The Great Depression of 2006: Cash Only
Jim in San Marcos explains that it's probably not the banks we need to worry about, but the financial entitities that are NOT covered by Federal deposit insurance.
And Karl Denninger also details other areas threatened by financial contraction.
4 comments:
Yes, the non-banks will go down first, one would have thought. Aren't we morbid today?
No, they won't all get scalped!
How are we defining a bank? 'A financial intermediary that takes short term deposits and lends on longer term thus transforming the temporal and risk structure of their liabilities and assets' was the best generic deinition lunch could come up with. Slippery things, banks.
Long-term, it seems the best business is to be a bank. But if I understand "Jim", it seems that as bank depositors have some protection, they're less likely to have their deposits hoovered out by panicky investors, than investment funds.
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