I think everybody has been brain washed for too long about the safety of the cash in bank. Think about it: If for every $1 deposited into a bank, 70 cents is loan out or invested somewhere, there is only 30 cents in the bank. If everybody withdraw their money, there is only 30 cents there. It is impossible to recall the rest of the 70 cents because these are loans and investment should require time for liquidation. In other words, regardless of how strong a bank is, it will be killed when there is a run on the bank. Why is it that everybody for so long assumes money is safe with a bank? I can only think that we have been brain washed for too long. I myself was brain washed too by conventional wisdom. That is why I mentioned in the previous blog that cash and fixed deposits in the bank above the insured amount is like buying a bond from the bank except that the interest earn is insufficient to compensate for the risk involved. It is time to get 100% safety in cash. I have done this for my family and extended family.

In Singapore context, some of our banks are at even greater risk. I am not referring to explosure to sub-prime toxic waste but rather the large scale rampant mis-selling will eventually cause banks' shareolders great pain due to increased  probability of litigation. Yesterday I read in a newspaper that a bank may compensate investors who had lost money in a particular investment product mis-sold to them. To put it otherway, because of the bank's mis-selling practice, the bank is taking on the investment risk of the investment products it is selling! If a product makes money, the bank will not get a cut in the profit but if a product loses money, the bank absorb the losses! Crazy right? But if the mis-selling continues, banks will be expected to take on such investment risks of all types. I urge existing banks shareholders to do the right thing by pressuring banks' management to stop this mis-selling practice. The mass media says that our local banks have minimal explosure to toxic waste. From what I see, if banks continue to mis-sell, they assumes investment risks of all toxic waste!

With such high risks involved in the bank, the last place a person should put their hard earn money is with the bank!

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