Seems that i’m a couple of months late on the old, ‘this feels dangerous’ business with British banking.
Lord Myners, the financial services secretary, said the bank system came close to collapse last October, before the government’s £500bn rescue package.
“There were two or three hours when things felt very bad, nervous and fragile,” he said. “Major depositors were trying to withdraw – and willing to pay penalties for early withdrawal – from a number of large banks.”
It appears that the BBC have edited his remarks, as elsewhere the “major depositors” are linked to New York and Tokyo.
Makes you wonder what kind of guarantees they had to be given in order to convince them not to remove their funds. The trouble with this game is that, like a Ponzi scheme (how about that?!) once it starts to unravel it will be fast, furious, and essentially unstoppable. The failure of one UK / US bank will bring down a couple of others, and the collapse of those, five more… if it makes it to ten, the whole system would likely fail.
Interesting time to be in government – essentially held hostage to the whims of capital movements. Lots is being written now about the unique problems of the UK state due to the relative size of the banking system. Can’t see the americans bailing out the UK (remember what happened after WWII?) so it might soon be time for another trip to the IMF.