an unpredictable event that calls into question a bank's ability to pay the depositors. In the old days, depositors lined up outside a bank. That was the kiss of death. Today, a bank run has to do with rolling over very short-term debt — debt obtained from other banks. The lenders decide that a bank or agency is insolvent. All at once, they refuse to roll over the loans. This is a bank run, but it does not involve depositors lining up outside the bank. It involves a rumor in the financial community. Such a rumor brought down Bear Stearns and Lehman Brothers in 2008. It took less than a week in each case. Word travels fast inside the banking system.Gary North, Black Swans and Bank Leverage
Monday, May 2, 2011
Gary North on Black Swans
So what is a black swan event? According to Gary North a black swan event is:
Our text for Sunday School (also "The Confession of Faith and Catechisms") Biblical Theology Bites What is "Biblical Theology...