Valuethinker wrote: ↑Tue Jan 12, 2021 7:31 am
dziuniek wrote: ↑Mon Jan 11, 2021 11:10 pm
Normchad wrote: ↑Sun Jan 10, 2021 5:36 pm
Nate79 wrote: ↑Sun Jan 10, 2021 5:23 pm
Hey, maybe OP will be right one of these days.
Apparently two significant crashes in year is not enough. Especially one where people thought the world was going to end due to the pandemic.
This is true. It was also true in 2008, where there was legitimate concern that the world wide banking system and all financial markets might collapse completely. The biggest, oldest, most successful names in American business were teetering in the edge, threatening to take out entire industries and everybody employed by them. The fear was very real.....
Oh, I am not sure the majority of people thought the world was going to end.
Then they were not paying attention. You could feel the fear in the streets of London.
My Dad's broker was with one of the largest and most conservative banks in North America (Canadian HQ'd). He told me that in late September, the feeling among the staff was that the bank was probably bust, but hadn't told anyone.
The largest financial institutions in the world (RBS was something like no 4 in assets, worldwide) were on the brink of insolvency. I had friends going up the High Street at the weekend after Lehman, and opening accounts at each financial institution, depositing £32k in each (the deposit insurance limit at the time). One opened 10 accounts in a weekend. That's how scared everyone was -- these were people involved with financial markets every day.
Congress kicked out the TAARP. Wall Street voted by dropping 8%.
Alistair Darling, the Chancellor, asked his civil servants how bad it could get, and was told (on a Friday) there would be no money in the RBS ATMs by Monday morning.
Gordon Brown, our Prime Minister, spoke from the steps of Reuters-- October 8, 2008.
We could summarise his speech as "Things are bad. They might get worse. We shall do what is necessary. Should that be insufficient, we shall do more".
An American columnist wrote "Did Gordon Brown just save the world?".
Markets rallied. A question was answered by Rep Frank on the floor of the House (apparently that has legal status in the interpretation of the law in court), answering in the affirmative re the use of the TARP (original intent only to buy mortgage backed securities at market price from the banks) as to general purchase of financial instruments. The money could be used to provide equity to the banks.
The banks issued stock and other equity instruments, and the governments of the USA, UK and other countries bought them. The solvency crisis was addressed. Gordon Brown would address the Eurozone ministers, the first non-member national leader ever to do so.
The aftershocks and the recession would be brutal, with long lasting political and economic effects we still confront today.
The Eurozone had yet to face the insolvency of Greece and its first existential crisis. That would come in the second wave.
But the system survived.
I hope never to live through such financial events again. It was our Crash of 1929. It was our default by Credit Anstalt in 1932. It was our money market panic of summer of 1914. It was our Mexico Crash of 1994. Our SE Asia Crash.