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A Virtual Shot Across The Bow?
The end of virtual banking may be very abrupt and NOBODY is prepared for it. The entire concept of using electronic 0's and 1's in a computer hard drive as money is patently ridiculous! Yes, those Tulip people from the 1600's would even laugh at our monetary system these days!
So news this week of a huge "outage" from RBS related to customers being able to access their electronic blips is more than a warning shot across the bow. It may have even been a TEST to see how people would react.
Millions left without money as RBS systems crash
http://www.telegraph.co.uk/finance/newsbysector/epic/rbs/9914242/Millions-left-without-money-as-RBS-systems-crash.html
"Up to 17.5 million RBS banking group customers were left without their money last night as the bank's systems crashed."
"People claimed that they had been left stranded, hungry and embarrassed as they were unable to access their own money and had their cards declined."
"Stephen Hester, the chief executive of RBS, which is 80% state-owned, was forced to apologize last June after millions of customers were left unable to view an up-to-date balance, move money or pay bills for days after a software update."
"Natwest whole system is down! No ATM's, no online banking and cards WILL be declined. Just found that out the hard way. Pls RT."
People are in for a life altering shock very, very soon as it will not be a test but rather a CONSEQUENCE of keeping your "money" in an insolvent institution called a BANK! Even the solvent ones will shut down because they are so interconnected to the banking system.
For example, when "Big Bank A" messes up their derivative book to the tune of a few trillion dollars all the counter-parties will be out of luck as well. This in turn erases the accounts of all depositors in Big Bank A as they have lost more than the money you lent them. The bank then tries to save itself by selling liquid assets that were levered 20-1. This in turn decreases the value of these assets and other banks are forced to do the same to maintain the minimum Tier 1 capital ratios further devaluing the assets for sale. And on and on.
Even though "Little Bank B" didn't even play in those Big Bank derivative games...all their customers are effected in other ways as the ripple effect goes round and round. No longer can their customers pay Little Bank B because all of their interconnections are effected by the banking chaos. Soon Little Bank B gets caught up in the rush for liquidity and does the exact same thing as the other banks to gain liquidity then customers fear for their "assets" and bank runs pick up pace.
No leveraged bank can survive a bank run and there are no unleveraged banks.
Voila...no more electronic blips.
The notion that you can close up one of the mega banks without a major government bailout is ridiculous.
So in the end it comes down to: WILL WE BAIL OUT THE BIG BANKS AGAIN?
I doubt it.
Continue Reading at.... http://src-fla.us/index.php/news2e629/78-news-articles/143-bix-weir-friday-roadtrip
