In what appears to be a colossal public relations stumble or a huge effort at damage control we see this article in the Globe and Mail:
http://www.theglobeandmail.com/report-on-business/ottawa-clears-up-confusion-over-bank-bail-in/article10697667/
My read of it
You know that in the absence of facts people will make up their own.
The
article from the Globe and Mail is helpful in the sense that it points
out the inept communications by the Finance Department. The genie is out
of the bottle now and will be hard to put back.
There has been
much talk about systemically important "too big to fail" banks with
interwoven borrowing and lending. This coupled with the unrestricted
fractional reserve system, people are concerned about sovereign debt in
places like Cyprus affecting the big banks.
Perhaps most
importantly is this arcane concept of "moral hazard". I had to look it
up. There is no consequence for poor management, bad behavior or bad
luck and some would prefer to call it. After the 2008 sub prime crisis,
not one prosecution. In the US MF Global, I believe the sixth largest
corporate collapse in US history did take money right out of the
customers "secured" accounts.
There is fear uncertainty and doubt
out there. I think most people are shaken by the current events - its
even been on CBC of all places and when these things hit the main stream
media, not just the blogosphere, its very hard to counteract the
disquient. The entire system, after all, is based on trust - faith in
the dollar so to speak.
