What Happens When the Banks Close Their Doors?

The following articles dealing with banks are all less than three weeks old. While we are focusing on the emergence of “Democracy” in Egypt, a global financial collapse is ignored and our stock market seems to be unstoppable even though the daily trading volume is less than half what it was in 2008. Spain, Portugal, Italy and Iceland banks were not included below since their bank crisis is well documented. I included Ireland to show the relationship between bank failures and elections. The cost of food and energy becomes irrelevant when the banks close their doors.  


FSC orders 6-month business halt to Busan, Daejeon banks

The Financial Services Commission on Thursday suspended operations of two savings banks as part of its ongoing restructuring of the secondary banking sector hit by toxic construction debt.

It also announced plans to provide a nearly 20 trillion won ($18 billion) credit line in support for other viable institutions.

The regulator said it halted businesses of Busan Savings Bank, the No. 1 in the industry in assets, and its subsidiary Daejeon Savings Bank for six months until Aug. 16.


Ivory Coast

Ivory Coast Banks, Stock Exchange Close Amid Bank Run

Ivory Coast’s financial system is grinding to a halt with banks closing and the stock market suspended, sparking a run on the lenders left open as the West African nation’s political crisis drags on.

Standard Chartered Plc, Citigroup Inc., BNP Paribas SA and Societe Generale SA have all closed their units in the world’s top cocoa producer because of security fears after a disputed Nov. 28 election left the country with two rival administrations.


United Kingdom

Taxpayers ‘subsidising banks by £30bn a year’

British taxpayers are subsidising the banks by more than £30bn a year on top of the vast state bail-out package extended during the financial crisis to prevent their collapse, according to a new report.

The New Economics Foundation (NEF) has calculated the value of the implicit Government guarantee, the fees charged on the emergency measures taken to stabilise the economy, and the excess profits taken on loans since competition in the market collapsed.

It says the figure is “at least” £32.5bn using “conservative” estimates. Publication of the report comes the day before Barclays kicks off the banking reporting season on Tuesday, when the high street lender will inflame public anger by unveiling around £2bn in investment banker bonuses.



Irish Bank Crisis Is Dominating Elections

Allied Irish Banks, p.l.c. (NYSE: AIB) has been in trouble from top to bottom from the financial crisis. Things have become dire enough that now the bank has listing issues. The bank noted today that in order to maintain an appropriate price range for its American Depositary Shares, it intends to change the current ratio of one ADS’s current representation of two Ordinary Shares to each ADS representing ten Ordinary Shares. In short, it is declaring a 1-for-5 reverse stock split.



Afghan bank crisis clouds future European aid-EU

European donors will have to review their commitments to Afghanistan if a fraud crisis at the country’s top private bank is not resolved satisfactorily, Europe’s top diplomat in the country said on Wednesday.

The International Monetary Fund (IMF) has painted a grim picture of the Afghan government’s handling of the Kabulbank crisis, other diplomats told Reuters, an assessment that could lead to the fund deciding not to renew its support programme for aid-reliant Afghanistan.

Corruption, bad loans and mismanagement have cost Kabulbank hundreds of millions of dollars and the government’s inability to come up with a serious solution has caused growing concern among Afghanistan’s international partners.


How much time do we have? This is dependent on the country and the banks current financial health. The following report from Davos explains the reasons and time frame on a world wide scale:

Bubble creation

Based on favorable demographic trends and continued liberalization,  the growth story for emerging markets was accepted by almost everyone. However, much of the economic activity in these markets was buoyed by cheap money being pumped into the system by Western central banks. Commodities prices had acted as a sponge to soak up the excess global money supply, and commodities-rich emerging economies such as Brazil and Russia were the main beneficiaries.

High commodities prices created strong incentives for these emerging economies to launch expensive development projects to dig more commodities out of the ground, creating a massive oversupply of commodities relative to the demand coming from the real economy. In the same way that over-valued property prices in the US had allowed people to go on debt-fueled spending sprees, the governments of commodities-rich economies started spending beyond their means.

They fell into the familiar trap of borrowing from foreign investors to finance huge development projects justified by unrealistic valuations. Western banks built up large and concentrated loan exposures in these new and exciting growth markets.


David DeGerolamo


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2 Responses to What Happens When the Banks Close Their Doors?

  1. Pam Reynolds says:

    Thanks for posting. I had no idea and this is real bad news. Wall Street is for sale too and it may go to German buyers. Alot of our American icon businesses are now owned by other countries.

  2. Larry Porter says:

    The fact all these countries’ banks are in trouble for basically the same reason shows the power of the operatives in this country. They control the world financial system, make no mistake. They are dictating the terms and are now very close to collapsing the entire world financial markets. Then they will be in place to dictate the kind of government they want, which won’t be a pretty picture for any freedom lover. As for the politicians, they know not what they do, seeking their insatiable taste for power.

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