Are you worried about a global bank run?

Somebody is.  Yesterday, the Irish government guaranteed all deposits in Irish banks.

This pissed off the Brits.

In a statement, the Association says the move has distorted competition and put banks in other jurisdictions, especially in Northern Ireland, as a competitive disadvantage. British banks have complained that the legislation would distort competition.

There are reports that money is being moved to Irish institutions from the UK.

Gee, ya think?

It also sent the British economist much smarter than I to new heights:

The Irish solution: unlawful, beggar-thy-neighbour and short sighted, but apart from that OK

Well, leave it to the Irish to actually pull the trigger in a Mexican stand-off.  Today, Greece has followed suit.

With all deposits guaranteed, rational (wealthy) people will seek out whichever banks offer the highest interest rates.  Which ones offer the highest interest rates?  The ones making the most risky investments. We are now witnessing a global socialization of the credit risks of the most risky institutions.  Why would policy makers do something so obviously insane?  Because they believe a global bank run is imminent or already in progress.

By the way, have you heard this rumor yet?

Bank of America poised for temporary shut-down

Yeah, right, crackpot.  Pray that nobody believes this crap…

Update 2008-10-05

Germany follows suit.

Germany is preparing to offer a blanket government guarantee covering all German cash and savings bank accounts held by individuals in a move to pre-empt panic withdrawals by customers in the coming days.

The officials said the move was agreed because of fear that the crisis at Hypo Real Estate, which disclosed a fresh funding gap at the weekend, precipitating the collapse of last week’s rescue package, would lead to widespread panic in the country on Monday.

I did not think German had a word for “panic”.

What’s German for “George Bailey”?

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