According to Rep. Paul Kanjorski (D) (PA-11), in mid-September of 2008, the United States of America came just three hours away from the collapse of the entire economy. In a span of 2 hours, $550 billion was drawn out of money market accounts in an electronic run on the banks.
Here’s the video:
The end-of-the-world-as-we-know-it is about two minutes in, but if you just start from the beginning you get to hear a panicked lady screaming.
This came out 2 days ago. You guys are slack asses
damn. we could’ve had it. soooo close.
that’s ok. it’ll happen. all on it’s own.
“Our” money market accounts aren’t FDIC-insured, are they? When the Congressman says money market accounts, he must mean banks loaning money to each other?
September 11 and September 15: the bookends of the George W. Bush presidency.
@2 That’s right. Your libertarian wet-dream almost came true. Personally, I’m damn glad it didn’t. But then, I’m just one of those crazy-assed whackos who believes in civil society and stuff.
@3, the circumstances are correct; since there is no insurance and because this is the first time a major money market broke the buck, all hell broke loose. The Lehman debt default was instrumental in this.
@ Amelia,
He’s referring to mutual fund money market accounts, typically held in brokerage accounts or directly with the fund company, which were not FDIC insured at the time.
There was a run on money market funds after Lehman blew up, no question. In fact a lot of the money market fund companies owned Lehman commercial paper and were hit with a double whammy of investor withdrawals and hundreds of billions of dollars of Lehman paper suddenly going to money heaven. Many of them internally “broke the buck,” but their parent companies stepped in and topped them off, and only The Reserve Primary Fund officially broke the buck publicly as I recall.
As far as whether there would’ve been an irreversible collapse of the US economy without Congressional action, I’d say TARP 1–that we had to give the financial powers that be $700 BILLION or they would crash the world economy–was another “Weapons of Mass Destruction” style Big Lie with the economy collapsing anyway and the government only possibly saving the jobs of a few thousand bank/investment company workers and execs. Regardless of which party is in power, it’s the financial industry that’s pulling the puppet strings.
Kanjorski (not the brightest of our trial-lawyers-turned-Congresspeople) is yanking our chains, using publicity to attempt misdirection.
He’s pretending it was some conspiracy, rather than ordinary people acting normally, transferring their money from a worsening spot to a better one.
That’s not to say things aren’t likely going deeper to shit, but in this instance Kanjo is fearmongering to deflect attention away from his Capital Markets Subcommittee’s extremely lax oversight for these past several years. I hope his efforts ultimately fail, and he is held accountable for being no less an idiot than everybody else.
@8, ordinary people acting normally is like nails on the chalkboard to some people round here.
Lots of very “in-the-know” people were advising their nearest and dearest in September to buy small plots of land on which to farm, buy handguns and security systems, and stock their homes with non-perishable food, bottled water and supplies. It was managed very carefully so as not to incite widespread panic.
The people I warned all thought it was Chicken Little paranoia, a la Y2K, but it was, indeed, THAT close, and may be again before long.
Stock up just to be on the safe side, slog readers.
That screamy lady scared me!
@8: I disagree. This is (a) a politician and (b) on TV. Therefore it’s double true.
I just can’t really fathom what “the end of our economic system and our political system as we know it” would look like. Widespread rioting? Declaration of martial law?
What would happen if everyone just calmed down and went back to work and tried to function normally instead of FREAKING OUT?
@14
thank you!
1. keep spending as if nothing’s wrong
2. everything’s gonna be all right
the “economy” is simply the velocity of money. don’t slow down!
This was not a false alarm. Nor a “Big Lie”. It absolutely was THAT CLOSE! In fact, we came within a whisker of total credit market/banking system collapse about three times over a two week period last September. For those who wonder what that might have meant, it would have meant no credit being made available to anybody. No cash at the ATM. No credit for houses, cars, college, etc. Also no credit for normal day-to-day purchases. No commercial paper market to provide the liquidity for companies to meet payroll or pay their vendors. No credit for the owner of a franchise gas station to re-fill their storage tanks. No credit available for Safeway or QFC or PCC to re-stock their shelves. No credit for Target or Nordstrom or Walmart to replenish inventory. The wheels of commerce would grind to an eerie halt. Then what? We don’t know but it wouldn’t be good.