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Run on the Banks from Britain to Ireland
By The Anglo American | October 4, 2008
As American politicians play politics with the second great depression in 100 years, Britain is facing the beginning of a run on their banks. The British government only guarantees around $50,000 of depositors’ funds whereas the FDIC make $100,000 safe in a US bank.
But the Irish government has put its name behind every deposit and now find themselves blushing with the attentions from British customers.
The soothsayers, most notably the British banks, say that Ireland is putting itself at risk of default. But with billions of British pounds flowing in one direction across the Irish Sea, there appears little chance of that.And it could not be easier with Irish banks having branches all over the UK. Take the Bank of Ireland, for example. It may only have eight branches on the UK mainland. But through banking deregulation and privatization, this Irish bank provides high street financial instruments on behalf of the British government. This means that every British post office savings account is guaranteed by the Irish state.
While nobody has lost any deposits through the collapse of a British bank, the onset of a full panic run on British banks remains a distinct possibility.
Could a 1920’s panic consume the high streets of America? Almost without doubt if US politicians do not agree with their President, there will be a crisis in the retail banks. And the cost to the American taxpayer will be vastly more and will go on for a very long time.
Will there soon be a torrent of greenbacks cascading into the Emerald Isle?
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©The Anglo American
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