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Our Loan Crisis Jumps Across the Pond
October 4, 2007
When a butterfly flaps its wings in Malaysia, a hurricane happens in Florida – or at least that's close to how the saying goes. In other words, something half a world away can have a direct effect on something else.
I witnessed this phenomenon firsthand on my recent trip to Scotland for my honeymoon. My husband and I saw a news report on the BBC about a bank called Northern Rock going into a tailspin because it had lent money to some other banks caught up in the subprime loan mortgage crisis in the United States.
According to news reports, the Northern Rock was in serious trouble.
People with money in the bank panicked, and long lines started to form at its branches as they clamored to get their money out before it collapsed.
My husband and I were walking down the street in Edinburgh when we happened on one of the branches with a long line winding down the block and around the corner. According to news reports, some people had been in lines since the middle of the night and still hadn't made it to the front. The people in the line we saw were predominately older (in the U.K. they are called pensioners), and we could see the distress on their faces as the line slowly moved forward and people were allowed to enter the bank one at a time to get their money out.
The lines lasted a few days until the Bank of England stepped in and bailed Northern Rock out, but it was a crisis that scared a lot of people.
Luckily for Northern Rock and its clients, the bank survived, and everyone who wanted to withdraw their funds could do so. At one point, more than $18,000 per minute was being taken out.
The lesson I took from was that, in our global economy, when one country sneezes, many others can catch a cold.
So far, in the tradeshow industry, the subprime mortgage crisis hasn't caused any real tremors. In fact, in the third quarter the pace of mergers and acquisitions was still rapid. But, no business is really immune if a larger crisis happens next time around, including tradeshows.
Posted by Rachel Wimberly on October 4, 2007 | Comments (0)
