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Bank Crisis

A systemic risk in the banking system

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Banking 101 - Systematic failure

  • Mar 29, 2010
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I wrote about the huge sovereign debt the United States is blessed with. These are people who are supposed to be economists and the experts who know the root of the problem and how to deal with it. Well, during the crisis in the financial system in 2008, no one had any idea what to do with the system! None whatsoever! Not the legislative bodies, not the bankers and certainly not the speculators! It's one reason why Icelanders couldn't get money out of their ATMs for 3 days!

I worked in the financial sector then and I had a clear idea of what fear was during those 2 months in end 2008. Now, after having pumped so much money into the system, you'd think the financial system in the world is stabilized. Yet, when I asked myself about why the government keeps spending and where they are going to get the funds from to fund those spendings, I got totally confused again. I mean unless I'm an idiot (which I don't think I'm), the sums just don't add up! I was top in accounting at one time, this is a system that will not ever balance itself!

Frankly, I know the figures won't tally. But I don't understand why those governments think is a way out of it (destruction, I mean). Now, after listening to the videos below, I begin to understand. We are on the course for some kind of destruction unless we changed course now!

The entire monetary & banking system is one that's set to fail. With excessive greed and continual misconception of ever growing economies, we have easily misplaced our faith in the banking system. Our assumptions about loans and deposits are totally wrong to begin with! Instead of the government issuing money, it's actually the bankers who are fabricating money which they do not have & then lending them to others in return for promises to pay. The runaway debt money has gotten so huge to the extent that 90+% of the money supply in the world are in the form of debts! People simply have no way to earn the interest that are needed to service these debts. Just like the American government's predicament now! We then enter the cycle of having to increase the money supply constantly so as to keep interest rate low. 

Tell you what... it's crucial you understand how the banking system works as I'm very sure we are heading for an even bigger crisis in the near future. In order to do that, the video did a marvelous job of explaining and showing you what the entire subject of banking and the monetary system is all about. Go through it and I guarantee that you won't regret it! It's not just about leverage or CDOs or even the housing market. The real culprit? The banks & their thirst for profits! I worked in two of them before, trust me, I know what I am talking about!


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April 01, 2010
definitely a thought-provoking piece and nice work with the vids. I do think this one's not very fun to read because it is a very sincere expression. Nice work!
April 01, 2010
The day of reckoning may not be too far away...
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Sharrie ()
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I'm a traveler at heart & have been nicknamed Travel Queen by friends & colleagues alike. Traveling has been my life passion for the last decade or so. As we enter a new decade, I'm excited … more
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Banks are susceptible to many forms of risk which have triggered occasional systemic crises. These include liquidity risk (where many depositors may request withdrawals beyond available funds), credit risk (the chance that those who owe money to the bank will not repay it), and interest rate risk (the possibility that the bank will become unprofitable, if rising interest rates force it to pay relatively more on its deposits than it receives on its loans).
Banking crises have developed many times throughout history, when one or more risks have materialized for a banking sector as a whole. Prominent examples include the bank run that occurred during the Great Depression, the U.S. Savings and Loan crisis in the 1980s and early 1990s, the Japanese banking crisis during the 1990s, and the subprime mortgage crisis in the 2000s. Usually, the governments bail out the bank through rescue plan or individual public intervention.[11] 
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