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I have to admit that
even I thought there was a great deal of hyperbole involved when Congress was
last fall being prodded with scary talk of Armageddon into taking action to
"rescue" the financial system.
Now, though, as the
Zero Hedge blog reveals in a post entitled "How The World Almost Came To An End At 2PM On September
18," it appears that those giving the warnings were deadly
serious.
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:
(What's this?)
How The World Almost Came To An End At 2PM On September 18 (Zero Hedge, 2/8/09)
‘The end of our economic system as we know it’ (Red-Hot Energy and Gold at
Money..., 2/9/09)
Steve Keen: "The Roving Cavaliers of Credit" (or Why
Ben's Helicopter Will Fail) (naked capitalism, 2/7/09)
On
Thursday (Sept 18), at 11am 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 is 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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