Impending Economic Turmoil: Banking Bailouts, Bank Runs, and Crashes

by | Sep 14, 2023 | Bank Failures | 43 comments




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Banking: Bailouts, Bank Runs, and Crashes Incoming!

The global financial crisis in 2008 has left a lasting impact on the banking sector, rattling the trust and stability of the global economy. This unprecedented event sent shockwaves across the world, but it also shed light on the intricate workings of the banking industry. Bailouts, bank runs, and crashes came into the limelight, introducing terms that were once considered arcane to the general public.

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Bailouts have become a common feature in the banking sector. In times of financial distress, governments and central banks often step in to support troubled financial institutions. They do so by injecting substantial amounts of capital to help stabilize the bank’s operations and prevent it from collapsing. The rationale behind these bailouts is to prevent a domino effect that could cause the collapse of numerous interconnected banks, which would have severe repercussions on the entire economy.

However, the concept of bailing out banks is not without controversy. Critics argue that such interventions enable moral hazard, as banks may feel less inclined to manage risks effectively if they know they will be rescued in times of trouble. Additionally, using taxpayers’ money to save failing banks raises legitimate concerns about fairness and equity.

Bank runs, another disastrous event, have plagued the banking industry throughout history. A bank run occurs when depositors rush to withdraw their money due to fears of the bank’s insolvency. The fear can spread like wildfire, leading even rational depositors to join the queue for withdrawal. This sudden and massive loss of funds can quickly deplete the bank’s reserves, triggering its collapse.

Bank runs were much more common in the past when banking regulations and deposit insurance were less prevalent. Today, deposit insurance schemes exist in many countries, offering protection to depositors and increasing confidence in the banking system. Governments provide coverage up to a certain limit to ensure individual bank failures do not result in financial chaos. However, it is important to note that the insurance coverage is limited and may not be enough to cover the entire amount if multiple banks collapse simultaneously.

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Bank crashes, on the other hand, are a culmination of factors that lead to the complete downfall of a financial institution. These crashes may be triggered by a wide range of issues, such as reckless lending practices, inadequate risk management, or exposure to external shocks. The collapse of large banks can have a systemic impact, affecting not only the banking sector but also the real economy.

The aftermath of a bank crash is often chaotic, characterized by massive job losses, liquidity shortages, and a credit crunch. Governments are then faced with the difficult decision of whether to bail out the bank, nationalize it, or let it fail. Each option comes with its own set of consequences, and policymakers must weigh the potential costs and benefits to the wider economy.

In conclusion, the 2008 financial crisis exposed the vulnerabilities of the banking industry and brought several terms into the public spotlight. Bailouts, bank runs, and crashes all have significant implications for the financial system and the overall economy. Governments and regulators must walk a tightrope to strike the right balance between preventing systemic risks and encouraging responsible banking practices. The lessons learned from past crises can guide institutions into a future where the banking sector remains stable, resilient, and capable of weathering the storms that may lay ahead.

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43 Comments

  1. Joe Filson

    FDIC, Didn't know they had a limit on their books! That changes, by a large factor, how I feel about bank's securities.

  2. Kim Collier

    The animals don't believe in daylight savings, nothing has really changed for me

  3. Joy David

    I rarely disagree with you, but you are wrong to take on the masks of loads of others in speculation. Untruth, and the general teartalk.

  4. Clifford Payne

    These “Faux-Paux” bank issues are just another tool to usher in the “Mark of The Beast” system! This digital system will force compliance to those on SS, SSI, and any and all SNAP programs and Medicaid or Medicare! Refuse, and you’re gonna starve to death, get thrown off your property cause you can’t pay your real estate taxes, etc! We’re living in both exciting and terrifying times folks! Get your gardens out if ya can, after these banking problems, the grocery shelves will be targeted next by the Powers that Be! Blessings….

  5. Jack Ibrahim

    You will own nothing and be happy.

  6. Sixshooter 45

    Watched videos where the SVB may get bought out for .60 on the dollar.

    Still a slight possibility of a bail-out.

    First Republic Bank shares went way down on Thursday so many people were in line trying to get their money out of that Bank.

    These upcoming two weeks will be interesting, to say the least.

    U.S. sent a 52 bomber, which is capable of carrying nukes, flying close to Russia borders letting them know we are willing to use nukes which could possibly cause a first strike from Russia.

    Our Government is totally out-of-control.

  7. Tdog

    I prefer it getting dark later. Gives me time to work outside after work. I hate it being dark by 5pm when they switch it back. More opportunity for thieves, civil unrest at night when dark at 5pm.

  8. michale539

    March 12 (Reuters) – State regulators closed New York-based Signature Bank (SBNY.O) on Sunday,
    The U.S. Treasury Department and other bank regulators said in a joint statement on Sunday that all depositors of Signature Bank will be made whole, and "no losses will be borne by the taxpayer."
    Reuters article today titled "Regulators close New York's Signature bank, say depositors will be made whole"

  9. Debbie Riddle

    I've seen online today, many people saying they have been going to their ATM's over the last 2 days, getting the maximum they can get out of their banks.
    There is no telling what's going to happen.

  10. 500grain

    Signature Bank just went under the third largest bank in US to go under.

  11. TVT

    Signature Bank was shut down today. Tomorrow is going to be interesting.

  12. RJ L

    I will be convinced when the avg. Joe is directly affected. So long general paychecks are payable, .., bank collapses are linked to the upper level of the 5% earners.

  13. 500grain

    For an entire week in March 1933, all banking transactions were suspended in an effort to stem bank failures and ultimately restore confidence in the financial system. This could be part of there solution.

  14. 500grain

    Yellen has already made the statement that there will be no bailout of SVB

  15. Suen

    Why aren't they meeting today and wait till tomorrow?

  16. ColinM

    This morning, I said to my wife: "you look like a million bucks!"

    "All green and wrinkled!"

    I'm sleeping in my car tonight.

  17. John D

    The officers of the bank saved themself. I so glad they put themselves first, ahead of their customers and employees.

  18. Rosanna Magnisi

    Yeah, they have to crash the economy so they can bring in the new system. Oh, and isn't there supposed to be an incoming object tomorrow? lolol

  19. John D

    How can there be a bank run, when its reported that the average person cant afford a 500 dollar emergency. They dont even have 500 dollars in the bank.

  20. John D

    I bet if I go to work tommorrow morning 3/4th of the people will have no ideal this happened. Remember when they said that the Chinese real estate fund ( cant remember the name) was going to cause a depression and housing prices to collapse a few months ago. Nothing happened. Nothingburger. I'm sure this will be the case. here.

  21. John D

    The FED keeps around several trillion dollars ( around 12 trillion) in physical cash in its underground vaults in various locations thru out the Coubtry for economic emergency. They can transfer that cash money to banks to cover deposits . As seen on the History Channel a decade ago. This is money to jump start the economy in case of some disaster.

  22. MikeHacker

    Get your money while you can…

  23. MikeHacker

    It needs to just collapse

  24. N3M3S1S

    So much for the governmental and banking industry "Stress Tests".

  25. M

    Silvergate Bank a crypto space bank collapsed before SVB. Crypto space is being affected also.

  26. M

    If anyone has a HELOC, and you need the money, get it tomorrow. Put it in your account. In 2008 banks withdrew lines of credit even for individuals with great credit. Think ahead.

  27. Neverette Brakensiek

    I hate to do it but SS check needs to go back in the mail. I guess that too is risky being the postal service is crap now. But what if your bank does fail, then what happens ? Would they just auto begin to mail them and how long would it take before they figure it out ? UGH

  28. Simpleman56

    A conspiracy theorist might think that the fuss from the folks over this, could be excuse for marshal law…

  29. Joyce Alphin

    You are right on

  30. Mi Be

    Is anyone really surprised? Everything is in commotion. Good advice from Travis! We can’t imagine all the things that could happen.

  31. Rick Walters

    Heard Elon Musk may buy out and possibly use the bank use with Twitter to start the ball rolling with .. digital money..plus he could have access to the start up tech business depending upon the money the bank ..had .. did eat..did drink..they bought.they sold..they planted..they builder.. majority..oh yawn..we've heard this before.. Bible tells..warns of the mark of the beast..how serious does it have to get before..you get serious..

  32. Mi Be

    Silver, gold, guns, ammo, land, food. Forget Banks!

  33. DJ

    This has been coming for a while.

  34. Spin Cycle

    Poor California democrats

  35. DJ

    Think about it,SVB Bank deposits was large companies. If the FDIC cannot bail out all the bank deposits because they don’t have the funds what’s to say they know most banks will fail so SVB goes ahead and fails so these big companies get their deposits back leaving nothing for the average people like us. Get your money out now!

  36. Craft Eccentricity

    I feel sorry for the Etsy sellers who won't get paid. Perhaps we'll see a rebirth of more local markets

  37. No More Libs

    Believe nothing you hear, half of what you see.

  38. PREPPER MEDIC

    Fed/FDIC meeting tonight (11PM on a Sunday)……..something is afoot!!

  39. Allan Horns

    It won't start the big collapse until next year. Good metrics to pay attention to is four things:

    Mass of gold stops being sold

    Major bunkers are done being built

    Rothschilds, Soros and others like them selling off government bonds

    Shipments to those same heads stop

    As long as those elites are still moving like that, it's not yet.

    They may use a shutdown to stall it and restitute, and that can trigger chaos, but next year is the goal. Why? Because next year's election means everything for their plans. It was suppose to be 2021, but trump stalled it by four years. And they will keep him, or someone like him, from derailing their plans. Even if they have to rig an election or take us to war….or both.

    Keep thy lamp lit

  40. Kurtrina Mckinnon

    Sad that people can't get their paychecks this could happen to any of us these days.

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