Financial crisis
Oct. 4th, 2008 09:35 pm![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
franceslievensSo Dutch prime minister Balkenende declared the Netherlands will buy the Dutch Fortis assets. In one fell sweep Dutch minister of finance Bos said in front of the camera they were able to buy the healthy part of Fortis, leaving the Belgians to fend for their own, and use the Dutch money to start solving their problems.
The media can only take his word on this one. Belgian prime minister is left to try and restore trust – preferably before Monday.
The longer I look at this crisis, the more I see a self fulfilling prophecy unfold. While in first year at uni the 1929 financial crash was used as an example of a self fulfilling prophecy in sociology 101. The rumour that banks are unable to pay up savings creates a run on the bank, which is in fact responsible for banks running out of money, and not the other way around. The banks still had enough money to go around their daily business, but the rumour got the better of them.
These days I notice the same thing going on with Fortis. Share holders loose interest, dump their shares because they've become worthless, and the regular client rationally decides a bank in trouble isn't a plce where his or her money should be. Which brings the bank into even greater trouble. trust is what counts, but we only hear the negative sounds.
I've got most of my savings sitting in a Fortis account. (The rest is sitting in a Dexia account – that other plagued Belgian bank.) We're paying off a mortgage. Until now I have been able to rationalise in the opposite direction: the mortgage we still have to pay is bigger than what the bank owns us. My savings are nowhere near the magical threshold of the 20,000 euros you get paid back in case of bank failure. On top of that the mortgage contract will stand in case of bank failure. We'll have to do our down payments as usual. I'm not scared to loose my money. In fact I decided to spend more than save. This apartment needs some improvements and we've got a baby on the way.
What annoys me most though, is the constant speculation, bad rumours, and scaremongering going on in the media. No-one seems to know what the exact numbers are. Everyone has to be believed to their word. And the deeper analysis that generally concludes to sit tight and wait this one out gets snowed under. All we can hear and retain are the worst case scenarios.
The media can only take his word on this one. Belgian prime minister is left to try and restore trust – preferably before Monday.
The longer I look at this crisis, the more I see a self fulfilling prophecy unfold. While in first year at uni the 1929 financial crash was used as an example of a self fulfilling prophecy in sociology 101. The rumour that banks are unable to pay up savings creates a run on the bank, which is in fact responsible for banks running out of money, and not the other way around. The banks still had enough money to go around their daily business, but the rumour got the better of them.
These days I notice the same thing going on with Fortis. Share holders loose interest, dump their shares because they've become worthless, and the regular client rationally decides a bank in trouble isn't a plce where his or her money should be. Which brings the bank into even greater trouble. trust is what counts, but we only hear the negative sounds.
I've got most of my savings sitting in a Fortis account. (The rest is sitting in a Dexia account – that other plagued Belgian bank.) We're paying off a mortgage. Until now I have been able to rationalise in the opposite direction: the mortgage we still have to pay is bigger than what the bank owns us. My savings are nowhere near the magical threshold of the 20,000 euros you get paid back in case of bank failure. On top of that the mortgage contract will stand in case of bank failure. We'll have to do our down payments as usual. I'm not scared to loose my money. In fact I decided to spend more than save. This apartment needs some improvements and we've got a baby on the way.
What annoys me most though, is the constant speculation, bad rumours, and scaremongering going on in the media. No-one seems to know what the exact numbers are. Everyone has to be believed to their word. And the deeper analysis that generally concludes to sit tight and wait this one out gets snowed under. All we can hear and retain are the worst case scenarios.
