BANK HOLIDAY... this is exactly what we need

[nadinbrzezinski]

to figure this damn foreclosure mess.

No, I don't expect our great leaders to go there... mostly they are 'fraid of the powerful actors in the market place.

But that is exactly what we need, and of course a slew of re-regulations and BREAKING UP the too big to fail banks.

No, that will not happen any time soon, even if it SHOULD.

[Subdivisions]

1. I visit several financial forums on a daily basis and the idea of an

impending bank holiday is gaining steam.

It is what we need. All the bad debt needs to be flushed out and let the chips fall where they may.

[Gin]

2. what does "bank holiday" mean?

[jaxx]

3. Closing them for an unspecified time.

[Davis_X_Machina]

4. Because nothing will settle...

...an already badly rattled nation than a bunch of ATM's that don't work, and that won't work until a time unspecified.

[jaxx]

5. Yep, not a pretty picture.

It seems like it would cause a panic.

[nadinbrzezinski]

7. Yep, like the great panic of 1932....

Oh wait, there wasn't one.

[nadinbrzezinski]

6. Roosevelt did that in 1932 because, ironically

of similar problems and they were not as fucked up as now.

Back then it was iirc 72 hours. We could do that, easily, worst case in a week.

But that is what it will take.

What will rattle the banking system worst than this will be a full fledged breakup of oh citibank and BOA... that will really be a nelson to the system as a whole.

Reality is that nobody in power has the political will to do this. That is the truth.

Oh never mind me, history and all that and past is prologue.

[Davis_X_Machina]

8. The 1933 bank holiday...

...was not pre-emptive. It came on the heels of three prior complete lock-ups of the system. 10,000 banks -- albeit much smaller than in our age of consolidation - had already failed. You have a functioning banking system right now.

[nadinbrzezinski]

9. We have a more or less functioning system

not a well functioning system.

The foreclosure crisis should tell you something. Tips icebergs and all that.

Don't worry our free market warriors will not do something that radical. Hell, they will not even return the regulatory environment that worked, so we are just spinning here.

[muriel_volestrangler]

13. Are you saying there are runs on banks going on right now?

That would be the situation in which stopping people taking their money out would make sense - when there's a panic, and a pause for reflection will make people realise the situation is OK.

Here's FDR's description of what was going on then:

What, then, happened during the last few days of February and the first few days of March? Because of undermined confidence on the part of the public, there was a general rush by a large portion of our population to turn bank deposits into currency or gold. -- A rush so great that the soundest banks could not get enough currency to meet the demand. The reason for this was that on the spur of the moment it was, of course, impossible to sell perfectly sound assets of a bank and convert them into cash except at panic prices far below their real value.

By the afternoon of March 3 scarcely a bank in the country was open to do business. Proclamations temporarily closing them in whole or in part had been issued by the Governors in almost all the states.

It was then that I issued the proclamation providing for the nation-wide bank holiday, and this was the first step in the Government's reconstruction of our financial and economic fabric.

http://www.fdic.gov/about/history/3-12-33transcript.html

So how many banks are unable to meet the demand for cash at the moment?

[Davis_X_Machina]

10. What you're advocating for, then...

...is not a bank holiday at all. You're advocating for nationalization, which you could do without a holiday (Sweden, early 90's). Or you could, conversely, have a holiday without nationalization (US, March 1933).

Apples and oranges.

[nadinbrzezinski]

11. I am advocating for a BANK HOLIDAY

nationalization, even if it made sense... is not in the American DNA.

[Davis_X_Machina]

12. To what problem is a holiday the solution, though?

[nadinbrzezinski]

14. Have you missed all the foreclosures?

Oh well.

Shakes head and walks away.

[Davis_X_Machina]

15. Not having any banks open...

...would stop a lot more than foreclosures, though.