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Anyone who has been anywhere close to finance knows that this is true.

The economy is largely about psychology and perception. If someone in a position of authority stands up and says that the sky is falling, they can cause the sky to fall even if it wasn't about to.

It is the same problem as the classic run on the banks. Even a fundamentally healthy bank is going to be in trouble if everyone asks for their money back at once.

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yep - it also just means that right up until a bank holiday and your account is frozen, the official line will always be everything is fine, the bank is well capitalised and there is nothing to worry about...unless you are well connected in which case you will get a whisper to move your money out).

So if you aren't one of the well connected people, it pays to be a little paranoid and be first in line to withdraw your money while you can. It's kind of funny, the rational action for any individual is not to keep most of their money in a bank where it is at risk of going away with zero notice. The confidence of the banking system relies on everyone being irrational!

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