How the World Almost Came to an End on September 18, 2008 81 comments
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Update: Felix Salmon raises questions on Kanjorski's statements: "This is all, frankly, fiction."
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LiveLeak has caught a scary moment of previously undisclosed insight by Paul Kanjorski where he reveals some facts that have not been captured by the media previously. At 2 minutes and 20 seconds in the video below, Democratic Representative Kanjorski explains how the Federal Reserve told Congress members about a "tremendous draw-down of money market accounts in the United States, to the tune of $550 billion dollars." According to Kanjorski, this electronic transfer occurred over the period of an hour or two. And it gets worse. Kanjorski paraphrases the following disclosure by Bernanke and Paulson (emphasis added):
On Thursday (Sept 18), at 11 in the morning the Federal Reserve noticed a tremendous draw-down of money market accounts in the U.S., to the tune of $550 billion was being drawn out in the matter of an hour or two. The Treasury opened up its window to help and pumped a $105 billion in the system and quickly realized that they could not stem the tide. We were having an electronic run on the banks. They decided to close the operation, close down the money accounts and announce a guarantee of $250,000 per account so there wouldn't be further panic out there.
If they had not done that, their estimation was that by 2pm that afternoon, $5.5 trillion would have been drawn out of the money market system of the U.S., would have collapsed the entire economy of the U.S., and within 24 hours the world economy would have collapsed... It would have been the end of our economic system and our political system as we know it...We are no better off today than we were 3 months ago because we have a decrease in the equity positions of banks because other assets are going sour by the moment.
Interestingly, Kanjorski, and likely more and more Democrats, are starting to shift to the camp that more time is needed to make a correct decision this time (which may explain Geithner's decision to postpone the "bank-rescue" announcement by one day, to Tuesday), instead of rushing into another half-baked plan. Very scary stuff.
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But what have they done to cure the problem? The fundamental problem is tectonic shift in global financial power and the US Governments policy of prescribing a palliative of easy credit.
The US Government needs to produce a game plan for delivering that famous productivity and cost competitive in the wealth generating industries that actually matter. It is no good pretending that you can be the World's dominant superpower, when all you do is shop.
Furthermore they need to reduce the number of reasons foreigners have for not buying US Goods. Some of that is down to things like foreign policy.
Would you rather have constant resource wars (like old Europe) or an Islamic system where usury is not allowed (and therefore there's no fast way to magnify good ideas)? Easy credit is a better answer.
On Feb 10 09:30 AM Dave Wrixon wrote:
> So they addressed one of the symptoms.
>
> But what have they done to cure the problem? The fundamental problem
> is tectonic shift in global financial power and the US Governments
> policy of prescribing a palliative of easy credit.
>
> The US Government needs to produce a game plan for delivering that
> famous productivity and cost competitive in the wealth generating
> industries that actually matter. It is no good pretending that you
> can be the World's dominant superpower, when all you do is shop.
>
>
> Furthermore they need to reduce the number of reasons foreigners
> have for not buying US Goods. Some of that is down to things like
> foreign policy.
"Someone threw us into the middle of the Atlantic.." Duh! The 'somebody' was the guy telling you he needed 9,7 trillion but couldn't tell you how he was going to spend it..
The Fed told us 'somebody' withdrew 500 billion an hour one morning in September.. How? - cash? into money market accounts? into government securities? No mention of exchange rate operations so gotta have been keeping it in dollars.. Hmm who needs dollars? American banks and hedge funds?
Do elected representative believe that money can electronically disappear? Does this guy know what a computer is? Does he believe the assets cease to exist in cyberspace?
Since the Fed clearly thinks they're idiots and easily fobs them off with stories of electronic wizardry, it's hard for anyone else to have much time for such well meaning buffoons. I have a picture of the session when law-makers were being told the 'big story' by the Fed, whose representative in my mind's eye resembles Austin Power's archrival Dr. Evil...
Ha! ha! This is the funniest thing I've heard in months.. I've just been laughing for 15 minutes...
Don't get it and this enigma is for me the real scary event.
Capitalism in the good times
Socialism in the bad times
We really have talked ourselves into believing we were born with the right to prosperity.
On Feb 10 09:30 AM Dave Wrixon wrote:
> So they addressed one of the symptoms.
>
> But what have they done to cure the problem? The fundamental problem
> is tectonic shift in global financial power and the US Governments
> policy of prescribing a palliative of easy credit.
>
> The US Government needs to produce a game plan for delivering that
> famous productivity and cost competitive in the wealth generating
> industries that actually matter. It is no good pretending that you
> can be the World's dominant superpower, when all you do is shop.
>
>
> Furthermore they need to reduce the number of reasons foreigners
> have for not buying US Goods. Some of that is down to things like
> foreign policy.
On Feb 10 11:04 AM mr freddo wrote:
> I have been advocating that people make sure they have adequate supplies
> on hand in the event that the banks close for an indefinite period.
> It sounds like science fiction but, as you can see from the above
> article, it could happen and it could happen quickly in our electronic
> age.
>
On Feb 10 12:35 PM infp wrote:
> Why aren't we holding the bankers who invested in these 'toxic assets'
> accountable? The executives at Bear Stearns, AIG, Fannie Mae, Freddie
> Mac, etc. who made millions off the derivatives trade are allowed
> to keep all their money with no apparent consequences. At the very
> least, can't these executives be sued for violating their fiduciary
> responsibility to shareholders and employees? We live in a suit-happy
> nation, awash in lawyers, isn't this a good time to use them?
1. Who were the withdrawers?
2. Where did the money go?
The answers to these questions might reveal some surprises.
For example, if the withdrawers were significantly domestic and quite large in number, the actions taken appear appropriate. If the withdrawers were few in number and/or foreign, we should question whether the actions were appropriate. In this second case, direct intervention with the withdrawers via central banks might have been indicated.
Finally, if the money withdrawn was largely converted to hard assets, that would be evidence of a concerted plan to bring down the U.S. That goes back to the central question: Where did the money go?