Frequent content contributor SJC suggested this article by Michael Panzner: The Time to Panic is When Those in Charge Say “Don’t Panic”. JWR’s comment:The bank run that Mr. Panzner mentioned (at Northern Rock–a mortgage lender in England) could very well spread to other banks primarily associated with mortgage lending, and then in a worst case, if a fevered bank run ensues, all banks. Here in the States, the public’s trust in the FDIC and FSLIC insurance will probably slow any bank runs, but the end result may be long delays before deposits can all be paid out, and even lengthier delays while the Treasury cranks up the printing presses to print up the requisite cash. (With a fractional reserve banking system, only a small fraction of the total deposits exist in the form of printed cash money.) Yes, Uncle Sugar can eventually make good on their bank insurance promises, but they will have to print mountains of $100 bills to do so. In a worst case situation you might only get a cashier’s check, and then have no place to cash it. Following any widespread bank runs, once people have lots of cash in hand they will understandably want to convert some of it into tangibles. Thus, big bank runs will be highly inflationary at the consumer level. Fundamental market laws are inescapable.
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From SHTF Daily: World’s banks hit for $30 billion in credit crunch
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Found at The Economist web site: Still hanging on–How far, and how fast, will the dollar fall? The article begins: “For several years, the darkest scenarios for the world economy have involved a dollar crash. The script was simple. America’s dependence on foreign capital was a dangerous vulnerability. At some point foreign investors would refuse to pile up ever more dollar assets. If investors were spooked, say by a crisis in American financial markets, they might ditch dollars fast. The greenback would plunge. A tumbling currency would prevent the Fed from cutting interest rates, deepening and spreading the economic pain.” Gee, this sounds a lot like a novel that I once
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Steve in Iraq forwarded us this link Former Fed Boss Says Euro Could Replace U.S. Dollar As Favored Reserve Currency. Meanwhile “Mr. Magoo” Greenspan was also quoted by The Daily Telegraph, as stating that Britain is in some ways more vulnerable U.S. real estate market. Specifically, Greenspan said; “Britain is more exposed than we are – in the sense that you have a good deal more adjustable-rate mortgages.”