What would happen if the bank where your savings are goes bust, and the bank where your mortgage is doesn't?
There is nothing like a big panic for irrational reasons. What makes this one more important than Lehman going under is that Bank of East Asia are the 3rd biggest bank in Hong Kong (that makes them global size), they have a great balance sheet, have nearly 3x the capital they’re required to have, and have no exposure to sub prime mortgages. I.e. none of the very real issues that our banks here in Nova Scotia are currently facing. And they still got hit by a run.
If it can happen there, with those fundamentals, don’t think it can’t happen here. The people queuing in the street are not wealthy investors, they are hardworking professionals like you and me. Hardworking professionals who have suddenly decided to take a day off from work, just because they’re afraid of losing everything they worked the past ten years for. Irrationally yes, but the whole point is that it is not rational for it to happen to a large and sound bank. What is the news going to bring next?
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