The Sikh Geek

What a way to start a weekend with doom and gloom and predictions of the world about to end!

Who hasn’t heard the term "Credit Crunch" recently? Like many I barely understand it but use it in casual conversation to look big and intelligent. About 12 months ago we had scenes in the UK which hadn’t been seen in post war UK, a run on a bank, with people queuing outside Northern Rock to withdraw their money. It was eventually nationalised i.e. the UK Government took control of it and propped it up with billions of pounds and added it to the National Debt. Thank you very much!

That was only a portend of things to come. While on holiday in the US in March I saw reports of Bear Stearns about to go belly up! I don’t know what the outcome of that was. Recently two of America’s Mortgage Banks, Fannie Mae and Freddie Mac, have been taken over by the US Govt. Why? Because these two banks held Mortgage loans in the trillions of dollars, yes that’s right trillions not billions. A Mortgage size which is twice the size of the entire UK Economy. Forgive me for not providing any deep financial analysis of this but I think that’s some "bad shit" going down.

Today, I’ve just read that Lehman Brothers, the 4th largest US Investment bank is about to go "tits up" unless a lass minute deal is organised or the US Govt takes over this one as well! Read the BBC Finance Editor’s blog post on this.

I’m not sure what happens when a Bank goes out of business? I think some "bad shit" happens and people’s lifes are destroyed and it’s a chain reaction effect. It’s great to know that you can run a business that will always be bailed out. I’d like one of those businesses, how do I apply to become a CEO of a major bank because I too can run it into the ground with losses mounting in to the billions. Isn’t there meant to be some sort of Financial Services Watchdog to maybe hint that the stability of these organisations is being undermined? BIG FAIL on their part!

Who cares, it’s just a world away from us, isn’t? Except that it isn’t and the only question is how bad will it really get. Confidence around the world is already at an all time low with speculation on the price of oil having driven the price way up and all the consequences that go along with that. Thanks to the Free Market Economy, thanks for fucking things up, thanks basically for nothing. Apparently there are more Banks hanging on by a thread and two smaller Building Societies in the UK are to be bought by Nationwide.

I have never seen anything like this because the fundamental basis of the Western Economies are being rocked. The failures of businesses are coming thick and fast with XL going into administration today and leaving 67,000 people stranded on their holidays.

As I said there is some "bad shit" going down and I’m off to put all my money under my mattress!!