Sunday, 20 July 2008

INSIDERS AGREE: US BANK RUNS IMMINENT

I had a very interesting conversation today with a friend who used to be a mortgage broker (until the company he started imploded) and now works at a bank selling REO property. Now, this is a guy who made millions flipping, and when I told him two years ago that the whole house of cards was going to collapse shortly, he laughed at me.

He ain't laughing anymore.

I get on the phone with him, and he immediately tells me that his wife just got laid off from Indy Mac, so life is kind of sucking for them right now. Then he proceeds to tell me that both he and his wife (who have very close contacts at banks) have heard from reliable sources that the industry FULLY expect a massive run on savings and loans in the very near future. We're talking weeks, if not days. We are now officially on Banking System Deathwatch, ladies and gentlemen, because the next big bank that falls will be the domino that unleashes the runs on the other banks.
http://2cents.dailyreckoning.com/viewtopic.php?t=32386&sid=f241f792f18c48139fc2bf57a0edb34d

A wholesale run on the Banks would be disastrous for not just the US economy, but for the world. Stockmarkets everywhere will be slammed.

It's also very likely that we will see "civil unrest" in this event as people fight to keep whatever money they have saved.

One of the only ways of preventing such an event would be for the US government to insure the savings held in any US bank or nationalise any bank finding itself insolvent. This is tantamount to a taxpayer bailout for institutions that engaged in poor lending practices, but the alternative may be very ugly indeed- one that the US government will want to avoid.

[Posted at the SpookyWeather blog, July 20th, 2008.]

No comments: