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Banking Problems Continue To Grow Rapidly

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As long as huge leverage exists the banks will have problems.

By definition all banks are insolvent because they can't pay everyone out on demand, no other companies are allowed to operate in this way.

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As long as huge leverage exists the banks will have problems.

By definition all banks are insolvent because they can't pay everyone out on demand, no other companies are allowed to operate in this way.

That's the way banks normally operate, and would be a liquidity problem.

What we have is a solvency problem.

That is, it looks unlikely that the banks can pay everyone out over any timescale, at all.

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That's the way banks normally operate, and would be a liquidity problem.

What we have is a solvency problem.

That is, it looks unlikely that the banks can pay everyone out over any timescale, at all.

That is correct.

Also, plenty of companies operate this way, though it's not always a good idea.

All banks have a liquidity problem... they only have to keep a small fraction of deposits as a cash reserve to pay depositors on demand. That's what fractional reserve is.

It's also the reason why a good bank can still be brought down by speculation that it's a bad bank... it creates a "run" on the bank where everyone tries to withdrawn their money at one, quickly exhausting the reserve.

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That is correct.

Also, plenty of companies operate this way, though it's not always a good idea.

All banks have a liquidity problem... they only have to keep a small fraction of deposits as a cash reserve to pay depositors on demand. That's what fractional reserve is.

It's also the reason why a good bank can still be brought down by speculation that it's a bad bank... it creates a "run" on the bank where everyone tries to withdrawn their money at one, quickly exhausting the reserve.

Trading whilst insolvent is a criminal offence for Company Directors. Most of the 'at risk' banks are trading in exactly that state!

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As long as huge leverage exists the banks will have problems.

By definition all banks are insolvent because they can't pay everyone out on demand, no other companies are allowed to operate in this way.

Exactly!!! The problem with the banks isn't one of liquidity but solvency.....as I suspect Santander will be finding out quite soon :unsure:

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Exactly!!! The problem with the banks isn't one of liquidity but solvency.....as I suspect Santander will be finding out quite soon :unsure:

...sure I read in the paper the other day that Santander are leading the pack for the RBS Williams and Glyns Branches in England....who decides on fitness ...FSA....or RBS...or anyone....?....and what is the latest on Santander..?.... :rolleyes:

Edited by South Lorne

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...sure I read in the paper the other day that Santander are leading the pack for the RBS Williams and Glyns Branches in England....who decides on fitness ...FSA....or RBS...or anyone....?....and what is the latest on Santander..?.... :rolleyes:

....any info on metro bank?

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....any info on metro bank?

..not mentioned in the final running...it's the new bank from the US opening 8 to 8 for certain higher segments of the market... has it opened first branch... ?...planned to be opposite High Holborn Tube station .... :rolleyes:

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  • 146 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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