Quote:
Originally Posted by Chrysalis
I never said all banks go bust, some were in a healthy state and would be there to take the customers who need a new bank, so we would still have a banking system. I hope you realise the problem in having a profit making machine that knows it cannot be allowed to go bust, having the garuantuee of been bailed out.
|
The banks are so interlinked that if one or more of the big ones goes under so do most of the rest.
There is little isolation in the banking network on either a countrywide basis or internationally. There is still an unknown sized elephant in the room called CDS (credit default swaps) which are highly leveraged traded instruments which are guestimated to insure the potential of sovereign debt failure for trillions. The sweat over the Greece situation is how to stop the triggering of those globally interlinked deals which are what has been described as weapons of mass financial destruction. The banks are into these instruments up to their eyeballs and beyond. They do not even know how big their risks are and would only know when the pass the parcel started with telephone number sized claims swirling around.
I like your idea that the few banks that would remain would be able to facilitate those who were in a bank that went bust. Not a lot of need for a bank if all your money has vanished into the ether.
Of course I know the problems of having a profit making machine that cannot go bust and thought that I had more than covered that in my post. You may not like and I do not either but the reality is that unless we (the government) bails out the losers we have a choice of lose a lot or lose it all.
You may wish to think the implications through a little more before assuming that all will be well if banks are allowed to go under. Savvy people have spread their money to take advantage of the government's assurance scheme for underwriting bank risk of failure to individuals. I haven't checked recently but I think its 90% up to £85K person per institution. Billions paid by you and I would go to those people if there was a collapse. There is no way out but to grin, bear it and hope that somebody sorts out the mess.