25 plus years of programming that told her that she must be one of the 'Regents of God' who would take control of the planet at the end of times, in order to 'keep everything on ice' for Jesus, who is apparently on his way. Check out the Council on National Policy, the true power centre behind the GOP, from where Fundamentalist Christian ideologies like Dominionism were wedded to the financial elite through Pat Robertson and Ted Haggard. These men have long railed against the non-believers, warning that God would punish the sinning majority - now their dream is real.....


Inertia - the tendency of a body to maintain its state of rest or uniform motion unless acted upon by an external force.
Yesterday i posted this and today this happened.