Is this a good thing or a bad thing?
http://www.bloomberg.com/apps/news?pid=20601087&sid=aP5mpMUORBWM
http://www.washingtonpost.com/wp-dyn/content/article/2008/10/10/AR2008101003147.html?hpid=topnews
I am sensing a "drum beat" from the press. In today's world the holiday can be effected by simply flipping a switch.
Don't know if you saw this...
ReplyDeleteHowever, we’ve only seen the tip of the iceberg when it comes to measures the government can impose in dealing with this crisis. Today, without further legislation, the President can at the stroke of a pen declare a “state of national economic emergency” of potentially unlimited duration. Once he does so, under existing law and precedent, he may:
Impose a national banking “holiday” closing all U.S. banks or restrict and ration cash withdrawals and the cashing of checks or drafts. President Franklin Roosevelt used this authority in 1933 to closet the U.S. banking system after a run of bank failures.
Shut down all stock and commodity exchanges. President Wilson invoked this authority in 1914 to shut down U.S. financial markets for four months.
Impose punitive taxes on inbound or outbound foreign investments. President Kennedy invoked this authority in 1962 to shrink U.S. capital deficits and support the U.S. dollar.
Investigate, regulate, or prohibit the importing, exporting or holding of currency, securities or precious metals. President Franklin Roosevelt used this authority in 1933 to order the sale of all privately held gold in the United States to the federal government. President Nixon invoked similar authority in 1972 to end the ability of foreign central banks to exchange U.S. dollars for gold.
A good financial plan calls for 3 months of cash to pay for routine living expenses. Maybe it might be a good idea to have that cash at home in a safe. Never really thought about it before until this is discussion of a "bank holiday".
ReplyDeleteBasically, I've been keeping 3 months available in a money market assuming I could easily transfer into checking if need be.
Something to think about is that a "bank holiday" or technically the inability to access your cash could happen for lots of reasons. Let's say a prolonged power failure occured such that ATMs and credit card machines in retail locations were not working. Or perhaps a computer virus shut things down for a time. So, from my perspective, it is much more than just the banks shutting down to "catch their breath" and gain equalibrium. The probably of this happening is not zero but I also don't believe that it is imminent or guaranteed either. Having said that, I would not suggest inaction and perhaps some form of insurance is a good idea.
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