Every so often an article will shed some light on what was going on while I was busy writing in the gloom of semi-darkness. I live out here in the cheap seats relegated to reading tea leaves, and squinting into the mist so it's nice to get confirmation from time to time as to how close to, or far from, the mark I was.
Here's an interesting article that just came out:
Revealed: Day the banks were just three hours from collapse
Britain was just three hours away from going bust last year after a secret run on the banks, one of Gordon Brown's Ministers has revealed.City Minister Paul Myners disclosed that on Friday, October 10, the country was 'very close' to a complete banking collapse after 'major depositors' attempted to withdraw their money en masse.
The Mail on Sunday has been told that the Treasury was preparing for the banks to shut their doors to all customers, terminate electronic transfers and even block hole-in-the-wall cash withdrawals.
Only frantic behind-the-scenes efforts averted financial meltdown.
If the moves had failed, Mr Brown would have been forced to announce that the Government was nationalising the entire financial system and guaranteeing all deposits.
And here's the conclusion of the Martenson Report I wrote and posted on October 9th [Note: I've moved the report out of the subscriber area so that anybody who is registered can read it]:
First, I want you to accept the possibility that the entire banking system could go into a form of financial cardiac arrest and fail to work properly. If this happens, uncertainty and fear will rule the day. Jobs will be lost, goods will grow scarce, and rumors will fly.
The most obvious impacts will be felt locally. Towns, municipalities, and states will have to navigate the loss of significant portions of their budgets. Services will be cut. Some stores and supply channels will not be able to operate, either because their cash flow got pinched and they went out of business as a result, or because their credit facilities dried up and prevented normal operations. Some goods will rapidly become scarce.
[...]
Let me close by saying that I fervently hope that this whole banking crisis blows over and does not result in you needing to draw upon any of the safeguards that I have laid out above. That is my most sincere wish.But as I see things now, the chance of a banking collapse and/or dollar crisis remains unacceptably high.
Do what you need to do. Do what you believe is right, and tune out the rest.
At the time I was unaware that the entire UK banking system was moments away from collapse, but I strongly suspected that something was badly out of kilter in the entire financial system due to the movements of several key financial stock prices (detailed in the linked report).
In a strange way, it's nice to know that I was not over-reacting, but was actually pretty close to the truth. Chalk another one up for intuition and luck!
At the same time, it's a bit unnerving to know how close we came to a systemic melt-down last October. I doubt the stresses are any less at the moment.
All the best,
Chris
This is a companion discussion topic for the original entry at https://peakprosperity.com/uk-banks-nearly-collapsed-2/