Okay, who knows if it’s time, but I know some people are making large savings withdrawals from their bank accounts and holding the cash.
The world (and the economy) seem to be getting more and more sketchy by the day. I’m going to buy a cheap, fireproof mini-safe, something just big enough to hold a few documents and cash. The banks are seriously starting to worry me, and the public’s potential response to what may be a nasty fallout concerns me even more. Will there be a run on banks with a subsequent government forced bank holiday?
Dunno, but if everyone went to the bank for cash today, there’s no way the banks could handle it. It’s like if everyone went out today and topped off their gas tanks. Every station would go dry. It’s like a self-fulfilling prophecy. Everyone fears a run, so everyone runs, thereby creating the run they feared.
I’m going to withdraw some of my savings. I recognize I could be part of the problem, but if I slap some cash in a box then I KNOW I’ll have access to it. I represent the fear driven run on the banks – lol. Is that wrong, am I part of the problem? Dunno, but read this from a CNBC article entitled “Brace Yourself (And Look to Cash)”:
Unless the banks are willing to step up to the plate and make loans to healthy business and worthy individuals, they will only add to an already dreadful situation. Right now the banks are hording their cash because they have no confidence in the value of the assets backing their existing loans.
That’s another way to look at it: the banks are hording cash. Translation: they’re holding OUR cash. I’d rather hold my own cash in this market – thanks. Here is another choice quote from the same article:
How long this state of affairs will last is a function of how long it takes the world to deleverage. And deleveraging is a deflationary event. That is not good for economies, for profits, for the prices of assets and that includes the price of one’s home. The stock market does not work well in a deflationary environment. The only thing that looks good in deflation is cash. And right now cash is looking pretty good to me.
Besides early childhood Soviet nuke juice exchange fears, this is the sketchiest time I’ve seen in my life.
Are YOU happy to read the doom and gloom at this blog? I sell fear for Paypal donations. Suggested donation: 5-10 bucks depending on how rich you are (also accepting Amazon shopping) :-).
There is one upside to this dramatic turn in the economy. Oil and energy costs are going down as there will be less demand in a recession. The recent rise in oil prices were due in part to investors flocking to crude and away from the dollar, but now many see the U.S. ahead of Europe in dealing with this crisis, so the euro is heading down against the
dollar buck. A declining oil price will ease fears of inflation.
The Russian economy is also taking a major hit. Should oil prices keep dropping Russian, Venezuelan, and Iranian profits will tumble. So lets think about this mess a different way: should oil keep going down these countries take a hit and inflation will stay in check. So long as this isn’t TEOTWAWKI, you keep your job, you don’t need to borrow money, and you don’t need a 401k for retirement in the next few years, you could come out of this sitting just fine.
– Ranger Man
BTW: related links:
As Global Markets Plungs, How Bad Can Crisis Get? – choice quote:
“We’ve got such an extreme amount of fear and angst in this market, you would expect we would see a bottom getting put in and we would move a bit higher for a period of time,” says Twibell of Colorado Capital Bank. “I’m not sure when we get that.”
Cramer says if you have money that you’ll need in the next 5 years, and it’s in the stock market, take it out now (video link)
Here is one more – a very good UK article – Germany takes hot seat as Europe falls into the abyss – choice quote:
Japan entered its Lost Decade as the world’s top creditor, with a vast pool of household savings to cushion the slump. America starts its purge with net external liabilities of $3 trillion, and a savings rate near zero. Foreigners own over half the US Treasury debt, and two thirds of all Fannie, Freddie, and other US agency bonds.