Posted on 02/11/2009 3:03:27 AM PST by Halfmanhalfamazing
RUSH: I want you to listen to this, Paul Kanjorski. He's a Democrat member of Congress from Pennsylvania. He was on C-SPAN's Washington Journal on January 27th.
KANJORSKI: On Thursday at about 11 o'clock in the morning --
RUSH: Stop the tape a second. Go back and recue this. He's talking about September the 18th here. Let me tease you even further. September the 18th is the day last year that the world economy almost came to an end. Don't smirk. It's true, Snerdley. That's what Kanjorski is saying. So he's talking here about Thursday, September the 18th.
KANJORSKI: On Thursday at about 11 o'clock in the morning the Federal Reserve noticed a tremendous drawdown of money market accounts in the United States, to the tune of $550 billion was being drawn out in a matter of an hour or two. The Treasury opened up its window to help. It pumped $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.
RUSH: Do you remember this? This is the day I think that the Atlanta banks ran out of one-hundred-dollar bills. But now stop and think of this: A $550 billion withdrawal from money market funds in one-to-two hours. I am convinced -- and there's one more sound bite to go here -- I am convinced that this is what they took to the White House and said to President Bush, "We have got a disaster, you have got to get on board with a bailout," which came later on in October, "you've got to get on board with this $700 billion, the TARP 1," all because 550 -- now, what precipitated this? Here's the second Kanjorski sound bite.
KANJORSKI: If they had not done that, their estimation was that by two o'clock that afternoon, five-and-a-half trillion dollars would have been drawn out of the money market system of the United States, would have collapsed the entire economy of the United States, 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're really no better off today than we were three months ago because we've had a decrease in the equity positions of banks because other assets are going sour by the moment.
RUSH: Now, this is January 27th, Kanjorski is talking about this, and we have to allow, since Kanjorski is a Democrat he's part of the Pelosi team, we have to allow that some of his comment here is being flavored. When he ends up saying we're no better off today than we were three months ago, some of this is obviously oriented toward panic and getting people to go along with the bailout today, but let's leave that aside because that's traditional Democrat Party politics. If they had not done that, if that $550 billion-dollar withdrawal in an hour or two had not been stopped, if they hadn't closed the windows, he says that five-and-a-half trillion would have been drawn out of the money market system of the United States. Now, when I hear money market I think of savings accounts, higher interest rates than passbook savings at the old downtown building and loan where people park their money temporarily 'til they decide where to put it permanently. He says five-and-a-half trillion would have vanished from the banking system, would have collapsed the entire economy of the US and within 24 hours the world economy would have collapsed.
Now, we've gotta allow here for some exaggeration. It's amazing this was said on C-SPAN on Thursday, January 27th, and nobody picked up on it. We got it from a website called LiveLeak. They were rummaging through things, and they found this. Now, let's assume for a second here that elements of this are true. Let's assume that there was a $550 billion run, electronic run on the banks and money market accounts in one to two hours. The question is who was doing this? Who was withdrawing all this money? And the next question is why? That's where my mind starts exploding, and this is dangerous to have these explosions going this way. Could it have been George Soros? Could it have been a consortium of countries -- Russia, China, Venezuela -- countries that are eager to have Barack Obama elected because they know that will make it easier for them to continue their own foreign policies in the world? In the meantime, five-and-a-half billion dollars in one to two hours, that can probably be confirmed. The five-and-a-half trillion is speculation based on the rate at which money was coming out. We could check that the Fed stopped the trading windows, they closed the window. We do know they were pumping money into the system left and right. And remember when the Federal Reserve loaned elements, $2 trillion and we weren't told who got the money? And we still haven't been told who got the money.
We know that last fall, the Federal Reserve lent $2 trillion to somebody or a series of somebodies, and we still don't know where it went. We know last year that we had a crisis on our hands and everybody was saying if we didn't do this today the country was finished and they got Bush on board, they got Paulson on board. Obviously this kind of news, if somebody from the Fed shows up and Bernanke and Paulson say, "Hey, we got a chance here of losing five-and-a-half trillion dollars if we don't do something," I mean that's gotta scare anybody into some sort of action to stem the tide. RUSH: We have an AP-Obama story here that targets the date of this run on money market accounts to September 16th. It was Kanjorski on C-SPAN on January 27th, said it was Thursday the 18th. Here's the AP story: "A money-market mutual fund that 'broke the buck' amid a rush of orders to pull out cash has begun returning an initial $26 billion to investors who had been unable to access their money for more than a month. ... On Sept. 16, the rapid sell-off of assets caused the value of fund assets to fall to 97 cents for each investor dollar put in -- the first instance in 14 years of a money-market mutual fund 'breaking the buck,' or having its per-share value fall below $1. Reserve Management froze redemption orders. That led institutional investors to pull out cash..." I think both dates are right. September 16th, the rapid sell-off begins and "[t]hat led institutional investors to pull out cash from that fund and others, creating fears about the safety of the $3.4 trillion in assets held in money-market funds, and a new temporary government money fund guarantee program.'" It's sort of just a casual, hey, no-big-deal kind of story from the Associated Press -- and here again is Kanjorski talking about this. Let's go back to these two sound bites, Paul Kanjorski (Democrat-Pennsylvania) on C-SPAN's Washington Journal on January 27th.
KANJORSKI: On Thursday at about 11 o'clock in the morning, the Federal Reserve noticed a tremendous drawdown of money market accounts in the United States to the tune of $550 billion was like being drawn out in a matter of an hour or two. The Treasury opened up its window to help. They pumped $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.
RUSH: By the way, I should tell you that Kanjorski's source for this is none other than Bernanke -- Ben Bernanke, the Federal Reserve -- and the Treasury secretary, Hank Paulson. They are the two figures that told members of Congress what was going on with this initial run of $550 billion, an electronic run on the banks, money market accounts, investor accounts here. He goes on to say this, if they had not stepped in to stop this, if they had not closed the window...
KANJORSKI: If they had not done that, their estimation was that by two o'clock that afternoon, $5-1/2 trillion dollars would have been drawn out of the money market system of the United States, would have collapsed the entire economy of the United States, 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're really no better off today than we were three months because we had a decrease in the equity positions of banks because other assets are going sour by the moment.
RUSH: So the last part, I think that's just salesmanship for doing something now to get the stimulus bill passed, although Kanjorski is among some Democrats starting to shift to the cant that more time is needed to make a correct decision this time; which I think is one of the reasons Geithner postponed his announcement to today from last week or even today. So, you know, I have been suspicious of all this that happened last fall. It just seemed too perfectly timed. Now we know that these are not individual money market accounts like you would have had to withdraw your money. This is money invested in a mutual fund money market account. So it is quite possible somebody could have started a run on this thing and the word spread, and it did -- and the $550 billion withdrawal in one hour would panic anybody. So there's so much to this. You know, it's always the case that there's so much more going on in all this that we don't know. The Drive-By Media, any longer, is worthless in ferreting out the truth involved in events. They totally exist on the surface. They exist with a path of least resistance particularly with Democrats in power, because with the presumption that Democrats could abuse power or commit ethics violations just doesn't even cross the radar. It doesn't even show up on the radar. It's not possible for Democrats to behave in that fashion, and so all this stuff goes on below the surface and we find out about it much later after the fact.
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There are two other pieces of info to this, so do you remember CHARLES SCHUMMER’S LETTER on INDYMAC bank in CA, that started a run on Indymac and Bernake (Fed Reserve) had to step in and take over the bank? Lehman Brothers CEO Feld was in trouble and got an offer to purchase the week before they went down, and he refused it...also Warren Buffet (I heard on FoxNews radio) offered Feld (Lehman) same deal for preferred stock he offered to Goldman-Sachs, and Feld refused allowing Lehman to fail. Think about the $440,000 donation to Obama right before Feld closes Lehman Bros down....and other donations to dems and DNC.
This was a conspiracy and I’ll wear the tin hat, since the facts show this to be true. Some investigation would show that much of the greed was done to bankrupt our system to make way for a new communist one. Remember these stock brokers went to same colleges with the same marxist professsors as Obama. The CAPM strategy of how to split and sell those bad assets got a Noble Prize, but it was one of reasons the banks had toxic assets. There is a thread somewhere on that info as well. Put all the info together and you will see a pattern of behavior to rape the free market capitalist system, while crashing it, to make way for marxism/communism. No scruples in this bunch of dems.
Why would Hamas terrorists want to come here, because they aren’t interested in freedom or capitalism? Why would Obama want them to come here? America had better start putting two and two together before it is too late. Who really won this election? Or did ACORN deliver the votes? We don’t know do we?
Almost all of it is stocks, money market accounts, pension funds, blah blah blah basically fake money.
Fake money? When your paycheck hits your account via direct deposit, is that money less real than if you handed the bank a paycheck or a stack of bills?
Your written checks manage to pay your light bill, regardless of how the money entered your account.
So no matter what, there’s not enough money to cover the “money”.
How much of your net worth is held in FRNs? Less than 100%? Why?
And if everyone was to run to the bank to take out all their C-Notes, the bank would be closed in like 15 minutes.
Quick, buy gold!
He was talking about the $700 million of short-term commercial paper mentioned in post #12.
Because you’re seeing AAA-rated debt all over the bond market default. You’re seeing a systemic break down in debt markets, mostly due to “engineered” debt securities being illiquid crap, coupled with feckless incompetence or pay-to-play corruption at the three bond ratings agencies.
Most people think that the stock market is the big market in the world. The NYSE likes to make the retail investor believe that they’re the center of the financial universe.
Not so.
The bond markets in the US and London are the centers of the financial universe. If we want to describe the markets as a dog, the bond markets are the body of the dog. The stock market is the tail. And the commodities/futures markets are sorta like a twitchy nose on the dog.
The tail and the nose go where the body goes. The nose might influence where the body wants to go, but if the body doesn’t want to follow, all the nose can do is sniff the wind.
The tail just tells you whether the body and nose are happy, frightened, not amused or ready to take a dump. The tail cannot make the body do anything, all it can do is follow.
Since the Depression, there has never ever been a debt deflation like we’re seeing now. The financial world has this “recent data bias” of using almost exclusively post-WWII data for their estimations of whether markets are cheap/expensive or in a panic or wildly priced up. The whole of the US financial world seems to want to completely ignore the Depression as a base of statistical information, because they’ve all talked themselves into believing that “it can’t happen again.”
Well... it has. The Depression was a case of debt deflation, and what we have now is a case of debt deflation. When you hear these analysts on CNBC or Bloomberg (or Fox Biz) talk about “de-leveraging” — that’s financial lingo for “debt deflation.”
As a result of debt deflation, the financial world is seeing stuff that they’ve not seen before. Most of the people in finance are younger - say, 50 and below. They don’t know jack about the Depression - most of them learned about it in history class in high school, it isn’t discussed nearly enough in financial degree classes, if the gibber-jabber I see spewed on the financial channels by “professionals” is any indication of what is taught about the Depression in MBA or finance majors.
One of the things the financial world is seeing is the deadly combination of illiquid debt securities (like CDO’s) and leverage. When you’re levered up and your portfolio loses value, your margin lender can (and will) call you, the fund manager, and say “Hi there... margin call. We need $XXX before time HH:MM or we’re going to start selling what we need to in order to lower your leverage.” All summer long, hedge funds and others were getting calls like this - you could see this start to happen as the stock and commodities markets were selling off in increasing waves. The reason why we saw this was that stocks and commodities are liquid - when the markets are open, you can get a price and sell the stuff right now - in seconds, if not minutes for large block orders.
Try selling some of these thinly traded debt securities in a couple minutes — fat chance. You’ll take huge losses. This is the problem with thinly-traded securities. Imagine if someone came up to you and said “I need more money down on your mortgage by 5pm today — or we’re going to sell your house.” It is exactly the same type of thing - you can’t sell your house in one afternoon without taking a HUGE haircut in valuation. So you sell what you can that is more liquid for more reasonable prices - like your 401K, or your car, etc.
So this set the trap for the market: Along comes the fall of Lehman. These funds, banks, investment banks - they’re all bleeding out of their eye sockets due to these stupid illiquid debt securities, they’ve had to sell off their stock and commodity positions at increasing losses... and now comes word that money market funds are not safe. We’ve had money market funds “break the buck” before in the US — the last time was about 14 years ago, if I recall. It was a little ripple back then, because the markets were healthy; money was pulled out of that particular fund, the market went on.
But leading up to 9/15 to 9/16 — the market behavior was getting increasingly “out there in the thin tails” — ie, the statistical models (going back to the confirmation bias and deliberate decision to ignore and not use data from the 1930’s) of these wizards of wall street were all saying “We have no prediction for what happens next....” because the events we were and are seeing are not in post WWII model data sets - but some old fart (really old fart) who had been in the markets in the 1930’s would have told us exactly what to expect. That’s why I keep referencing Irving Fisher’s paper on debt deflations - Fisher studied the panics of 1929/1933, 1873, 1837, 1807, etc. They have a common pattern to them, and we’re seeing that pattern now.
Suddenly it is worth paying attention to the really old fogies with no hair or white hair. They’re the only people alive with some basis in experience for what we’re seeing.
Due to the recentcy bias in their models, suddenly there was no black box telling the young turks that this was a buy signal. It is like those older role-playing game maps with a big, dark area on the map that gives no detail; it says only “Here be dragons.”
Right now, there are banks withdrawing guidance on their bad loan losses — because their models don’t account for unemployment higher than 9%.
So they had to fall back on human judgment - and in this case, the judgment became panic.
Me too. It was right here in FR where politicket said he was bailing to cash just before the large part of the meltdown. I evaluated the situation and bailed too. It saved me about $80K in my IRA.
I said way back, way back in Oct. & Nov. this was an intentional act. Rush is close, but not quite on this yet...
Look to who was invested heavily in the companies and/banks that went under. Rush needs to go back 9 months, 12 months and look who was invested in the failed or failing institutions.
The run-up in oil prices was not an accident, was not all that speculation, and was not the faux demand. It was done to protect the assets and the people of those oil countries from the economic collapse of the world.
I said it before and I'll say it again...we took a terrorist hit on our economy.
Where do you live?
Where exactly do you store these stacks?
Funny notes on the movie:
About this title: Alan J. Pakula directs the political thriller Rollover, produced by leading lady Jane Fonda's production company, IPC Films. Featuring a racist plot and negative stereotypes about the Arab world, this film reflected the American fear of the Middle East prevalent in the early '80s.
Not tellin ya.
Besides, they’re not “hundred dollar bills”.
They’re hundred “dollar bills”.
Just separate out and save your singles when you get home.
By the end of the year, you’ll have a good stack of Christmas cash.
Am I reading you wrong or are you saying the time to buy in stocks only is now?
International Bankers.
I know rumors can spread fast on Wall Street, but one hour to move $500 billion?
My big question is where did the money move to, not the stock market, not gold either or Treasuries, so where did it go?
Remember, we are talking about money market money, which is considered cash by many, so it needs to be parked somewhere, but where?
OK, Dave, the lion's share of the damage was done by 220 entities within 1 hour. Now as a sweet, open-minded, reasonable, even-tempered, fair, non-pre-judgemental, polite, scrupulous, and equitable man, I say we waterboard this Soros sonofabeech until he talks.... and then turn his soaking butt over to Vladimir Putin for some serious fact-finding, before working over every member of his family.
At that point, I will personally interrogate you mercilessly at Pete and Shorty's, plying you with spirits, until you tell me EGGZAKLY what you did with your IRA.
Move along, Bert. Nothing to see here.
This is all BS. Electronic transactions simply transfer funds from one bank or brokerage account to another. Perhaps they were being transfered out of the country but electronic transactions cannot transfer funds out of the banking system. KANJORSKI is a crackpot and Rush is an idiot for giving him publicity.
If I left you with that impression, I’ve done something very, very wrong.
I am even now, as I type this, hedging the last stock positions I have in the market.
I was look at the bond market....that’s what I meant. I have Intel stock and it is so low right now I may as well hang on to it. Intel, basically, is a good company and I can’t see them going out of business. I’m betting they will come out of this one way or another. May be a bad bet but you gotta do something. I have the certificates as well. Don’t trust brokers any more. If I end up using them to light the woodstove, so be it.
I’ll gladly accept beer (I’m a retired engineer — engineers love beer), but I’ll tell you without you having to buy me anything:
I went to cash. I could be wrong. I could be reading far too much negativity into this market, but what I’m seeing in international trade tells me that we’ve got more to drop from here.
If the SP500 closes below about, oh, 755 to 758 — somewhere in that range.... and doesn’t pop back up immediately the next morning... I think we go down sharply from there.
The central problem in the world economy is that there were many more nations than just the US who depended upon the US consumer. China, S. Korea, Taiwan, Germany, Canada... when you look at their trade stats, all you see is a curve that is dropping off a cliff. When trade declines like that, it means bad things for the world economy.
The US consumer has never had both their retirement investments (IRA, 401K, pension) AND their home equity hit as hard as this, and never at the same time since WWII. For the big cohort of the Baby Boomers, if their IRA’s/401K’s don’t recover (and I don’t see the market recovering for years to the 2007 highs), their home equity will not recover for a decade or more... they now have no choice but to save.
Well, saving results in “the paradox of thrift.” Since the US economy is (or was) 70% based on consumer spending, when these consumers stop spending and start saving, guess what? The US economy goes down further.
It is a no-win situation as far as I can see it. And the clowns in DC and NYC are not doing anyone any favors. There’s a whole lot of posturing going on, but there’s little in the way of serious attention to the real issues: consumer spending and home defaults. The only guy who is even marginally on the job is Bernanke... and he’s making moves that are getting negative responses from the Chinese, who we need to buy all this debt.
I’m not telling people what to do. I’m just telling you what I did. I’m a very active investor/trader, and I believe I have the discipline to get back in as well as get out. Too many people panic on the downside and don’t get back in on the upside — and there will be an upside at some point. We know that. I’m just in need of my time to do other things than watch the market, and I see nothing constructive happening in the next quarter (or two), so I’m getting out.
The folks who play on pity are the sociopaths - and I can just see Bush and his concern for people losing their homes and 401K's and pensions and wanting to "help". He's a good man - the people feeding him the crap were not.
Bush is a sociopaths' dream - a powerful soft touch with deeper pockets (taxpayer money) than anyone on the planet.
Just the kind sociopaths are drawn toward...
Obama might be another soft touch - he's being rolled - with his assistance - bankrupting his chance of fulfilling his programs after paying congressional dems to get all their chits in...
Then there's big incentive for bankers who have a clue ( just like they knew NOT to invest with Madoff) they'd figure this one out. To say anything would be to ask for destruction... Bankers are easy to play but they know the game. And they've been both rewarded - and double crossed. Things might get interesting.
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