Better safe than sorry

We pulled all our money out of Fortis today. I assume we won't be the only ones. It is pretty clear that Fortis will either go bankrupt or it will be taken over at 2 euro per share. Fortis is basically insolvent.

So how can banks can go bankrupt in such a short amount of time? Bad investments and the multiplicator effect.
In brief:
John Doe deposits $1000 on his Washington Mutual (the FED takeover target)bank account. The bank will put 10 or 20 % of that money into a "safe" government insured financial instrument. They are by law required to do this, it is their required reserve ratio. Assume the bank puts 10% of that money in a safe place.
It uses the other 90% to make a profit... it invests that money...

Because the multiplicator effects also works on the next transaction, the original$1000 John put in his bank now become $5000 of investments and $4000 in new loans.

Most banks invested that money in "MBA's", mortgage backed assets. But because of the housing collapse those MBA's have declined in value.
That wouldn't be a problem if those bets weren't leveraged as much as they were. (leverage: investment were a small move in the assets will have a big impact on your investment, example: 5% move in the asset would have a 50% move on your money).

So banks bought and sold those MBA's from each other, so they are connected with each other for each of those products. If one goes bankrupt, another bank that is holding assets/investments from the first bank loses that money... and idd for the next one and the next one. So a collapse of Bank XYZ in Japan or the US could have a big impact on Fortis or any other bank.

Some people find it difficult to believe that banks don't have YOUR original money. They only have electronic numbers, that's it.

This is only the beginning, a few banks will survive, the rest will go bankrupt (or taken over by the FED which is basically the same thing)

So what can you do in this environment to protect your hard earned assets?
1. Spread assets over different banks
2. Follow the quote of your bank on a daily basis
3. Keep some cash at home, this will be helpful if the economic system as we know it would cease to exist and the banks don't open for the next few days/weeks
4. Buy some gold (coins/bars) or silver, this will be helpful if the economic system as we know it would cease to exist and the banks don't open for the next few days/weeks
5. SAVE, SAVE, SAVE

What will happen next?
1. A lot of banks will go bankrupt
2. A lot of people will lose their jobs
3. Prices of every day goods will explode
4. Prices of financial assets will go down (delevering)
5. Prices of gold and silver will go up
6. Luxury items will become cheaper: homes, cars, boats, RV's, ...
7. The dollar will collapse