2012 Doomsday News is Bad for Financial Systems

Only sizable number of people believe doomsday 2012 is true. Imagine if this number grows into huge,  it can wreck havoc on our financial systems.

The small numbers make us happy and we are not worried for them as the small group of people does not matter when the statistical models are run on the financial data. Especially, the lending machines are not sensitive to rising patterns due to doomsday related news.  Suppose a country has 10% people believing that doomsday of 2012 is true and it will occur. What these people are going to do? There are some possible guesses. Certainly, people are not going wait in the bunkers and on the hills of Bugarach in France to become the victim of end of the world.  There are some behavioral models which can predict the impact of such belief on financial systems. More people are going to apply for borrowing money from banks and other financial institutions.  Most of these loans would go to the people who do not have repayment capacity. What banks do in such cases. They provide loans which are not secured and are from the open market. Such money is not going to come back. A certain way of belief will point to spike in the trends of loans. It may offer some possible clues when the numbers pile up. There is no way of detecting them at the time of application. The profile of areas can point to few possibilities but banks would not be able find a way to deny such loans which are being taken for granted as borrower believes he would not need to pay it back because after 2012 doomsday, things will vanish.

Banks need to establish the profiling system which can monitor such applications which are for the money and the borrower does not really need that.  Bank must say no to the people whom it thinks, need not money for anything. The unsecured loans are toxic for the banks.

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