September 18, 2008: Edge of Collapse

The Daily Reckoning ^ | 02/11/2009 | Dave Gonigam

[RushingWater]

On Thursday [the 18th], at about 11 o’clock in the morning, the Federal Reserve noticed a tremendous drawdown of money market accounts in the United States to a tune of $550 billion being drawn out in a matter of an hour or two.

The Treasury opened up its window to help. They pumped $105 billion into the system and quickly realized that they could not stem the tide. We were having an electronic run on the banks.

[hiho hiho]

We are at war, but the enemy is not obvious.

[AndyJackson]

He has destroyed or damaged other countries' monetary systems.

I hate Soros's politics, but Soros did not damage any country's monetary system. His method of trading was to be in a position to make a lot of money when a country damages its own monetary system. For instance his killing of the British pound was because the British had manipulated their own currency to an unsustainable level. Soros's billions are a drop in the bucket of daily international currency flows, and if folks thought Soros was on one side of a trade, and they could do so, they would very happily pile on the other side and take him out. In the case of most of these currencies they couldn't do so because the countries had already manipulated their currencies.

[Blackirish]

Black Swan

http://en.wikipedia.org/wiki/Black_swan_theory

[nicola_tesla]

Total horsecrap - bad article, don't believe it for a minute. Note what it says: 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 How would a guarantee of a measly 250k stop a 5.5T withdrawal ? Such bull. Secondly, most MM funds hold commercial paper and other short-term bonds; they are not pure demand deposits like in banks. What, someone thinks they could sell 5T of bonds in an afternoon ? No, this all happened because a venerable MM fund, Reserve, broke the buck a few days prior to the 18th, and many people, myself included, decided that our MM funds were not very secure. Now, I do believe Paulson and Bernanke used this opportunity to get the TARP passed. It was just another lying, criminal act by Paulson to get his banker friends a wad of taxpayer dough.

[LS]

I agree---if you look at the "Gold Corner" of 1869, it took three of the wealthiest men in America everything they had to ATTEMPT to corner the market on just New York gold. Still, they came close.

But this does raise questions as to why mutual funds would so specifically trigger all this, and who was behind it.

[VaBthang4]

"Can anyone say George Soros?"

Try human nature.

[VaBthang4]

Oivey.

I’m sorry but many of the post so far are just kooky.

This wasnt some big conspiracy. Millions of people and business’ started pulling their money out...it was going to create a snowball effect.

Its not rocket-science.

Sheesh.

[Old_Grouch]

MountainLoop wrote: "Have any of the news outlets been talking about this, or conservative talk radio? This seems like big news to me."

Yes, Rush talked about it on Thursday. (And maybe other times, I don't hear him that often.) He raised the names of Soros or a consortium of countries who would benefit from an Obama-win.

[VaBthang4]

Zactly.

[jersey117]

The main question is, who wanted to get The Messiah elected so desperately that they would do something like this?

The A-rabs

[oldtimer]

I’ll bet our pal Soros, and some of his band had a hand in $140 oil last year, coincidentally before the electionl.

[Old_Grouch]

Oivey. I’m sorry but many of the post so far are just kooky. This wasnt some big conspiracy.

The coincidence of the Fannie Mae-Freddie Mac house of cards tumbling at just the perfect moment raises a big flag in my mind. Many Democrats were involved with that organization and could have put pressure on certain banks or something and started those dominos falling. We are talking the biggest seat of power in the world, and it would be naive to imagine that scheming does not take place. That has never been the case in history before.

[bigbob]

This is THE story.

I think it was someone (group) who wanted to send the strongest possible message in time to influence the US election, but who would have been damaged themselves if the global economy had actually collapsed. Terrorists wouldn’t have cared what collateral damage they caused, as long as they ruined the US.

[SpaceBar]

We still don’t know who shorted airline stocks shortly before 9/11. For a “free” country they sure keep us in the dark.

[webstersII]

“Total horsecrap - bad article, don’t believe it for a minute. “

So you are saying it was clearly due to a coincidence?

I’m not saying it’s not coincidence but that would make it so . . . coincidental.

[blam]

"We still don’t know who shorted airline stocks shortly before 9/11. For a “free” country they sure keep us in the dark."

We'll, if you knew the truth you may do something horrible like insult a Saudi prince.

[M Kehoe]

Chucky Schumer. He started the ball rolling before Sept of '08 (he publicly claim two large banks were insolvent, before they actually were).

We don't live in interesting times (Chinese curse), we live in dangerous times.

5.56mm

[RushingWater]

No, this all happened because a venerable MM fund, Reserve, broke the buck a few days prior to the 18th, and many people, myself included, decided that our MM funds were not very secure.

I can somewhat agree with you - I almost pulled my money out too and my 401K stays about 90% MM. But at this magnitude, must have been a country such as China but perhaps it was simply a move to another asset for more security.

The major question I have is how can this be anonymous?? Does anyone have a Fed chart that shows for certain that this did happen?

[RushingWater]

Yep, must have happened - doing a little google -

On September 19, the U.S. Treasury announced the establishment of a temporary guarantee program to protect shareholders of money market mutual funds—and on September 29, officially opened the program to eligible money market funds.

Source

[bboop]

Rush mentioned it last week, too. And he mentioned, earlier on, that SOMETHING had to have triggered this so suddenly, and he was giong to dig around until he found out.

Yes, someone mentioned it at a press conference last week. It’s good we have researchers and Those Who Would Dig for Truth.