Bank Holiday

[runningman]

Re: Bank Holiday

First of all, let's be clear on what a bank holiday is, how FDR used it, and why he did so. Understanding these things is key to understanding what is likely to happen with bank holidays in the future.

When FDR came into power, there was a massive string of bank failures under way and strong public mistrust in banks evidenced most particularly in the form of bank runs. FDR instituted a bank holiday to basically determine which banks were fiscally solvent and which weren't. The idea was to close/consolidate banks which couldn't survive anyways, and better recapitalize banks that were viable, thus cutting out the deadwood and enhancing peoples' confidence in the banking sector. It actually helped a lot, although it was by no means a silver bullet for economic recovery.

However, you should keep in mind that back then a little organization called the Federal Deposit Insurance Corporation did not exist; the FDIC was created under FDR's administration with the aim of guaranteeing funds in the banking sector, thus negating a lot of the traditional issues that led to runs on banks. Second, we have technology and infrastructure for monitoring and adjusting bank liquidity that didn't exist in the 1930s. Thanks to that technology, Obama's folks could most likely do most of what FDR's administration did without even having to close down the banks - and do so preemptively before bank runs are likely to occur.

This is not to say that bank runs and bank holidays can't happen; nothing is impossible. But even if they do, the stock market won't be the best predictor to look at; you should look at things like benchmarks for interbank lending and liquidity, the prevalence of bank runs, the prevalence of bank failures, etc.


Shockingly, yes. I think most of us on here had US history in high school.


While the actual number is important, you really should pay significant attention to the %. Our society today has completely different levels of productivity, output, investment, and wealth generation than it did back during the Great Depression. Percentages allow you to better consider the approximate impact of negative economic developments relative to the productive capacity of the economy. In other words, we may have twice as many unemployed people as in the Great Depression, but we also easily have more than twice the productivity, significantly more consumption per capita, much greater population and job pools, much greater pools of investment, etc...all of which help us better weather negative economic impacts than our predecessors could back in the Great Depression. This is why economists consider relative percentages, and not just absolute numbers.

So I don't understand what you are saying.. are you saying there will be a bank holiday or not??? I'm saying yes...

reason is because people will start to pull out of banks once the run starts. Don't you understand that the gov't has been delaying this because this will unravel the deck of cards that the US has been building for years??!!??

[runningman]

Re: Bank Holiday

I don't know why this double posted

[Miroslav]

Re: Bank Holiday

So I don't understand what you are saying.. are you saying there will be a bank holiday or not??? I'm saying yes...

Ok, here is the Cliff's Notes version: (1) Bank holidays are unlikely because the government has other means of addressing banks' liquidity and solvency that they didn't have in the 1930s, and (2) if they do occur, bank holidays are likely to be preceded by runs on the banks and widespread bank failures.

reason is because people will start to pull out of banks once the run starts.

I'm sorry, but now I don't understand what you're saying. I can't make sense of this statement. If you mean run as in "bank run", then a bank run is the act of people pulling money out of banks; people don't pull their money out "once the run starts".

Don't you understand that the gov't has been delaying this because this will unravel the deck of cards that the US has been building for years??!!?? What happens when the FDIC goes broke??

You seem to be saying that the government is delaying this bank holiday thing because of fear that it will cause the banking system to fall apart. Actually, I think you may have it a bit backwards. The entire concept of a bank holiday is an action taken by the government to increase peoples' confidence in the banking system - and it worked pretty well in the past. So in other words, in the face of a bad situation, a bank holiday is a good thing. The government wouldn't delay a bank holiday out of fear of collapsing the banking system; the government would do the bank holiday to prevent the banking system from collapsing.

[i!!ustrious]

Re: Bank Holiday

^^^ or "cash cows."

might as well reiterate this again: i just believe that there is going to be some catastrophic financial destruction, and epic reconstruction of the systems in the next 14 years. i'm also going to weather the hyperinflation storm cos' i'll be livin' at a no or minimum level of upkeep sergeants.

FDR is the man. might as well dump some quotes from him here too:

If you treat people right they will treat you right... ninety percent of the time.

In our seeking for economic and political progress, we all go up - or else we all go down.

In politics, nothing happens by accident. If it happens, you can bet it was planned that way.

It is an unfortunate human failing that a full pocketbook often groans more loudly than an empty stomach.

I see an America whose rivers and valleys and lakes, hills and streams and plains; the mountains over our land and nature’s wealth deep under the earth, are protected as the rightful heritage of all the people.
ATTRIBUTION: Franklin D. Roosevelt (1882–1945), U.S. president. FDR Speaks authorized edition of speeches, 1933-1945 (recordings of Franklin Roosevelt’s public addresses), side 8, Cleveland campaign speech (Nov. 2, 1940), ed. Henry Steele Commager, Introduction by Eleanor Roosevelt, Washington Records, Inc. (1960).

We shall make mistakes, but they must never be mistakes which result from faintness of heart or abandonment of moral principles. I remember that my old school master Dr. Peabody said in days that seemed to us then to be secure and untroubled, he said things in life will not always run smoothly, sometimes we will be rising toward the heights and all will seem to reverse itself and start downward. The great thing to remember is that the trend of civilization itself is forever upward.
ATTRIBUTION: Franklin D. Roosevelt (1882–1945), U.S. president. FDR Speaks authorized edition of speeches, 1933-1945 (recordings of Franklin Roosevelt’s public addresses), side 12, fourth inaugural address (Jan. 20, 1945), ed. Henry Steele Commager, Introduction by Eleanor Roosevelt, Washington Records, Inc. (1960).

proportionality corresponded to the modern day, i would like or see many of these principles and values revamped and taken into action by our leaders... damn, the presidents speech the other night though... WTF.

-------





-------

[Miroslav]

Re: Bank Holiday

this again: i just believe that there is going to be some catastrophic financial destruction, and epic reconstruction of the systems in the next 14 years.

You don't need to wait 14 years. This is happening right now.

[runningman]

Re: Bank Holiday

You guys are right everything is fine in the world.. When do you think things like this will turn very violent?

[Cj Tari]

Re: Bank Holiday

haha man i love your apocaliptic view of everything.

i think most people are worried about getting jobs and supporting their families instead of "hitting the streets" in protests, a lot of my neighbors used to have decent jobs and now theyre stuck working at walmart or 7eleven, so i doubt any of them are eager to start the riots.

[Mariner1]

Re: Bank Holiday

haha man i love your apocaliptic view of everything.

i think most people are worried about getting jobs and supporting their families instead of "hitting the streets" in protests, a lot of my neighbors used to have decent jobs and now theyre stuck working at walmart or 7eleven, so i doubt any of them are eager to start the riots.

then people should be concerned about creating incentives for employers to create new jobs. if the people demand poverty, by gosh, give it to them.

edit; look at greece for example. that country is so fvcked, I wish i could watch a live feed from google earth at the collapse of that anthill.

[Miroslav]

Re: Bank Holiday

You guys are right everything is fine in the world.. When do you think things like this will turn very violent?

No one said that everything is fine. If your point with all of this is "things are really bad", then yes, we all clearly get that.

[runningman]

Re: Bank Holiday

my point isn't that things are bad. I have been constantly saying things are getting worse. I could deal with bad as long as there is a light at the end of the tunnel. But that light hasn't appeared yet which leads me to believe that rioting and protests will be a big thing over the next 2 years. I don't want it, but think it is inevitable.

[Steve Graham]

Re: Bank Holiday

you think way too much, read way too much, watch way too much news.. the media has you by the balls mate, step outside and enjoy life once in a while for gods sake before you end up in the looney bin.. or worse, you'll be one of those people standing in the street preaching the end of the world is coming

[toasty]

Re: Bank Holiday

or worse, you'll be one of those people standing in the street preaching the end of the world is coming

you talk like that isn't already the case.

[Steve Graham]

Re: Bank Holiday

[Kamal]

Re: Bank Holiday

runningman may just have something here. Didnt the mayan's predict Dec 21, 2012 as the ultimate doomsday event?

[Mariner1]

Re: Bank Holiday

runningman may just have something here. Didnt the mayan's predict Dec 21, 2012 as the ultimate doomsday event?

No, they did not such thing. Their calendar simply ends. The theory that the world will end on december 21st 2012 is a theory created by a guy who took copious amounts of LSD.

I would say the probability of the world ending on that exact date, like any other prediction of such nature, approaches nil.