Have you ever heard that expression expect or prepare for the worst and hope for the best? Well that’s the modo that the banks have in mind right now as they are anticipating a collapse. With weak corporate earnings, and a banking crisis, this means a lot of bad mystery with what is going to happen next. Mystery for markets and the uncertainty with Brexit is like mixing oil and water together they just don’t go well together. Probably the worst threat a bank could have to deal with. It is just like when certain countries get hit with real tornadoes. They have to prepare for the worst possible scenario. They have to go in with a plan and that is what the banks are doing.
According to The Free Thought Project, “This could mean triggering Article 50, referendum in other European nations leading to a break-up of the euro or sterling hitting below $1.20 or lower. The banks are ready for anything now.” Desperate times calls for desperate measures.When they say that the banks are going to get hit with a nuclear winter it is a metaphor for the fact that they are getting ready for a collapse or better yet a crash. What is being recommended is that businesses continue working until further notice. Although the future is unclear businesses must steer.
Another good relatable example to this that I witnessed is when teaching assistants went on strike. For the University of Toronto, classes still were in session, but it obviously had an affect on things. Students were anxious to get marks back as assignments were put on hold for marking. With these hold up of these assignments it was hindering and slowing down the school year. Just like the banks now, there was a lot of uncertainty. Not to mention many students were anticipating graduating. The worst news they could get is that they would have to perform another semester. Luckily, the issue was resolved and I’m sure the banks will come up with a plan to prepare for this nuclear storm.
According to Forbes, there have been many bank failure rates in the past. In 2012, there were 51 bank failures. In 2011, there were 92 bank failures. In 2010, there were 157 bank failures. In 2009 there were 140 bank failures. In 2008 there were 25 bank failures, and in 2007 the start of the financial crisis, there were only three. So evidently history often repeats itself. As the timeline shows there have been more back failures as of recent.