Northern's dilemma will rock markets
Northern Rock crisis sparks banking panic
Run on the bank
Scramble to quit UK bank
So, no surprise for HP'ers. We've been predicting runs on the banks for months. And now they're here. So what should you do to get ready for the collapse? Here's Ten Ways to Prepare for the Great Crash:
1) Get to cash, NOW. Every financial mania ends with a rush to cash, and a liquidation of assets at greater and greater loss. Get to cash. Even gold is at risk as owners liquidate to raise cash.
2) Know where your cash is, and that it's protected by the "full faith and credit" of the host government. If you have more than the allowed limits in any one institution, and they go tits up, it's your own damn fault. If there's no protection, get your money out of there NOW.
3) Unless you plan on keeping your house forever, sell your house as fast as you can at whatever price you can get for it. Because you'll never get that price again in your lifetime. And then rent (for a fraction of the cost of buying)
4) Get out of all stocks and money market funds. Yes, that's right, even money market funds are not secure, and they can and will lose value
5) Get into short term US government t-bills and liquid FDIC-insured savings accounts (up to the FDIC limits). Wait for the bad storm to pass
6) Tell everyone you care about that The Great Unwinding is here. Use the "email this post" function (the little envelope by the comments link below) to send this to your friends and family. DO NOT be the last one out of the pool - be the first.
7) Get 100% out of ANY troubled bank or brokerage, and any bank exposed to the subprime cancer. If and when they go belly up, even getting your FDIC insured deposits out will be a pain.
8) Check your mutual funds and 401k. Get them to cash and T-bills if you can.
9) Watch what the central banks do. Their actions may present you with some short-term trading opportunities. Watch for currency meltdowns - don't have all your cash in one currency. Use the currency ETFs to spread your risk.
10) Get some popcorn. You're gonna witness some historic stuff these next few days, weeks and months.
From The Independent:
Panic on the streets of Britain: Northern rocked, City shocked
Yesterday something happened that I have not seen in my lifetime, a run on a major British bank. There were queues outside Northern Rock branches as depositors tried to get their money out.
This is the sort of event that happened in America after the Great Crash of 1929. For Northern Rock, this is catastrophe. For the rest of us it marks the end of an era of easy money.