Wednesday, February 11, 2009
Pull the Temple Down...
What happens behind closed doors in politics is always fascinating to me. But Washington DC as a town by rule leaks all the time. Not many people know how to keep a secret at all. But a blogger recently stumbled upon something that revealed one of those closed door moments which helps put many things in perspective. I had no idea how close we had came to total implosion in the country. All the way back in September of last year. If you remember that month the candidates for both parties were campaigning and debating hard against each other. And in the middle of that month Lehman Brothers had been forced to file for bankruptcy on the 15th...http://en.wikipedia.org/wiki/Lehman_BrothersWell three days after that, the Fed chair (Ben Bernake) and the Treasury secretary (Hank Paulsen) called the leaders of Congress and the President together in an emergency meeting. And you might have remembered that on that day the stock market had suffered one of its biggest losses in history...I think it lost like 800 and some points. Most of the leaders that came out of that meeting were reported to be 'visibly shaken'. President Bush at the time turned to Mitch McConnell and told him, "I am going to be blamed for many things but I refuse to be Herbert Hoover too." So what did they see in that meeting that meeting that scared the living shit out of them? Now we know. A video dug up by a blogger featuring the head of the Capital Markets Subcommittee, Representative Paul Kanjorski explained what happened in that room that terrified everyone...Let me paste in a transcript because it shows how close the nation came to literally being ripped apart..."
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."Now that is scary stuff. Now that helps me make sense of why they have been shoveling money at this problem with no end in sight. It really is a house of cards...Ballpark it for me if you had to put a cost on this how many trillions of dollars will it take?
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."Now that is scary stuff. Now that helps me make sense of why they have been shoveling money at this problem with no end in sight. It really is a house of cards...Ballpark it for me if you had to put a cost on this how many trillions of dollars will it take?
