The Ingenesist Project is retained by corporate clients because we look at the world through a different set of filters. We are looking for possible disruptions on the horizon as far in advance as possible so that our clients can be aware of potential perils and modify their business plans accordingly.
One of our signature assertions is that Money is merely a social agreement – not a federal mandate of a democratic government. People will trade whatever currency they agree to trade. Increasingly, people, empowered by social media can impact the financial system far more that a bunch of Quants peddling CDOs.
People simply do not know how powerful they are.
Suppose someone puts together a Twitter/Facebook campaign for everyone the withdraw their money from a single financial institution who just handed out big bonuses? At best, those bonuses will have to be recalled to keep the doors open. At worst, people will find an alternate currency to store the “value” that is destroyed by a bank run. Virtual Currency? Admittedly, it’s far-out, but we need to keep our eyes on these trends because once started, they move very very fast. That’s why they call it a “Run”
Is this scenario really possible? Read on…..
Now that is voting with your dollars (euros in this case) on a major scale. It is very interesting to see what a coordinated group of people can really press a bank where they did not believe in their policies and forced the Dutch bank into receivership. Pieter Lakeman of the Mortgage Grievances Foundation helped organized this campaign after they alleged the bank carried on reckless lending practices. Over a 12 day period they pulled out over half a billion euros (550 million euros) from the Dutch bank to force its bankruptcy.
Those talks failed and after leaks in the press customers began withdrawing their money en masse. Reports in the Dutch press said that €600 million euro (£550 million), about a quarter of the bank’s assets had been taken out.
On Monday afternoon the court placed the bank into receivership. Professor de Haan says that those mass customer withdrawals ruined the bank.
“Before this bank run occurred, although the bank was not in the best of all possible positions, it was not near bankruptcy. A few weeks before this bank run, the central bank issued a statement saying DSB had sufficient capital and sufficient liquidity.”
Analysis: In the very global and corporate natural of our economies, people need to know how to vote with their money – and then how to magnify their vote with Social Media. Here is an episode where they did just that with the exception that a non-profit foundation helped organize the run. Guess what, Twitter can do it faster and with no containment to a single institution. Banking institutions should take notice and hope that the practices of others banks do not force this template into Social Media.