I have a genuine question: what changed over the weekend?

SkepticOne wrote: »

Here's what happened over the weekend I think. Despite the blanket guarantee in place, there has been a drain of funds from the banks from bond holders, corporate depositors and retail depositors over the last few months. Consequently, the banks - again despite the state guarantee and support from the ECB - were finding it difficult to raise money and were thus becoming insolvent.

The guarantee is worthless if Ireland is properly bankrupt, the government would not have the funds to pay out. And they never did. And neither would anyone lend to Ireland to honour the guarantee, if the banks were to collapse, which would mean our economy would completely collapse.

In a doomsday scenario, the Irish government wouldn't have the cash. It's called writing cheques your ass can't cash.

The bank guarantee was always a bluff. At the time, in 2008, there was major panic and confusion. And it wasn't from Cassandras being "negative". There was genuine confusion as it was emerging how dishonest and reckless bankers had been everywhere. After the Irish bank guarantee there were many English people putting deposits in Irish banks because they believed there own banks weren't safe.

Had the various governments approach been "let the morkets decide" it would have triggered a massive collapse through the entire global banking system. This has happened before - in the early 30s for example. It was possibly the major factor that led to the second world war.

Most money in the world does not exist as hard cash. It's credit. Even the cash in your pocket only exists because someone has borrowed money from a bank. A full banking collapse causes vast amounts of money to vanish into thin air.