Wednesday, July 15, 2009

Is an FDR-type "bank holiday" on the cards?

The Blogosphere has been busy with a lot of chat on the subject. Roughly half the hits for a Google search for "fdr bank holiday" show up on a search for "fdr bank holiday 2009".

I'll tell you what interested me:

If I was Obama, and I had this at all in mind, I would have acted on this by now.

Of course, it is possible that the administration's judgment is that the public needs to be prepared before such a move is made, whenever that may be necessary.

Should that be the case, then it would of course be useful to encourage extensive discussion of this on the Blogosphere before drawing more traditional media into the discussion, and finally announcing such an actual move.

However, a week is a long time in politics and it remains to be seen whether such a drastic move will be thought necessary. Because the consequences will not be pretty: in 1933, the US was pretty isolated from the rest of the world, and vice versa....

It is doubtful if the result would stop at greater bank & system control, fewer banks & a lower US Dollar. The impact on US Treasuries, and on Emerging Markets would be terrible.

Greater bank and system control is already being sought by legislation being considered by the US Congress. Banks are going out of business by the day, though that gets hardly any publicity. And a lower Dollar can be more predictably and efficiently obtained by other measures.

So the supposed main advantages of a "bank holiday" are already on the way to being obtained (we hope!). Any additional advanatages of such a possible move are more uncertain than in 1933. And the disadvantages of a "bank holiday" might be horrendous. Sphere: Related Content

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