Good point.
Cheers!
Posted on 02/09/2009 10:54:52 PM PST by TigerLikesRooster
Rep. Kanjorski: $550 Billion Disappeared in "Electronic Run On the Banks"
At 2 minutes, 20 seconds into this C-Span video clip, Rep. Paul Kanjorski of Pennsylvania 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 occured over the period of an hour or two.
(Excerpt) Read more at liveleak.com ...
(note: Sept 15, 2008 was Monday. He may have been refering to "Sept 18, 2008.")
"On Thursday Sept 15, 2008 at roughly 11 AM The Federal Reserve noticed a tremendous draw down of money market accounts in the USA to the tune of $550 Billion dollars in a matter of an hour or two.
Money was being removed electronically.
The treasury tried to help with $150 Billion.
But could not stem the tide.
It was an electronic run on the banks
The treasury intervened but had they not closed down the accounts they estimated that by 2 PM that afternoon. Within 3 hours. $5.5 Trillion would have been withdrawled and collapsed and within 24 hours the world economy."
Ping!
http://www.nytimes.com/2008/10/10/business/10markets.html?_r=2&pagewanted=2&fta=y
I thought maybe some of it was orchestrated, still wonder, but the train wreck had already started some time B4 this so then I thought maybe managers of MM funds were getting out plus short sellers, so I don't know.
He goes on to characterize this as a “panic”, but who was panicking ? Was it a panic, or was it a concerted attack? This seems to be the unstated question here.
BUMP
Later.
Many funds operate under the same financial premise and use software to do it. I wonder how much of this is automatic, as opposed to sinister?
OK, I’ll dial my tin hat to “neutral” ... + 0.1
were they removing their own money or was this a mass theft?
jeez
der fuhrer vill not be denied
Funny.
The fact is that this little statement proves that whatever response the government comes up with - excepting staying neutral - will simply exacerbate the situation.
They are essentially admitting that they don’t control the financial levers anymore. The world market is so sophisticated and large that we are essentially back to a pre-Fed period where whipsaw responses to the market were much more common.
Had they not shut down the market they actually don’t know what would have happened. They were speculating. It was a real panic (automatic and electronic - maybe), but did shutting it down make it worse or better? What if the market had cleared on Monday?
As bad as the whipsaw could be (it would literally wipe out malinvestment), the market would clear as recognized value and moved in. Sadly, the “stimulus” just continues the hurt. Like getting surgery one cut and one day at a time.
We live in interesting times.
He said that the accounts were closed, and that they estimated that by 2 PM that afternoon, the US economy would have fallen. ...then the world, etc.
I thought this had been acknowledged since the early '90s. I remember some C-span type presentation I saw around then when some guy was explaining the explosion of the money market, how money had become a commodity in itself rather than representing other commodities. I suppose this has always been true in a way, but his point was the explosion in the amount of money, which seemed in some way to be breaking assumed boundaries.
You are right. It is just that the wizards still think the curtain is drawn.
OK, here’s what happened that precipitated these events.
A couple of money market funds “broke the buck” — owing to the collapse of Lehman Bros. The funds had been playing rather fast and loose with their credit quality standards, and the NAV of funds that held 10’s of billions in $$$ fell to a few cents below $1.00.
OK, so what was the big deal? With what was happening in that timeframe, no one knew anything for certain any more. Money market funds are “supposed to bore the investor into a good night’s sleep...” — and suddenly, this assumption was put to lie.
Suddenly, no one trusted ANYTHING any more. When money market funds can’t return your capital whole.... it is time to get out of “cash equivalents” and into real cash, or sovereign debt (which is as close to cash as one can get without having Brinks trucks show up at your front door...)
The result was this run on money market funds, which resulted in huge spreads on investment-grade short-term commercial paper as the funds sold out as well as the huge buying surge into T-bills (culminating in their eventual negative yields a couple weeks later).
The Dem's will never demand a Congressional investigation.
That the Dem's will never launch an investigation should tell everyone all they need to know about this crisis.
Sometimes panic over rides logic!
Part of the problem here is that the people in DC are simply not our best and brightest. They are, on the whole, the failures and dregs of society.
In these crisis situations, where high finance is involved, the people in DC are completely without a clue as to what is going on. They have no foundation, no framework of understanding with which to discern who is telling the truth, who is telling a lie and who is merely clueless - and as a result, they’re getting log-rolled by Wall Street.
Now, that’s the normal state of affairs. It has been that way since the founding of our nation.
What is different this time is that neither the Fed, nor regulatory agencies understand the markets they pretend to regulate or supervise. The derivatives markets especially have completely surpassed the understanding and comprehension of the people in DC. We might as well be carrying on a conversation about particle physics theories as discussing finance with these people. If we started talking about Schroedinger’s famous experiment with the cat in the box, they’d fixate on whether we were being cruel to the cat and get on the evening news to excoriate us for being cruel to cats with particle physics experiments.
They would completely miss the point of the “thought experiment.”
this sounds like a)financial terrorism or b)outside influences creating an election influence. why are we only hearing about this now? who did the withdrawing?
I think that that withdrawal and the gas prices at the time were somehow connected to outside or inside influences to sway the election to the dems.
Good point.
Cheers!
2. Rep. Kanjorski got the date wrong. Sept. 15th was a Monday. Maybe he meant the 15th, or maybe he meant the 18th. We need a better resolving lens than Kanjorski's statement.
3. Of course, this happened while most people here in Houston were blacked out by the hurricane of Sept. 12/13th (Fri. night overnight), and while newspapers were available (the generally pitiful libtarded Houston Chronicle), Internet and cable biz news weren't, until about Sept. 27th-29th for most Houstonians ..... Just in time to see the market go over the waterfall. (Perhaps the events are related? Word "got out" and a rush to cash ensued?)
4. Minyanville also describes the peculiar This Week appearances of Sec'y. Paulson (who had a visible tic) and Rep. Boehner and others, who were singularly uncommunicative but indicated that something had happened or had nearly happened, ominously refusing to say what, even when prodded by George Stephanopoulos. A straightforward explanation would have been less alarming, one imagines (imagines -- since TV wasn't available here).
For possible interest.
How do we get to $5.5 trillion? Do the arithmetic. If withdrawals had continued at the same rate for three more hours, they'd have added up to maybe $2 trillion.
Again, better statement of problem needed.
Sound as bad as Friday October 13, 1307.
On second thought that treatment may be in store for us.
you have me here - this is succinct and true and should be shouted from rooftops
Now, that’s the normal state of affairs. It has been that way since the founding of our nation.
the founders were not a$$es this current crop is....they created a stable government thats lasted 240 yrs....
Surprise. Surprise. Election2008 was stolen in so many ways.
This has the xtink of George Soros all over it.
Ooops. Make that “stink”, not xtink (typing too early this am).
well, I went back and looked at a headline or two from 9/15/08 - found this - Obama had an immediate comment:
“U.S. President George W. Bush said Monday he is confident that the markets are resilient and can deal with the latest financial blows. “We are working to reduce disruptions and minimize the impact these financial market developments on the broader economy.” ...
U.S. Democratic presidential candidate Barack Obama said eight years of Bush “brought us the most serious financial crisis since the Great Depression.”
His Republican rival said John McCain said he was happy the federal government decided not to use taxpayer dollars to bail out Lehman Brothers.”
http://edition.cnn.com/2008/BUSINESS/09/15/lehman.merrill.stocks.turmoil/index.html
now the question begs, how would Obama know, at that point, on that same day, that we would experience the ‘most serious financial crisis since the Great Depression’?????? when we wouldn’t actually know that for another month or three????
They had planned it to scare folks into changing leadership. I believe Bambi is no more than a puppet who is given a script each day. The whole crisis was just too convenient. I will always wonder why Hillary was not privvy to it. Remember old Michelle said “That no one would keep Bambi from becoming Pres.” She was letting the cat out of the bag at that point. The Obama folks have been behind the scene planning the takeover for a long time.
Give that man a cigar! The fix was in. This whole bubble of over investment in over valaluation has created a giant gas bag based on nothing! It and the valued amount are worthless! This is the funniest thing I have ever seen in my whole life.
The capital, the productivity, the potential worth - none of it was ever there to begin with. Talk about leverage, the people that started this crap started to beleive their own hype and rode the gas bag to the dizzying height it attained; and the were suprised as the whole ball of gas delated.
No perspective, no idea base economic value. Dreams, piled on hope, piled on greed - that’s all that was ever there. Now they can live with the nightmare they have created.
If they think that that they will use the taxpayer to bail them out this time they’ve got another thing coming. It ain’t gonna happen. There is no way that politicians and oligarchs are going to send the American taypaying public to the desert of an economic gulag for fifteen to twenty years to save their asses.
In less than two years the American public (and the rest of the worlds citizens) who are being set up for the robbery on a grand scale will awaken. When they do; the culprits will bail out like rats leaving a sinking ship. There will be hell to pay and lives lost before this is over.
The whole thing was planned and orchestrated for a leftist takeover of America. They should all be hung for treason. We should “revisit” the methods our forefathers used to deal with traitors.
How do we get to $5.5 trillion? Do the arithmetic. If withdrawals had continued at the same rate for three more hours, they'd have added up to maybe $2 trillion.
1+1=2,2+2=4,4+4=8.......Call it the cascade effect, you know like what happens to your computer when you accidentally stumble upon a site that tries to open an infinite number of windows on your computer. Had they not disconnected from the system it could have happened.
So you’re positing a geometric, or maybe no, an exponential rate of increase in withdrawals.
Possibly, Us average schmoes will never know how such an attack was created or executed, but I for one am willing to take anyone brave enough to talk about it at their words at least.
The war on the United States during this election was on many fronts
Unfortunately, I agree with you.
Spot on. Dummy and political hack Stephanopoulos (sic?) is considered a serious journalist.
Insightful and it is in keeping with my thinking on the matter. Our leaders panicked first. A whispering/mumbling campaign of fear got out of hand, maybe?
Interesting. Thanks. What would be most illuminating is to know where all that money was destined, then compare that with who was driving oil prices and who launched the short attacks on Morgan Stanley in October making the current crisis public.
Are you sure you should be posting facts on this topic? LOL!
Rumor travels faster, so you can think for sure that it would have accelerated. If so, 5.5 trillion, or 2 trillion, there’s not much difference, both would have had severe impacts.
What they did was effectively a bank holiday without announcing one.
Rush is asking this same question right now: “Could it have been Soros?”...
“could it also have been a consortium of countries that wanted to see Obama in the White House?”
Rush on this now
Those headlines are interesting...
My question has always been: How did a small percentage of bad mortgages (less than 5%) lead to the imminent end of the world as we know it and general financial chaos? How could that happen? It still doesn’t make any sense to me.
I don’t normally tend to conspiracy theories, but there are so many things wrong here it makes my head spin in disbelief.
bump
Well, subprime was only a small part of the credit bubble, yet with derivatives and their multiplicative effects, poorly understand and very complicated, leverage*100 everywhere you look, and global links and dependencies between seemingly unrelated financial elements, it happened.
“Rush on this now”
Yes, he is, and I just posted a link to this in the live thread there:
http://www.freerepublic.com/focus/news/2182367/posts?page=83#83
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