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May 09, 2008
Northern Rock, Bear Stearns... Who's Next?
A few days ago I got an unusual edition of the Daily Dose newsletter. Normally, Daily Dose concerns itself with human health, but this issue was about the health of the banks that hold your hard earned money. It starts with
Dear Reader,
If you're reading this letter, then that means I got to you in time...
You see, there's something really bad going on at one of the world's largest banks... A bank you probably deposit money at.
The newsletter goes on to compare the unnamed bank to Enron, the very large company that evaporated overnight after some accounting sleights of hand that were intended to build confidence in the balance sheet inevitably had the opposite effect.
The thought of a very large bank becoming unstable is disturbing. What's more disturbing is that we needn't analogize with a company from years back in another industry to illustrate the problem. Every day's news has a story of yet another large player in the banking / financial industry writing off huge chunks of bad debt and going hat in hand to capital markets, shoring up the balance sheet with a fire sale of equity.
First there was the UK's Northern Rock Savings. Then there was Bear Stearns.
Following those disasters and the ongoing troubling news about widespread financial instability, wouldn't it be nice to read that housing prices were stablizing, the crisis seems to be abating?
Unfortunately, it seems to be getting worse.
Who's next?
It may be time to ask yourself: how safe is my "money in the bank"?
Posted on May 09, 2008 at 03:38 PM
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