Message: Electronic Bank Runs - Bank of America & Citigroup - Nationalization coming
Saturday, February 21, 2009Citigroup, Bank of America: Prisoner's Dilemma, Electronic Bank Runs and Nationalization
 (excerpts) Citigroup (C) declined 61% from a peak of $4.10 to an intraday low of $1.61 over just 10 trading days. Bluntly put: Citigroup is dead. Bank of America (BAC) declined 64% from a peak of $7.05 to an intraday low of $2.53 over just 10 trading days. Bluntly put: Bank of America is dead. It used to be that bank runs were very public affairs. Crowds would rush the PHYSICAL offices of a stricken bank and demand PHYSICAL withdrawal. The large, panicked and angry mobs would make instant newspaper headlines. More importantly, bank runs could not be covered up and kept secret. Unruly mobs demanding their money don't tend to go quietly into the night. Today, things are much different. Bank runs occur with a phone call... nah... a click of the mouse. There is absolutely no need to show up at office and demand paper money. Now the bank run is electronic. Without the mob, without the noise and the rage a bank can be entirely drained of reserves almost INSTANTLY. With Citigroup and Bank of America reeling from massive losses from failed credit and investment policies, their common stock, bonds and credit default swaps are all now signaling their imminent failure. Unfortunately there will be no angry mob lining up at the bank. Like Bear Stearns and Lehman Brothers, the run will be overnight, instant, electronic and leave no trace. When the tipping point is hit, the world at large won't know until AFTERWARDS. Big money investors can't run the risk of waiting and hoping that everything will work out just fine. They find themselves in a Prisoner's Dilemma. Since they can't play nice as a team, they have to be first to act... and act they will. The first to panic wins. Therefore, big money investors must now be pulling their deposits at both Citigroup and Bank of America and they must be doing it quietly and quickly with the click of a mouse. No mobs demanding paper money... just a 'click' and a string of ones and zeros blitzes from one end of the world to another over the internet. Consequently, nationalization is guaranteed. http://benbittrolff.blogspot.com/200... |
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