mechtraderpro
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For those who cannot remember that we have been here before. 
Just thought I would refresh everyone’s memory on some of the “older” boom and bust’s ...perhaps we should revive the old bailey tradition though !
The Panic of 1825
Britain was again rebuilding after conflict, this time the Napoleonic Wars. The economy went into overdrive and the liberalising of trade in Latin America created an export boom.
Speculation was so intense that some investors even began to throw money into schemes involving the imaginary South American Republic of Poyais. In tandem, Bank of England allowed easy finance for the boom.
By April the boom had become a bubble at bursting point. More than seventy banks collapsed and by Christmas, Bank of England intervention had failed to quell a now economy-wide panic.
Legend has it that the Bank of England was itself in danger of collapse until reversing its caution and acting as the 'lender of last resort', bankrolled by French gold.
1866 – Overend, Guerney & Co.
With roots deep in Quaker East Anglia, Overend, Guerney had survived the Panic of 1825 as the great discount bank of its time, second only to the Bank of England in its turnover, and had since become known as the 'bankers' bank'.
After the retirement of Samuel Guerney, though, a new breed of profit-hungry company directors expanded its core business into riskier investments such as shipyards, railways and other long-haul investments.
The bank took short-term loans to fund risky long-term schemes, incurring liabilities four times the size of its assets. It was a costly mistake. When several of its creditors collapsed, the bank's share price plummeted and, in desperate need, it was refused assistance by the Bank of England.
Overend suspended cash payments and panic spread across the country. The bank went into liquidation in June and its directors were tried at the Old Bailey for fraud. Other banks, now unable to find funding, also went under. With nearly 200 companies defaulting, the ensuing depression lasted several years.
The crisis led to Walter Bagehot's famous call for the Bank of England to act as the 'lender of last resort' – preventing economy-wide collapse by providing the last line of finance for troubled banks.
Just thought I would refresh everyone’s memory on some of the “older” boom and bust’s ...perhaps we should revive the old bailey tradition though ! The Panic of 1825
Britain was again rebuilding after conflict, this time the Napoleonic Wars. The economy went into overdrive and the liberalising of trade in Latin America created an export boom.
Speculation was so intense that some investors even began to throw money into schemes involving the imaginary South American Republic of Poyais. In tandem, Bank of England allowed easy finance for the boom.
By April the boom had become a bubble at bursting point. More than seventy banks collapsed and by Christmas, Bank of England intervention had failed to quell a now economy-wide panic.
Legend has it that the Bank of England was itself in danger of collapse until reversing its caution and acting as the 'lender of last resort', bankrolled by French gold.
1866 – Overend, Guerney & Co.
With roots deep in Quaker East Anglia, Overend, Guerney had survived the Panic of 1825 as the great discount bank of its time, second only to the Bank of England in its turnover, and had since become known as the 'bankers' bank'.
After the retirement of Samuel Guerney, though, a new breed of profit-hungry company directors expanded its core business into riskier investments such as shipyards, railways and other long-haul investments.
The bank took short-term loans to fund risky long-term schemes, incurring liabilities four times the size of its assets. It was a costly mistake. When several of its creditors collapsed, the bank's share price plummeted and, in desperate need, it was refused assistance by the Bank of England.
Overend suspended cash payments and panic spread across the country. The bank went into liquidation in June and its directors were tried at the Old Bailey for fraud. Other banks, now unable to find funding, also went under. With nearly 200 companies defaulting, the ensuing depression lasted several years.
The crisis led to Walter Bagehot's famous call for the Bank of England to act as the 'lender of last resort' – preventing economy-wide collapse by providing the last line of finance for troubled banks.
