Banks—Be Careful

Almost half a trillion (500 billion) Euros were deposited last week with the ECB (European Central Bank) by European banks. These deposit pay less interest than money lent bank-to-bank, or to the bank’s customers.

The reasons these deposits are so high is because the banks don’t trust each other. So Barclays won’t lend money to Deutsche Bank, who wont lend to Soc. Gen in Paris, who refuse to lend to the Spanish bank Santander, who in turn shun loans to the Royal Bank of Scotland, who avoid Barclays like the plague, they are all suspicious of each other’s solvency. See? It’s a circle, an ever-spinning wheel.

The banks are in the “know” and they are too scared to lend each other money, as they know a crash could be imminent. But we have lent to these banks by placing our money on deposit with them, but we don’t really know how dangerous the situation is. The wool is pulled over our eyes.

Bank Run at Northern Rock

I read the other day that Citibank in the US borrowed over $2 trillion from the Federal Reserve, that’s $2000 billion—two million times a million dollars. Any bank that has to borrow 2 trillion must be very broke.

So be careful. The banks are in dire straights. Their profit figures hide the truth—accounting games—they are so dodgy they won’t even lend to each other.

The Bank of Ireland’s shares are €.08c; they used to be €18.00 a share, so €180,000 in their shares a few years ago is now worth €800—€179,200 is lost. Allied Irish Banks shares are at €.06 cents. The stock markets “squeak” the truth, the share prices reflect the true market sentiment.

These Irish banks and many others like UniCredit in Italy are utterly worthless.

Take your cash mostly out, and buy gold, we buy from Celtic Gold, Stefan Kramer, he’s very kind, he’ll answer your questions, there is no pressure to buy from him.

“Cash in Hand. The very best stand” ….so the poet said. The poets know ebley-ting, you have to watch what they say. Tee hee.

Stuart Wilde (www.stuartwilde.com)