Banking regulators in several countries might consider an extended banking holiday to “ease” tension in credit markets. Call it a forced holiday, as few would be celebrating.
There are signs out there, not necessarily on bank doors.
One measure, the TED spread, widened to a record Monday, gauge keeper Bloomberg reported. The TED, aside from being someone I swim with at The Pool, is the margin between what ordinary banks pay and the USA Treasury pays to borrow money for three months.
Thus, lenders appear to be holding onto cash, exactly what responsible financial managers are telling their clients these days.
An enforced bank holiday in the USA, perhaps Canada or the United Kingdom or Germany, theoretically would give regulators (Federal Reserve, Bank of England, Office of Thrift Supervision, Federal Deposit Insurance Corp., Office of the Superintendent of Banking Institutions, European Central Bank and so on) as well as other organizations such as the IMF the time they need to sort through the big issues in the current financial turmoil.
In April, USA regulators and legislators said they would try to outline new guidelines for banks and for brokerages and other market participants within 100 days. Presumably, a one-day or three-day holiday, during which THE DOORS WOULD BE CLOSED AT YOUR LOCAL BANQUE POPULAR, would allow booking agents in Washington, London and elsewhere to line up Jackson Hole, Wyoming, for a gathering of silk suits – or as is the case with government, cheap wool suits.
Such a bank break also would give ordinary bank employees times to stock up on tomato paste, water and canned citrus. Rice and beans, anyone?
Like I said the other day, this is a test of the incumbent doghouse system.
Note: My cosmos in terms of holdings is listed on www.Stockhouse.com under the “portfolio setting.” I am currently losing my shirt. For more ThomWatch, please see ThomCalandra.blogspot.com.
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