The Global Banking Crisis

Good morning everyone. Am I just being paranoid or is there an actual possibility the banking system could collapse? I have heard that some countries are now deducting interest instead of paying it! That's right you have to pay them to have money in the bank! What happens when people realize it's less costly to keep money in a safe at home?

Also what about the insane amounts of debt being racked up? I read that America was in peak debt after WW2 and the world kept on turning and here we are today. No catastrophe yet.

Okay,the crunch. Could this really crumble? Could there be a run on the banks? Could we wake up one morning and not be able to access our money? What would we do then? Unless we train ourselves in survival aka Bear Grylls what chance do we stand? Am I foolish? Should I keep working or just go into training for the coming crisis?

Comments

  • +12

    Of course this is all possible. It has happened many times before in individual countries and regions, and sometimes globally.
    Does it make sense to plan your life around such ideas? Yes, in that you should have some savings to tide you over and a good network of friends and family to assist if the worst ever does happen (which won't be doomsday preppers, whatever the American fear mongers say, think more great depression).

    But if you only worry about risk you miss out on 100% of the opportunities in life. You would hesitate to borrow to buy a house, invest in high return assets, or take a high paying job with a 'risky' employer. These are all the risks you must contemplate to be financially successful.

    Of course, there is much more to life than financial success. And if you want to be a nurse or a fireman who enjoys fishing and coaching local sport on weekends and lives a modest lifestyle, the risks you mentioned don't apply, and you can have a wonderful, rewarding life. And you could make all the financial preps in the world and find you come down with a medical catastrophe. In other words, keep some perspective about the risks and balance in your life.

  • +2

    Nah it's fine. The gub-mint will just print more money and give it to the banks.

    • +1

      Yeh, anything to keep the private debt bubble growing. The government will use all the mechanisms they can to maintain the status quo.
      The economy was ripe for a correction in 'Kevin' 07, but good old Australia battled through. Economist Steve Keen bet his house the economy would crash around 2008, he cashed out of Sydney before the crash….. Which never happened, not only was he wrong he also had to walk from Canberra to Kosiosko because he lost the bet!

      As for the sky falling down? Nah not in Australia, she'll be right!

  • It's time to start collecting bottlecaps. Maybe bitcoins.

    • +9

      What do you think why the professionals here have been collecting Eneloops over the last decade?

      • +1

        I have been collecting portable solar panels myself.

    • Yes, I should have been collecting bitcoin.

      • It’s interesting to think about this.
        While bitcoin was a good return in retrospect, so were much less risky shares, or even real estate. Things that were all ‘high’ in 2016.

        There is a lot of momentum in the financial system.

  • I wouldn't worry about it but if you are really worried I'd swap 10% of your money in the bank for silver coins. If the economy collapses that badly then price of silver will rise a lot. After that you're going to want to own a farm, people can do without other things but everyone needs food

    • +1

      if the banks do crash I am sure a lot of people will "buy the farm".

  • +4

    Negative interest rates are what central banks are charging institutions as they want them to stop hoarding cash with them and lend it out to help create economic activity. I am not aware of any banks charging retail customers negative rates

  • -1

    Japan, Switzerland, and Sweden all have negative interest rates.

    https://en.m.wikipedia.org/wiki/List_of_countries_by_central…

    • +5

      Yes but this is central banks charging negative rates for commercial funds parking money with them. Retail investors do not hold funds with central banks. Don't confuse the two.

      The USA has also placed negative bonds into the wholesale market with great success.

  • +6

    Transfer your savings over into my account. I promise you I would never charge interest for holding it.

    • But a Saudi prince promised me 10% if I held onto his cash :P

    • Curious wouldn't be illegal since you aren't an Authorised Deposit-taking Institution?
      Also I wonder if it would come under money laundering?

  • I could be mistaken about the banks actually charging negative interest rates directly to the customer. I'm not sure if it has happened yet or not. But sooner or later won't it be passed on to the customer? Have interests rates been negative before or is it unprecedented?

    • I believe it's unprecedented in Australia. As you indicated above, some countries are charging interest rates for savings because they want to force the people to spend the money to stimulate their economies.

      • Maybe they are just trying to cripple the mattress market.

    • It could happen, the whole idea it to goose people into buying certain asset classes and causing inflation to reduce the overall debt load, or at least make it appear to be repayable.

      There are even snide comments made by Central Banks, one recently called themselves "Magic People"

      It's not magic, it's social engineering and mathematical manipulation. They should really call themselves the "confidence artists"

  • Yes, that's right. The Central Bank also realizes the danger of all the banks charging negative interest rates. They only allow 10% of a nations banking system to be negative. However the interest rates of the banks that do pay interest are paying next to nothing. This article puts it in perspective:

    http://www.lifehacker.com.au/2016/03/what-negative-interest-…

    • lol lifehacker

      • lol fruit

  • When potential world leaders start talking about defaulting, I think everyone's sphincters tighten.

  • +1

    You can always hedge your bets and invest in some solar cells, solar hot water, rainwater, fruit trees and a veggie garden.

    Most of that has a reasonable payback period except maybe the rainwater tanks.

    Off grid batteries will take a couple of years.

    I'd keep some cash around though. Even in a shortish lived emergency like hurricane Katrina those without some cash had a harder time with no ccard facilities or ATMs in service.

    • Don't forget the armour to protect your loot

    • +1

      My place has fruit trees, a bit of a veggie garden, a water tank, 3kW of solar panels and a couple of largish batteries that we use when camping, so I guess I'm all set for the forthcoming financial apocalypse. And I usually have more cash around than most OzBargainers, according to past threads.

      Even so, having these things makes it crystal clear to me how important it is that we depend on the people in the community around us, and throughout our country and world for our well being. If you doubt this, I'd urge you to try and grow 50% of your family's food, provide 50% of your own energy (don't forget transport!), handle 50% of your medical issues etc.
      We're all in this together.

  • Which bank?

  • If there's negative interest, does it mean if I borrow money from the bank, they will actaully pay me interest??

    • Yes it's called wishful thinking in banking terms ;-)

    • No it the other way around you pay banks to keep your money or you pay the government to lend them debt
      Plenty of negative bonds around in the last couple of years

      But if you borrow from banks charges a margin on top
      If it -ve 1 they just add 2% so you paying 1%

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