Paraguay's president resigns amid Ueno Bank collapse and impeachment
Paraguayan President Santiago Peña announced his resignation on Thursday after the collapse of digital lender Ueno Bank froze accounts for about three million customers — roughly 60% of the adult population — the BBC and AP report. Congress's lower house unanimously advanced impeachment, alleging conflicts of interest tied to Peña's former shareholding in the bank's owner; both houses then pressed the trial rather than accept the resignation, which would have left him eligible for a lifetime Senate seat with immunity. The central bank had seized Ueno earlier in the week over a severe capital shortfall; deposit-return measures are underway while criminal probes continue. Read at BBC News →
The Panic of 1873
What happened then
In September 1873 the Philadelphia house of Jay Cooke & Co., heavily exposed to Northern Pacific Railroad bonds it could no longer sell, failed. The collapse set off bank runs, a New York Stock Exchange shutdown, railroad bankruptcies and a multi-year depression remembered as the Panic of 1873.
What caused it
Post–Civil War railroad overbuilding, speculative finance and a sudden pullback of European capital left the system brittle. When confidence in Cooke — once a trusted wartime financier — snapped, depositors and investors discovered how tightly public and private credit had been woven together.
How it was resolved
Clearing houses and the Treasury scrambled; firms failed in waves; unemployment and wage cuts followed. Labor unrest, including the great railroad strikes of 1877, marked the long hangover as politics argued over greenbacks, gold and who should bear the losses.
How it turned out
The panic became a classic American lesson: when a fashionable lender holding public trust and ambitious paper goes under, the political cost can rival the financial one. Recovery took years, and the episode hardened later debates over banking supervision and the fragility of confidence.
What the philosophers say
In his essay “Of Public Credit,” Hume warned that paper fortunes built on confidence can turn on a nation as quickly as they enrich it. “Either the nation must destroy public credit, or public credit will destroy the nation,” he wrote, arguing that once ordinary people and merchants treat state-linked paper as safe money, any shock that exposes hollow assets threatens not only private savings but political order itself. A digital bank that held pensions and public deposits, then froze millions of accounts, is the kind of fracture Hume had in mind: when trust in the ledger fails, rulers discover that apologies and impeachment motions are the price of treating other people's money as political capital.
Sources: Hume, “Of Public Credit” (Econlib / Liberty Fund) · Stanford Encyclopedia of Philosophy: David Hume
Sources: U.S. Treasury: Financial Panic of 1873 · PBS American Experience: The Panic of 1873 · Wikipedia: Panic of 1873
Further reading: Manias, Panics, and Crashes: A History of Financial Crises by Charles P. Kindleberger and Robert Z. Aliber