May 20, 2012

WALTER RUSSELL MEAD: Voters, Depositors Could Bring Europe Down.

An invisible bank run is a hard thing to watch; not only is it less telegenic than the old-fashioned kind, one relies on numbers from official government agencies for statistics. How much money left the banking system today? How many banks need emergency liquidity to meet the tide of withdrawals? In the old days, reporters could and did watch lines form outside the banks and watch the armored trucks arrive with cash. These days it is happening anonymously and you only know what they tell you.

They are very unlikely to tell you the truth. Officials lie like rats in times of financial panic; they do it out of a sense of duty. They will insist that a given country will never leave the euro until the moment that it does; they will say that a deposit freeze is unthinkable until they announce that they’ve done it; they will tell you a bank is rock solid until the moment they padlock its doors. This is all for your own good, of course. They don’t want you to panic — and they want to make sure that your money is trapped when they take it away or turn it from gold into straw.

Bank runs, even virtual ones, are the method by which public fear can blow up the eurozone.

Indeed.

Comments are closed.
InstaPundit is a participant in the Amazon Services LLC Associates Program, an affiliate advertising program designed to provide a means for sites to earn advertising fees by advertising and linking to Amazon.com.