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I suspect banks are facing a bank rush from people

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Re: "government action including limits upon bank withd

Unread postby Duende » Mon 06 Oct 2008, 23:02:34

In times of economic instability like this, methinks cash in hand is better than digits on a computer. One is legal tender, one is... digits on a computer.
"Where is the man who has so much as to be out of danger?" -Thomas Huxley
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Re: I suspect banks are facing a bank rush from people

Unread postby Cloud9 » Tue 07 Oct 2008, 06:45:59

No problem pulling out $5,000 yesterday.
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Re: I suspect banks are facing a bank rush from people

Unread postby kevinr » Tue 07 Oct 2008, 07:32:34

My wife works for a top 20 largest bank in the U.S. She deals with business customers over 5 million in sales per year. This bank has setup a special "task force" to talk with people (her customers) wanting to remove large sums of money.

When they call and ask for their balance (say 500,000) and they'd like to withdraw (400,000 - pre-this weekend) to be under FDIC protection she makes a note and sends it to a special department. She does not know what happens from that moment forward.

Luckily her bank has very few "poison loans".
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Re: I suspect banks are facing a bank rush from people

Unread postby dauterman » Tue 07 Oct 2008, 07:56:08

Hi,

The generalized bank run is already underway:

http://www.rgemonitor.com/roubini-monit ... s_underway

I saw the writing on the wall months ago and already ran my own bank accounts. Now my $5000 is someplace safe, not in a bank. I am safe from a bank failure, but have to worry about hiding the cash someplace safe. So which is the better tradeoff?
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Re: I suspect banks are facing a bank rush from people

Unread postby Nickel » Tue 07 Oct 2008, 08:08:22

$this->bbcode_second_pass_quote('Cashmere', '')$this->bbcode_second_pass_quote('Sys1', 'A')ll right, I think I should have added that I'm french. Here in Europe, we have far less debts than americans.


Money?

There in Europe, you have debts that you can't repay with money.


Presumably you mean something like having one's entire nation founded on the fact that the French fleet prevented the redeployment of Cornwallis's troops to continue kicking it around for another two or three years, or fronting all the money necessary for the procurement of the weapons, provisions, and soldiers' pay to establish that nation in independence... the sort of existential debt that can never been repaid, no matter how high-and-mighty and big-for-one's-britches one might get in the meantime, no?

Yeah, it sucks when people forget things like that.
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Re: I suspect banks are facing a bank rush from people

Unread postby Arsenal » Tue 07 Oct 2008, 08:13:54

I ran mine as well but I have a safe so part of it is in there and another part is hidden. Just don't keep all your eggs in one basket and you will not have to worry as much about fire/theft. Cash on hand is definitely better than 1's and 0's. Gold and silver is also great with a lot of the other metal. Lead.
If the American people ever allow the banks to control issuance of their currency, first by inflation and then by deflation, the banks and corporations that grow up around them will deprive the people of all property until their children will wake up homeless on the continent their fathers occupied. T Jefferson
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Re: I suspect banks are facing a bank rush from people

Unread postby Nickel » Tue 07 Oct 2008, 08:15:07

$this->bbcode_second_pass_quote('dauterman', 'I') saw the writing on the wall months ago and already ran my own bank accounts. Now my $5000 is someplace safe, not in a bank. I am safe from a bank failure, but have to worry about hiding the cash someplace safe. So which is the better tradeoff?


Well, how much federal deposit insurance is the knothole in the tree you're stuffing the tubesock with your $5,000 into eligible for if Skidrow Sam finds it and nicks it?
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Re: I suspect banks are facing a bank rush from people

Unread postby Arsenal » Tue 07 Oct 2008, 08:19:00

$this->bbcode_second_pass_quote('Nickel', '
')Well, how much federal deposit insurance is the knothole in the tree you're stuffing the tubesock with your $5,000 into eligible for if Skidrow Sam finds it and nicks it?


None. And that is the risk you take when you remove your cash from the bank. Of course you need faith in the bankers and the government to honor that commitment. (Just ask an Argentinian who they would trust) In my opinion you need both.. Money in hand as well as money in the bank.
If the American people ever allow the banks to control issuance of their currency, first by inflation and then by deflation, the banks and corporations that grow up around them will deprive the people of all property until their children will wake up homeless on the continent their fathers occupied. T Jefferson
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Re: I suspect banks are facing a bank rush from people

Unread postby AgentR » Tue 07 Oct 2008, 08:32:51

$this->bbcode_second_pass_quote('Duende', 'T')here's not enough physical currency to go around.


If that were true; none of this would be happening; however, its not. If a bank needs more physical currency; they simply ask for it; and in the current climate the Fed *will* forward it along. Its not a limited commodity like gold, oil, or land; its paper; which the Fed prints to stay in accord with current demand.

As long as the digital bit dollar remains in existence it can be exchanged for a physical dollar; at worst you have to wait a couple hours for more physical currency to arrive.

This isn't the old '20s where a gold backed dollar was a limited, fixed commodity.

$this->bbcode_second_pass_quote('', 'F')or instance, imagine that the gov't does declare a bank holiday. No prob. But let's say that 'holiday' gets extended, and people start realizing that their funds are locked up in empty ATM's. Oh snap. Then, retailers only start accepting cash payments because


Exactly. Which is why there will not be a "bank holiday" as you call it. It creates more problems than it solves. While a "bank holiday" can do positive things when the currency involved has a physical backing that limits its availability and supports a real value; the modern currency is only valuable because people trust their ability to use it, and a bank holiday breaks that trust. Thus... not happening.

$this->bbcode_second_pass_quote('', 'E')ither way, if TSHTF I'd rather have hard cash in my pocket rather than a bank statement and a colorful plastic card.


Gold, silver coin, vegi oil, or gasoline in cans; yes. Unbacked paper currency and colorful plastic cards on the other hand, share the same value... *zilch*. No trust, no value.

Not to say people shouldn't have some amount of cash for times when power is down, or whatnot; but to think that cash is safer than your debit card is simply unrealistic.
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Re: I suspect banks are facing a bank rush from people

Unread postby Nickel » Tue 07 Oct 2008, 08:38:08

$this->bbcode_second_pass_quote('Arsenal', 'I')n my opinion you need both.. Money in hand as well as money in the bank.


I suppose, but the "gold and lead" attitude is a bit much.
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Re: I suspect banks are facing a bank rush from people

Unread postby Nickel » Tue 07 Oct 2008, 08:41:31

$this->bbcode_second_pass_quote('AgentR', 'G')old, silver coin, vegi oil, or gasoline in cans; yes. Unbacked paper currency and colorful plastic cards on the other hand, share the same value... *zilch*. No trust, no value.


Ultimately, it's a good point. But really, it's extreme. If everyone simply invests in survival and eschews cash, then the economy ossifies, liquidity vanishes, and we re-invent the 11th century by our own actions. "Fear itself", etc. etc.
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Re: I suspect banks are facing a bank rush from people

Unread postby HEADER_RACK » Tue 07 Oct 2008, 08:55:28

$this->bbcode_second_pass_quote('AgentR', '')$this->bbcode_second_pass_quote('Duende', 'T')here's not enough physical currency to go around.


If that were true; none of this would be happening; however, its not. If a bank needs more physical currency; they simply ask for it; and in the current climate the Fed *will* forward it along. Its not a limited commodity like gold, oil, or land; its paper; which the Fed prints to stay in accord with current demand.

As long as the digital bit dollar remains in existence it can be exchanged for a physical dollar; at worst you have to wait a couple hours for more physical currency to arrive.


Your statement is not accurate. The fed does not GIVE away physical cash for free. If a bank doesn't have enough physical cash on hand, they have to BORROW it from either another bank or the fed. This is called a LOAN. This also means they have to pay it back with intrest.
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Re: I suspect banks are facing a bank rush from people

Unread postby AgentR » Tue 07 Oct 2008, 09:34:32

$this->bbcode_second_pass_quote('HEADER_RACK', '')$this->bbcode_second_pass_quote('AgentR', ' ')they simply ask for it; and in the current climate the Fed *will* forward it along.


Your statement is not accurate. The fed does not GIVE away physical cash for free. If a bank doesn't have enough physical cash on hand, they have to BORROW it from either another bank or the fed. This is called a LOAN. This also means they have to pay it back with intrest.


Gee.... I don't see the word "give" in my text. I describe the physical process by which the currency moves to and from a bank. It is a guaranteed process under our system. It does create an asset on the Fed's books; and a liability on the banks book, and entails interest of the very low sort that is associated with these types of operational loans.

As long as the bank is operational; the fed will not say, "NO"; to this type of transaction; if a real run happened, and a bank went insolvent; the only interesting thing would be a few hours downtime as responsibility for deposits shifts directly to federal systems (insurance, etc) which continues the process in pretty much the same way, as far as your typical depositor can tell.

Now, if folks WANT their cash out; I don't really care; I'm just pointing out the fallacy that it becomes somehow safer. If the banks all go belly up; that paper you are so desperately interested in will be worth the same as an equal weight of toilet paper. I know I sure as heck won't trade any physical commodity for paper currency in such a situation.

Just ask yourself; if the banks are closed, and you have gas, oil, food, or whatever; would you be willing to trade that food for a gram or three of green paper that you can neither deposit, nor trust anyone else to accept?

At best you will trade for other physical assets; at worst, you'll seal the warehouse and sit on the roof with a rifle and wait to see how the economy reestablishes itself.
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Re: I suspect banks are facing a bank rush from people

Unread postby AgentR » Tue 07 Oct 2008, 09:39:08

$this->bbcode_second_pass_quote('Nickel', '')$this->bbcode_second_pass_quote('AgentR', 'G')old, silver coin, vegi oil, or gasoline in cans; yes. Unbacked paper currency and colorful plastic cards on the other hand, share the same value... *zilch*. No trust, no value.


Ultimately, it's a good point. But really, it's extreme. If everyone simply invests in survival and eschews cash, then the economy ossifies, liquidity vanishes, and we re-invent the 11th century by our own actions. "Fear itself", etc. etc.


I make that above statement in the context of a full run on the banks that takes them all to insolvency. The run causes the devaluation of card and paper alike; which is the point I'm trying to make in this thread.

The paper only has value because of trust.
The plastic only has value because of trust.
The digital bit in the bank only has value because of trust.

Any action that destroys that trust; destroys the value of all three equally and simultaneously.
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Re: I suspect banks are facing a bank rush from people

Unread postby AgentR » Tue 07 Oct 2008, 09:45:15

$this->bbcode_second_pass_quote('Nickel', 'P')resumably you mean something like having one's entire nation founded on the fact that the French fleet prevented...


You know, as much as we verbally beat on each other (US & France) we have served each others' interests very well, for a very long time. Sorta like brothers who are constantly beating the ****** out of each other; yet always manage to protect each others' long term interests against external threats.

PS: Shhh... I'm buying their wine again, but don't let'em know! :-D
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Re: I suspect banks are facing a bank rush from people

Unread postby Arsenal » Tue 07 Oct 2008, 09:51:22

AgentR,

While I agree, you are talking about one outcome. Lets try some different scenarios.

1. Market pops again and your bank fails. The FDIC swoops in and rescues all the assets up to $250,000 dollars and you are only inconvenienced by the loss of time. (Of course it is almost seamless).

2. Same as one but the FDIC can't/won't because they are stretched too thin. Best case is a lengthy delay in getting your funds back or worst case... Never.

3. Everything tanks. Fiat currency is worthless. Gold and silver are kings.

4. Total failure AKA Mad Max. Gold and silver are almost worthless. Gas, food, ammo are king.

Now #1 it makes no sense to take cash out. #2 does. You can't outright dismiss any of these scenarios because there is always a possibility of that happening. Diversify, Diversify, Diversify.

Cash in bank.
Cash in hand
Gold/silver in hand
Gas, food, firearms/ammo in hand.

If you have all four then I think you have lessened your overall risk of one of those taking you out.

I am not saying that what you stated is incorrect. Yes the Fed can prints/deliver all the money they want and a old style bank run is IMPROBABLE but not impossible.
If the American people ever allow the banks to control issuance of their currency, first by inflation and then by deflation, the banks and corporations that grow up around them will deprive the people of all property until their children will wake up homeless on the continent their fathers occupied. T Jefferson
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Re: I suspect banks are facing a bank rush from people

Unread postby Arsenal » Tue 07 Oct 2008, 09:54:30

$this->bbcode_second_pass_quote('AgentR', '
')I make that above statement in the context of a full run on the banks that takes them all to insolvency. The run causes the devaluation of card and paper alike; which is the point I'm trying to make in this thread.

The paper only has value because of trust.
The plastic only has value because of trust.
The digital bit in the bank only has value because of trust.

Any action that destroys that trust; destroys the value of all three equally and simultaneously.


Of course you type that before I responded. :) All of that is very true. Trust is what this whole system is dependent on. It was broken in the 30's and it took a long time to get people to trust banks again. Now they are everywhere in everything. Kinda scary to think about them failing.
If the American people ever allow the banks to control issuance of their currency, first by inflation and then by deflation, the banks and corporations that grow up around them will deprive the people of all property until their children will wake up homeless on the continent their fathers occupied. T Jefferson
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Re: I suspect banks are facing a bank rush from people

Unread postby AgentR » Tue 07 Oct 2008, 12:25:48

$this->bbcode_second_pass_quote('Arsenal', '2'). Same as one but the FDIC can't/won't because they are stretched too thin. Best case is a lengthy delay in getting your funds back or worst case... Never.


I don't so much dismiss #2; as I BELIEVE that your #2 results in the paper dollar becoming completely worthless; whether its in your bank, or in your hand, its most valuable use is as toilet paper.

Look at it from the merchant side, banks are going splat and FDIC is not stepping in and handling customer demands for cash.

Why am I going to give you a loaf of bread for the cash you took out last week?

Realistically, from a business side view, I can't do anything WITH that dollar you might wish to give me. I can't pay my taxes with it; I can't pay my vendors with it; even paying my employees with it would be a gigantic pain in the rear. All that stuff requires bank balances; not paper currency; and if the banks are going urp and NOT being kept open by FDIC intervention; the game is over.

At the absolute best, the paper dollar you might give me just makes my safe more tempting for thief morons that think those dollars will ever be usable again.

I'll say again; if the banks go down, and FDIC is unable to keep them running relatively smoothly; the dollar economy is *OVER*.
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Re: I suspect banks are facing a bank rush from people

Unread postby yesplease » Tue 07 Oct 2008, 13:13:22

$this->bbcode_second_pass_quote('Leanan', 'S')mall businesses are likely the ones pulling out their money. They are likely to be over even the new $250,000 limit, what with payroll, retirement fund contributions, insurance payments, etc.

They won't be putting it under the mattress, but they're probably trying to spread it around so they're not over the limit at any one bank.
So far, savings deposits, and deposits in banks as a whole, are up. W/ little easy credit, some people/groups have to save their money if they want to purchase stuff.
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Re: I suspect banks are facing a bank rush from people

Unread postby HEADER_RACK » Tue 07 Oct 2008, 14:19:07

$this->bbcode_second_pass_quote('AgentR', '')$this->bbcode_second_pass_quote('HEADER_RACK', '')$this->bbcode_second_pass_quote('AgentR', ' ')they simply ask for it; and in the current climate the Fed *will* forward it along.


Your statement is not accurate. The fed does not GIVE away physical cash for free. If a bank doesn't have enough physical cash on hand, they have to BORROW it from either another bank or the fed. This is called a LOAN. This also means they have to pay it back with intrest.


$this->bbcode_second_pass_quote('', 'G')ee.... I don't see the word "give" in my text. I describe the physical process by which the currency moves to and from a bank. It is a guaranteed process under our system. It does create an asset on the Fed's books; and a liability on the banks book, and entails interest of the very low sort that is associated with these types of operational loans.


I made my post for clarity. Someone not knowing would interpret your statement as a give away of money.

$this->bbcode_second_pass_quote('', 'A')s long as the bank is operational; the fed will not say, "NO"; to this type of transaction; if a real run happened, and a bank went insolvent; the only interesting thing would be a few hours downtime as responsibility for deposits shifts directly to federal systems (insurance, etc) which continues the process in pretty much the same way, as far as your typical depositor can tell.

Now, if folks WANT their cash out; I don't really care; I'm just pointing out the fallacy that it becomes somehow safer. If the banks all go belly up; that paper you are so desperately interested in will be worth the same as an equal weight of toilet paper. I know I sure as heck won't trade any physical commodity for paper currency in such a situation.


What happens if they don't all go belly up only half of them? Does the FDIC have enough cash on hand to cover half the banks in America? What if withdrawls of your cash were limited to a certain amount per day,week or month?
I think the cash I had on hand would be worth alot more than what you had in the bank.

$this->bbcode_second_pass_quote('', 'J')ust ask yourself; if the banks are closed, and you have gas, oil, food, or whatever; would you be willing to trade that food for a gram or three of green paper that you can neither deposit, nor trust anyone else to accept?

At best you will trade for other physical assets; at worst, you'll seal the warehouse and sit on the roof with a rifle and wait to see how the economy reestablishes itself.

There will come the day when that does happen and Joe six pack is pimping his wife and daughter for food, but not at first. First we will have a depression that will only get worse. In that time your cash will be accepted as a medium of exchange. When it does come time that cash is no longer accepted and you can only barter, the rule of law will be over.
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