Tuesday, February 10, 2009

Who Caused the Economic Collapse; Was it an October Surprise?


Embedded above is a C-SPAN video of Paul Kanjorski. He's a Democrat member of Congress from Pennsylvania. He was on C-SPAN's Washington Journal on January 27th. This is what he said:
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.

[. . .]

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.
A massive electronic run on banks was averted on September 18, a run that would have caused economies to collapse worldwide and would have threatened our entire political system.

The question now is this: Just who was behind the bank run?

More from the Wall Street Journal.



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