In August 2007 subprime took over the headlines but the equities markets didn't seem to understand and moved higher, with the DJIA setting it's 14,164.53 all-time high on October 9.
On Thursday September 13, 2007 I realized something had changed. The BBC's Robert Peston reported that Northern Rock was seeking emergency funding, the Financial Times relayed the "All Chauffeur Alert" that the limos were pulling into the Bank of England for a 9:30 p.m. meeting.
Depositors started lining up outside of NRK branches and I started putting up linkposts. When
Bear Stearns collapsed in March '08, I said:
A quick word of explanation. During the run on Northern Rock we were thinking of the depositors and how awful the uncertainty must be. There were very few bloggers onto the situation and even the financial journalists didn't seem to grasp how anachronistic a bank run was in the 21st century, at least that first weekend.Here's the headline story, from Bloomberg:
So we went out and got what we considered to be reliable sources we could link to and a thousand people got pointed to sites that weren't talking rubbish....
It has been a year of record misery: the largest bankruptcy, bank failure and Ponzi scheme in U.S. history; $720 billion in writedowns and losses by financial institutions; $30.1 trillion in market valuation wiped out....
...“We had what was for all intents and purposes a systemic bank run for the first time in 70 years,” said DeRosa, whose fund is up 25 percent this year. “This ended our belief that financial panics were a thing of the past. That’s why this is a transcendent event.”
The price tag has been transcendent, too. Global stock markets lost about half of their value in 2008, or $30.1 trillion dollars. In the U.S., $7.2 trillion of shareholder value was wiped off the books, as the Standard & Poor’s 500 Index fell 39 percent through Dec. 30 and the Nasdaq Composite Index dropped 42 percent...MORE
In September of this year, in the days leading up to the failure of Washington Mutual, I started quoting a line from "It's a Wonderful Life":
"Don't look now but there's something funny going on over there at the bank, George..."Here's a clip: