Investors were also looking ahead to the meeting of the G7 this weekend for signs that the governments of the leading industrial economies would come up with further co-ordinated measures to tackle the crisis.
Alan Ruskin, strategist at RBS Greenwich, said: "The idea of a bank holiday only makes sense if the G7 needs to buy the time to come up with the specifics. A holiday as a circuit breaker simply to calm the market down with no interim actions would probably do more harm than good."
Foreign Exchange Analytics' David Gilmore says markets should prepare for another coordinated rate cut next week, and this time, he predicts Japan, with its 0.5 pct benchmark rate, will participate. He adds that 'while I would not (count) on a global bank holiday next week, one would make sense to me,' particularly with scheduled U.S. and Japanese bank holidays on Monday . 'Again this is a remote option, but not to be ruled out.' The main focus, he says, must be on 'government efforts to restore solvency in the banking system, and that process will be taking place in Washington not on Wall Street.'
If ever a weekend offered fair promise for declaring a bank holiday, it's this one. First, the G7 finance "ministers" are meeting in Washington, no doubt to talk about "restructuring the international financial architecture", which our masters have long longed to do. Second, it's a long holiday weekend, and the yankee government always likes to throw its surprise parties on weekends, when nobody can do anything to protect himself. Third, they haven't staunched the bleeding in the system yet. Listen, I am not predicting they'll declare a bank holiday, but it's a possibility, so pick up some extra cash tomorrow, like, a couple of month's living expenses.
Same as the 1930s?
Merely a temporary inconvenience -- that's how Saginaw businessmen looked on the eight-day bank holiday ordered by Gov. William A. Comstock on Valentine's Day 1933. The stock market crashed a few years before, real estate values were falling at alarming rates, and they agreed they had to do something.
But when less than a month later President Franklin D. Roosevelt ordered a national four-day time-out, even the most confident realized dire times were ahead. Only 207 of Michigan's 436 state banks and trust companies reopened their doors.
In Saginaw, two out of the city's three financial institutions permanently closed, and it took 10 years before Peoples American State Bank and Bank of Saginaw customers received their full deposits back.
Sound familiar? Could it happen again?
Yes, said Harold E. Evans, the retired chief financial officer for the former Second National Bank, Saginaw's sole survivor of the 1933 crash. But today's threat comes more from long-term loans made on short-term funds, he said, than the pledging of stocks to groups that in 1933 caused banks to fall like a house of cards.
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