For the latter if circumstances arise that can cause interruption to normal activity, life support machinery is required pronto.



Banks need new depositors whose cash will help to pay out existing clients who, like it or not, need to take some of their cash out at times. Since the money from previous depositors Tom, Dick, and Harry is out earning interest, the funds have to come from somewhere to keep the show on the road.

Of course if Tom, Dick and Harry happen to be financially strapped for some horrible reason like a credit crunch, and start missing out on regular payments, headaches of major dimensions will flare up. That is the time to get going and get bailed out by the central bank, who will invariably fork out because after all, who wants to create waves more than is necessary and start a run?

Getting money out of Peter to pay Paul is not really the thing to do, but then, there is an art in doing the wrong thing correctly.

Naturally, it is a bit more complicated than that, and we do need the banks, albeit they need us. Banks play a major role in making business possible, and for deals to take place. It is unthinkable to manage without them. However, it is not pleasant to know, that we have to pray for their good health, which we could ruin without wanting to, and actually help to sink them as well as ourselves at the same time.

The lack of liquidity is of course the main culprit. The wheels of the liquidity providers have to be turning smoothly for them, so that they in turn, can function. Anything going wrong brings fear of safety, and can trigger an avalanche of failures. It does not matter how many safety nets there may be in place, to avoid trouble is hard.

Like the sharks which have to keep swimming or else they sink, one too has to keep active come what may, to keep afloat. It means determination at all levels to do without certain things, raise output as best as possible even if under difficult conditions, and stay cool. Such combination always produces winning results.

It takes only a little to upset the boat, but by the same ruling, a little extra effort can see it sail through to safety.

Remember that song Ya Gotta Have Heart? If you sing it every now and then, it works wonders!