I’ve been steering clear of writing anything about the global economic crisis / credit crunch – partly due to my own cynicism of how the markets work (corrupt greedy brokers short selling on inside information – hey, just my opinion) and my lack of understanding!
But a story that caught my eye this week in Hong Kong is the one concerning the Bank of East Asia as reported by the South China Morning Post. In short, several days ago a rumor started to spread that BEA bank was in serious trouble as a result of its dealing with Lehman Brothers. Text messages were sent and entries were posted on internet discussion forums confirming this. I even had a friend Instant Message me asking whether I had withdrawn my savings from my BEA account. When I questioned him about his source, this is how the conversation went:
Me: I haven’t heard anything, are you sure?
Friend: Oh my god – don’t you watch the news
Me: I work in PR, I monitor the news all day every day
Friend: Well you’re not very good at your job!
This led me to think I must have missed a howitzer of a news story and that I was not as good as my job as I thought I was (tongue firmly in cheek)!!!
Since this conversation there have been throngs of people queuing to withdraw all their savings for fear that the bank will swallow their money - Northern Rock style panic escalated quickly. I thought I had missed the most important news of the day and potentially the week! However, only days after, those throngs of people are now lining up to deposit their money again!
This was in fact a case of Chinese whispers (played by actual Chinese people) and is a fantastic example of how technology today enables rumours to spread like wildfire and wide enough to (almost) bring down a bank.
The chairman of the bank, David Li Kwok-po, has come out to say the rumours about solvency problems at his bank are “groundless” and the perpetrator has now been arrested (an 18 year old bank clerk). Authorities are now looking to make further arrests of those who helped spread the rumour – which in my eyes is every person who sent passed the message on and thus unrealistic.
The key factor of this panic was the wide diffusion of mobile phone SMS and BBS postings warning that there was trouble in the bank. Under current strained conditions, we have to be extra vigilant of messages received from friends and treat them with a lot more caution than viral emails such as the “I Love You’ virus in 2000.