U.S. may declare Emergency Bank Holiday ???

[chimper]

http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article3556815.ece

'He said that should the US Federal Reserve, the US Treasury and the Securities and Exchange Commission not devise a broad rescue plan to address the credit turmoil on Wall Street this weekend, “I would not be surprised to see an emergency bank holiday announced. That hasn’t happened since Roosevelt.” During the Depression, 75 years ago almost to the day, Franklin Roosevelt declared a four-day bank holiday, which stemmed a frantic run on banks.'

[RUMMYisFROSTED]

1. That'll settle everybody down.

/s

[Lex]

23. LOL. yup.

nt

[high density]

2. Come on. We aren't anywhere close to that

Bear Stearns took too much risk and got burned. This isn't a new phenomenon. Doing something lame brained like this today would begin a run on the banks.

[SOS]

35. One way to look at it

"Bear Stearns took too much risk and got burned."

Another view is that the 5th largest investment bank in the US collapsed on Friday.
Bears Stearns was founded in 1923 and has made a profit every single year for 84 years.
They made profits in the Great Depression.

And the entire thing collapsed on a Friday afternoon in March 2008.

[high density]

41. I'd call them a speculation bank

What they did wasn't investment.

[roguevalley]

50. how about taking out their management team and beating them

with clubs?

[MadMaddie]

52. Well if it goes against common sense and historical wisdom

this administration and it's cronies will do it.

[marmar]

3. Things are more bollocksed up than we know......

:scared:

[MadHound]

4. If they declare a bank holiday now, rather than stemming a bank run,

It will start a bank run. Right now the people are vaguely alarmed over the Bear Stearnes thing, but not enough to go down to their local bank and pull their money. If the Feds overreact and declare a bank holiday, that will panic the people and it will start a run on the banks as soon as the holiday is over.

[Raven]

5. Roosevelt was also able to calm the American people. There is a

famous "Fireside Chat" in which he urges Americans to put their money back in the banks...that the bank were safe. People believed him. Bush is no FDR!

[DemReadingDU]

8. Similar to "It's A wonderful Life"

Remember the scene in the movie, about the run on the bank, and George Bailey calms the people...
http://en.wikipedia.org/wiki/It's_a_Wonderful_Life

try this link...
http://tinyurl.com/5bd66

[eShirl]

28. Bush is the AntiFDR

[Ishoutandscream2]

49. Exactly. FDR was able to settle the nerves of Americans

Can you imagine Chimpy going on the air to make this announcement? Shit, there would be wide spread pandemonium.

[Danascot]

51. Everytime B*sh tries to tell us everything is okey-dokey

The public pulls another $50 billion out of their mutual funds. After 8 years people are finally getting wise to his BS.

[mediaman007]

6. Not too many people can take a run on the bank...

people have no savings!

[Vanje]

15. I'm going to make a run on my bank first thing Monday

.....and get my miserable $210.48 savings.

[RUMMYisFROSTED]

24. Get there quick. It's losing value every second that Chimp is in office.

[SoCalDem]

27. we do

:)

[corkhead]

48. I already made my run on the banks, I probably have negative net assets.

[HamdenRice]

7. Won't work. This is nothing like the 1930s. It's bank driven, not consumer driven

Bank holidays address "runs" on banks. Those occur when consumers (depositors) become afraid and rush to take out deposits. That hasn't happened yet.

This is driven by banks refusing to lend to each other, because they are afraid to take each other's collateral (which consists of mortgage backed securities).

This is a much more difficult problem. Bernanke seems to be doing the right thing -- which is making the fed the intermediary between banks by accepting mortgage backed securities as collateral.

[bicentennial_baby]

10. Did you see the NYT article this morning?

Fed Chief Shifts Path, Inventing Policy in Crisis

WASHINGTON — As chairman of the Federal Reserve, Ben S. Bernanke has long argued that a central bank should base its policies as much as possible on consistent principles rather than seat-of-the-pants judgment.

But now, as the meltdown in credit markets threatens major institutions on Wall Street and a recession appears inevitable, Mr. Bernanke is inventing policy on the fly.

“Modern monetary policy-making puts a lot of weight on rules, but there is no rule book for an economic crisis,” said Douglas W. Elmendorf, a senior fellow at the Brookings Institution and a former Fed economist.

On Friday, the Federal Reserve seemed to toss out the rule book altogether when it assumed the role of white knight, temporarily bailing out Bear Stearns, one of Wall Street’s biggest firms, with a short-term loan to help avoid a collapse that might send other dominoes falling.

That move came just days after the Fed announced a $200 billion lending program for investment banks and a $100 billion credit line for banks and thrifts. In a move that would have been unthinkable until recently, the central bank agreed to accept potentially risky mortgage-backed securities as collateral.

On Tuesday, the central bank is expected to reduce short-term interest rates for the sixth time since September. The Fed has already lowered its benchmark federal funds rate to 3 percent from 5.25 percent, and investors are betting that it will cut the rate to just 2.25 percent on Tuesday.

http://www.nytimes.com/2008/03/16/business/16bernanke.html?hp

:hi:

[HamdenRice]

20. I'm about to go buy the paper, but have to say Bernanke is doing a good job

in a horrible situation. The first non-idiot Bush has appointed.

But this is NOT something the fed can handle alone.

But if the president were not mentally incompetent, this would be being addressed by the Treasury Department, the SEC, the IRS, the Commerce Department and Housing and Urban Development.

Treasury and the SEC should deploy an army of lawyers and accountants to unbundle the good mortgages from the bad and repackage them. Commerce and HUD should be establishing a nationwide mortgage work out program. The IRS should be looking into the stripping of mbs income streams for stupid tax purposes.

But Bush is a complete idiot. Gail Collins had a great column about how he went to Wall St. and made a complete ass of himself. She says not only does he not know what's going on, but he couldn't even be bothered learning how to read his idiotic speech:

http://www.nytimes.com/2008/03/15/opinion/15collins.html?em&ex=1205812800&en=f15079df20e3ae9b&ei=5087%0A

George Speaks, Badly



By GAIL COLLINS
Published: March 15, 2008

Watching George W. Bush address the New York financial community Friday brought back many memories. Unfortunately, they were about his speech right after Hurricane Katrina, the one when he said: “America will be a stronger place for it.”

“You’ve helped make our country really in many ways the economic envy of the world,” he told the Economic Club of New York.

You could almost see the thought-bubble forming over the audience: Not this week, kiddo.

The president squinched his face and bit his lip and seemed too antsy to stand still. As he searched for the name of King Abdullah of Saudi Arabia (“the king, uh, the king of Saudi”) and made guy-fun of one of the questioners (“Who picked Gigot?”), you had to wonder what the international financial community makes of a country whose president could show up to talk economics in the middle of a liquidity crisis and kind of flop around the stage as if he was emcee at the Iowa Republican Pig Roast.

We’re really past expecting anything much, but in times of crisis you would like to at least believe your leader has the capacity to pretend he’s in control.
...

The country that elected George Bush — sort of — because he seemed like he’d be more fun to have a beer with than Al Gore or John Kerry is really getting its comeuppance. Our credit markets are foundering, and all we’ve got is a guy who looks like he’s ready to kick back and start the weekend.
...

But wait — more positive news! The secretary of Housing and Urban Development is proposing that lenders supply an easy-to-read summary with mortgage agreements. “You know, these mortgages can be pretty frightening to people. I mean, there’s a lot of tiny print,” the president said.

Really, if he can’t fix the economy, the least he could do is rehearse the speech.

[Celebration]

45. oh, I heard it, it was terrible

He even said inconGRUous instead of inCONGruous. Everyone was like, LAUGHING at him.

The second statement was something like "And we went after the terrorists."

His S's were all slurred.

His meds either need to be upped or downed. Amazing speech.

[Spider Jerusalem]

21. Well...that's just not reassuring at all.

We've an impending financial crisis brought on by overextension of credit at a time of low interest rates; reducing interest rates to stimulate further credit lending is going to accomplish what, exactly? Apart from staving off the inevitable just a little longer and making the hole a little deeper?

[elleng]

11. GOOD explanation!

Thanks

So the Fed holds bundled bad sub-prime mortgage securities, the Fed ends up owning the properties!!!!

[HamdenRice]

17. They are taking them as collateral for loans to banks. They might actually make money.

You're welcome!

They are not, as some have reported, buying them. They are lending to banks and taking mbs as collateral. Only if the banks default will the fed end up owning them.

The fed probably believes that there are still a lot of good mbs, but all the banks are terrified of accepting any mbs as collateral for interbank loans. That's why it's a "liquidity crisis."

About 25 years ago, there was a Mexican debt crisis. The US treasury department did something like this with Mexican bonds. After the panic was over, the US actually made money on the deal.

[elleng]

22. Wasn't that B. Clinton?

As to the suggestion in the article, about a bank holiday, think that guy misunderstands?

[HamdenRice]

26. Sad to admit it was Bush mafia family Consiglieri James Baker

IIRC it was under Poppy and was called "the Baker plan." Ironically, their solution was to accept Mexican bonds at a discount, and securitize them (just as mortgages are securitized to make mbs).

That was one of the first huge securitizations, and helped popularize them across Wall St and the world.

So in a way the success of Consiglieri Baker led to the explosion of mbs that is the root of the crisis today.

[elleng]

9. Who would announce it?

Hunky Dory George?

[ThomWV]

12. Patently absurd

[LiberalArkie]

13. I am wondering if we are getting to the same point as the movie Rollover

[lpbk2713]

14. Keeping people away from their money

would probably cause more problems than it would solve.

It would magnify the sense of urgency people are feeling.

[DemReadingDU]

16. Wall Street fears for next Great Depression

3/16/08
Wall Street is bracing itself for another week of roller-coaster trading after more than $300bn (£150bn) was wiped off the US equity markets on Friday following the emergency funding package put together by the Federal Reserve and JPMorgan Chase to rescue Bear Stearns.

One UK economist warned that the world is now close to a 1930s-like Great Depression, while New York traders said they had never experienced such fear. The Fed's emergency funding procedure was first used in the Depression and has rarely been used since.

A Goldman Sachs trader in New York said: "Everyone is in a total state of shock, aghast at what is happening. No one wants to talk, let alone deal; we're just standing by waiting. Everyone is nervous about what is going to emerge when trading starts tomorrow."

more...
http://www.independent.co.uk/news/business/news/wall-street-fears-for-next-great-depression-796428.html

[DemReadingDU]

18. Meltdown: the bad news is only just starting

3/16/08 Meltdown: the bad news is only just starting by John Waples, Business Editor

SAID last weekend that bankers believed the situation in the interbank lending market was as bad now as it was last August when Northern Rock, the mortgage bank, went into meltdown. I was wrong - it’s worse.

These are serious times in financial markets. The emergency funding given to Bear Stearns, the troubled American investment bank, shows just how bad it is.

All banks are running for cover. They are frantically trying to build up their balance sheets and eliminate risk. They are not prepared to lend to each other and the biggest concern they have is not one of liquidity, but solvency. That is why Bear Stearns was left high and dry.

Most banks are still sitting on valuable assets, but they cannot sell them at sensible prices and are running out of cash. Some will eventually be forced to sell, and fast.

There are scare stories aplenty out there about prominent institutions like Royal Bank of Scotland, Fortis and America’s AIG and a host of continental banks.

They are repeatedly denied but if only half the rumours are true, we are looking at a very frightening scenario.

The most optimistic interpretation is that the collapse of Bear Stearns is the big casualty we have all been waiting for, and that we will now see a period of consolidation among financial institutions.

The pessimistic view is that the Bear Stearns episode is the equivalent of a fall from a mountain top to a slippery ledge, and there is a greater tumble to come.

more...
http://business.timesonline.co.uk/tol/business/columnists/article3558568.ece

[OmahaBlueDog]

19. That's pure crap

People aren't running banks for cash, and there's no indication the FDIC can't pay. Bank holidays are to calm small investors. Big investors are being calmed by Ben Bernanke, who is simply printing money like he's mother f$%^&ing Santa Claus to bail out Bear Stearns.

The stock market, while sinking slowly, is not in a particular panic.

The only place where the US is really getting pounded is in the Foreign Curency markets. Gues What? We can't suspend dollar trading.

If we had a brain in our head, we'd have a T-Bill auction hiatus, draw a line in the sand, and say the debt stops here. We won't do that.

Irony time: FDR brought in deficit spending to attempt a solution to the Depression. The next Dem president will probably slash spending and attempt a debt restructuring and repayment plan. We will have then become the fiscal conservatives.

[CatholicEdHead]

29. Would that be "drowning the government in a bathtub of debt"?

ala Grover Norquist? Isn't this just according to plan to cut Social Security and other entitlements?

[OmahaBlueDog]

30. Absolutely correct....

... and , in the short term, the neocons will have partially succeeded. That is the Bush legacy.

However, raising the SS age is far from ending the program, and the reality is that we live too long (as a group) to continue to support retirement at 65 or 67.

Where I feel a fiscally conservative Democrat will differ from the Norquist/Neocon vision is:

a) what constitutes a "fair tax." We will continue to assert that those who benefit most from our system should pay the largest share of the costs; Norquist wants a flat tax or an NST system that would shift an enormous burden to the poor and middle class.

b) where we spend the money. The conservative vision is no social programs. Government should run the justice system, secure the borders, and that's about it. I think even Hillary Clinton wants to largely remove us from the foreign military adventure business, and focus our spending on helping the working poor and lower middle class, and promoting education.

[pitohui]

32. social security can't be raised any higher for blue collar workers

the retirement age was already raised under ronald reagan (not a progressive) and yet somehow people are still crying out to raise it further?

you do understand that blue collar workers, the core of our industries, a great many of them already become disabled before age 65, do you really suppose that my husband will still be able to lift 100 pound weights when he is age 70, some jobs it's just part of the reality that you can't spend all day hiding at your desk unless you are doing something of no value such as "managing" people by telling them what they already know what to do, sure, a 70 year old could do THAT job but the blue collar jobs that require real hands-on work no way

if you want to reinvest in infrastructure, reinvest in manufacturing, return our economy to health -- no, you have to be aware of physical reality and many jobs it's just insanity to expect people to work much past age 65

also, there is only so much room at the top, every "good" job requiring little physical activity where some old person is retired in place and refuses to leave means one fewer "good" job for a person in their middle years -- less room for advancement -- less ability to get a higher income and put more into their social security (soc. sec. is based on what you earned while working)

there is every good reason to leave the age of retirement exactly where it is

please spend some time with real people in their sixties and seventies, not just with exceptionally active and athletic old people, but with REAL people who have worked all their lives and as a result are experiencing the normal aches and pains and health issues that result

if you raise the age of retirement too high, you cheat the hardest physical worker of ever having any retirement while he is still mobile and pain free enough to get much out of it

[OmahaBlueDog]

34. I respect what you're saying, but I disagree

Factoring out what type of work you do, Americans (on the whole) are living well into their 80s, 90s, and 100's. The system just wasn't designed for that. The system was originally designed for people to collect in their mid 60s and die off in their 70s.

The better alternative is to start investing in job retraining for older workers. As a nation, we have not adopted well to the notion that people will be ending careers in their 40s and 50s and starting new ones. We need to make job training accessible and easy to afford. We also need a national health plan that helps to take the "pre-existing condition" fears out of the equation for employers.

[tachyon]

36. I agree with you conceptually but retraining is pretty much trivial when the job goal is

flipping burgers. Which actually becomes in itself mostly irrelevant when nobody can afford burgers.

[OmahaBlueDog]

38. Again, I respect what you're saying, but I disagree

<<etraining is pretty much trivial when the job goal is flipping burgers. Which actually becomes in itself mostly irrelevant when nobody can afford burgers.>>

Retraining is at its least trivial when the goal is flipping burgers. Notwithstanding the facts that flipping burgers is necessary and honorable work, and that some do advance from flipping burgers to managing and owning restaurants, the bottom line is that in a failing economy, the best way to ensure we can all afford burgers is to get people out of minimum wage jobs and/or unemployment into the jobs that are in-demand as quickly as possible.

And some comments to two posts back:


<<ou do understand that blue collar workers, the core of our industries, a great many of them already become disabled before age 65, do you really suppose that my husband will still be able to lift 100 pound weights when he is age 70?>>

I fully understand that welders, construction workers, material handlers, drivers, machinists, fabricators, assemblers, and many others reach their physical limits into their 50s. Some go on to manage. Some change careers. Others end up chronically unemployed. That third group exists for a variety of reasons (for example, it is cheaper to keep an injured worker doped on Oxycodone for 10 years than to pay for corrective surgery). However, understanding does not change the fact that Social Security is an insurance policy, and we are now regularly collecting far in excess of what the policy was designed to pay. The only ways to fix that are to collect some more and pay out less. It's not politics, it's math.

[tachyon]

39. I didn't mean to imply that burger flipping is not a completely honorable profession!...only that

it's not one that requires a lot of training. Like fifteen minutes. Maybe instead of taking people -out- of minimum-wage jobs, it would be better to make the minimum wage one that could actually sustain a human...? Just a wild and crazy thought.

Of course that tends to create inflation so the trick is to make sure everyone has enough resources to keep from starving. But of course not all at once...we will probably end up with 'rolling hunger' like the electricity in many places.
The crux is, of course, who decides.

[pitohui]

53. methinks you don't know real old people

you know a fantasy statistic that americans are living "well" into their 80s, 90s, 100s -- again, i urge you to spend some serious time volunteering or socializing with people in this age group because if you rely on who you encounter by chance, it's self selecting that you only see the most active and mobile of the retired!

i have heard that 50 percent of people over age 85 have symptoms of alzheimer's disease or another form of dementia, heart disease is v. common in the older folks i know (yes, even the non smokers who ate good diets, imagine that! or as my dad's cardiologist said to him, "it isn't true you have no risk factors because your age is a risk factor"), cancer is common -- good lord, after age 70 if you haven't been treated for cancer or heart disease or another serious illness you pretty well count yourself lucky

to talk about job retraining for people in that age group is just cruel and hurtful, there is a time when people simply have to slow down

when you get older, you are going to be shocked at what time does to the brain and this fantasy of people being re-trainable for jobs in their 60s is going to look like foolishness that it is, here's a clue, there's a reason why it's news when somebody in their 60s or 70s gets a college degree and it ain't because learning comes as easily to the mature brain as it does to the younger brain, it's because these lucky folks are exceptional and therefore newsworthy


and the idea that it's fine for somebody in their 70s to stand on their feet all day flipping burgers because it's honorable, well, all i can say is, i wish for you what you wish for me and mine, my friend, MEET some old people, many of them have venous insufficiency and they can't stand for a long period of time, AIN'T GONNA HAPPEN

[SpiralHawk]

25. "Another holiday! Cool. My fav. Smirk." - Commander AWOL

[pitohui]

31. sounds like rumor mongering to me

i just read the article and all i can say is, facts not in evidence, i'm not convinced any of this will result in an emergency bank holiday this week

[roamer65]

33. There will be no bank holiday.

Not in this day and age of computers. Here's what the Federal Reserve WILL do...

They're going to open up the window for unlimited loans to banks and financial institutions at 0%, with basically very long repayment terms. M3 money supply growth will go well beyond its current 17%. Inflation will go up accordingly.

[LWolf]

37. A "bank holiday." Does that mean that they shut down

ATMs and debit card purchases across the nation?

[Bluebear]

40. Chimperrific!

[bushmeister0]

42. Text of FDR's first Fireside Chat on the Banking Holiday

He summed the situation up like this:

"Confidence and courage are the essentials of success in carrying out our plan. You people must have faith; you must not be stampeded by rumors or guesses. Let us unite in banishing fear. We have provided the machinery to restore our financial system; and it is up to you to support and make it work. It is your problem, my friends, your problem no less than it is mine. Together we cannot fail."

http://historymatters.gmu.edu/d/5199/

Those were the days. We need desperatly this man now.

[NashVegas]

43. Hello? I Have a DEBIT CARD!

And so do a lot of other people.

[sarcasmo]

44. Monday, shit is going to hit the fan. Wall Street knows this whole bank mess is bad news and Silver

Spoon boy doesn't have a clue. Load up on those canned goods people.

[Generic Brad]

46. He's already lost a great American city on his watch

Now it looks like he's going to lose the rest of America.

[natrat]

47. they have not lost anything-this is the plan ,they are winning