Once A Run On Banks Starts….
by | Posted 6.26.2012 | Post Comment (No Comments)

There are many symptoms of the current European crisis. Some of the symptoms are also the causes in a very vicious cycle. The fact is that our whole system relies on confidence as I mentionned a week ago but also on a strong banking system. Why? Banks acquire money from central banks and depositors. They then put that money to use by lending money to small and bigger companies, to individuals, they invest money in the markets, help companies do merger & acquisition activity, etc. Without banks, there is no economy in much of the West. That is also why in the recent credit crisis (2008), the US and other governments had NO CHOICE but to rescue several banks. They did try not doing so with Lehman and it turned out to be a terrible mistake.

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