Posted on 02/11/2009 3:03:27 AM PST by Halfmanhalfamazing
RUSH: I want you to listen to this, Paul Kanjorski. He's a Democrat member of Congress from Pennsylvania. He was on C-SPAN's Washington Journal on January 27th.
KANJORSKI: On Thursday at about 11 o'clock in the morning --
RUSH: Stop the tape a second. Go back and recue this. He's talking about September the 18th here. Let me tease you even further. September the 18th is the day last year that the world economy almost came to an end. Don't smirk. It's true, Snerdley. That's what Kanjorski is saying. So he's talking here about Thursday, September the 18th.
KANJORSKI: 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.
RUSH: Do you remember this? This is the day I think that the Atlanta banks ran out of one-hundred-dollar bills. But now stop and think of this: A $550 billion withdrawal from money market funds in one-to-two hours. I am convinced -- and there's one more sound bite to go here -- I am convinced that this is what they took to the White House and said to President Bush, "We have got a disaster, you have got to get on board with a bailout," which came later on in October, "you've got to get on board with this $700 billion, the TARP 1," all because 550 -- now, what precipitated this? Here's the second Kanjorski sound bite.
KANJORSKI: 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.
RUSH: Now, this is January 27th, Kanjorski is talking about this, and we have to allow, since Kanjorski is a Democrat he's part of the Pelosi team, we have to allow that some of his comment here is being flavored. When he ends up saying we're no better off today than we were three months ago, some of this is obviously oriented toward panic and getting people to go along with the bailout today, but let's leave that aside because that's traditional Democrat Party politics. If they had not done that, if that $550 billion-dollar withdrawal in an hour or two had not been stopped, if they hadn't closed the windows, he says that five-and-a-half trillion would have been drawn out of the money market system of the United States. Now, when I hear money market I think of savings accounts, higher interest rates than passbook savings at the old downtown building and loan where people park their money temporarily 'til they decide where to put it permanently. He says five-and-a-half trillion would have vanished from the banking system, would have collapsed the entire economy of the US and within 24 hours the world economy would have collapsed.
Now, we've gotta allow here for some exaggeration. It's amazing this was said on C-SPAN on Thursday, January 27th, and nobody picked up on it. We got it from a website called LiveLeak. They were rummaging through things, and they found this. Now, let's assume for a second here that elements of this are true. Let's assume that there was a $550 billion run, electronic run on the banks and money market accounts in one to two hours. The question is who was doing this? Who was withdrawing all this money? And the next question is why? That's where my mind starts exploding, and this is dangerous to have these explosions going this way. Could it have been George Soros? Could it have been a consortium of countries -- Russia, China, Venezuela -- countries that are eager to have Barack Obama elected because they know that will make it easier for them to continue their own foreign policies in the world? In the meantime, five-and-a-half billion dollars in one to two hours, that can probably be confirmed. The five-and-a-half trillion is speculation based on the rate at which money was coming out. We could check that the Fed stopped the trading windows, they closed the window. We do know they were pumping money into the system left and right. And remember when the Federal Reserve loaned elements, $2 trillion and we weren't told who got the money? And we still haven't been told who got the money.
We know that last fall, the Federal Reserve lent $2 trillion to somebody or a series of somebodies, and we still don't know where it went. We know last year that we had a crisis on our hands and everybody was saying if we didn't do this today the country was finished and they got Bush on board, they got Paulson on board. Obviously this kind of news, if somebody from the Fed shows up and Bernanke and Paulson say, "Hey, we got a chance here of losing five-and-a-half trillion dollars if we don't do something," I mean that's gotta scare anybody into some sort of action to stem the tide. RUSH: We have an AP-Obama story here that targets the date of this run on money market accounts to September 16th. It was Kanjorski on C-SPAN on January 27th, said it was Thursday the 18th. Here's the AP story: "A money-market mutual fund that 'broke the buck' amid a rush of orders to pull out cash has begun returning an initial $26 billion to investors who had been unable to access their money for more than a month. ... On Sept. 16, the rapid sell-off of assets caused the value of fund assets to fall to 97 cents for each investor dollar put in -- the first instance in 14 years of a money-market mutual fund 'breaking the buck,' or having its per-share value fall below $1. Reserve Management froze redemption orders. That led institutional investors to pull out cash..." I think both dates are right. September 16th, the rapid sell-off begins and "[t]hat led institutional investors to pull out cash from that fund and others, creating fears about the safety of the $3.4 trillion in assets held in money-market funds, and a new temporary government money fund guarantee program.'" It's sort of just a casual, hey, no-big-deal kind of story from the Associated Press -- and here again is Kanjorski talking about this. Let's go back to these two sound bites, Paul Kanjorski (Democrat-Pennsylvania) on C-SPAN's Washington Journal on January 27th.
KANJORSKI: 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 like being drawn out in a matter of an hour or two. The Treasury opened up its window to help. They 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.
RUSH: By the way, I should tell you that Kanjorski's source for this is none other than Bernanke -- Ben Bernanke, the Federal Reserve -- and the Treasury secretary, Hank Paulson. They are the two figures that told members of Congress what was going on with this initial run of $550 billion, an electronic run on the banks, money market accounts, investor accounts here. He goes on to say this, if they had not stepped in to stop this, if they had not closed the window...
KANJORSKI: If they had not done that, their estimation was that by two o'clock that afternoon, $5-1/2 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 because we had a decrease in the equity positions of banks because other assets are going sour by the moment.
RUSH: So the last part, I think that's just salesmanship for doing something now to get the stimulus bill passed, although Kanjorski is among some Democrats starting to shift to the cant that more time is needed to make a correct decision this time; which I think is one of the reasons Geithner postponed his announcement to today from last week or even today. So, you know, I have been suspicious of all this that happened last fall. It just seemed too perfectly timed. Now we know that these are not individual money market accounts like you would have had to withdraw your money. This is money invested in a mutual fund money market account. So it is quite possible somebody could have started a run on this thing and the word spread, and it did -- and the $550 billion withdrawal in one hour would panic anybody. So there's so much to this. You know, it's always the case that there's so much more going on in all this that we don't know. The Drive-By Media, any longer, is worthless in ferreting out the truth involved in events. They totally exist on the surface. They exist with a path of least resistance particularly with Democrats in power, because with the presumption that Democrats could abuse power or commit ethics violations just doesn't even cross the radar. It doesn't even show up on the radar. It's not possible for Democrats to behave in that fashion, and so all this stuff goes on below the surface and we find out about it much later after the fact.
RE :”The tax laws were changed so gain on a home didn’t count as long as you had lived there for at least 2 years. “
I am glad you reminded me of this, Thanks!
I’m putting it into a series of CD’s, paying attention to FDIC limits and the creditworthiness of the banks involved.
Here’s a tip: If a CD from a bank is paying more than a few basis points more yield for the same duration as what you’re seeing from other banks, it probably is because that bank (the one paying the higher yield) has a lower S&P/Fitch’s/Moody’s rating, or they’re on a negative creditwatch, or they’re in trouble, not downgraded yet, and they’re in a fat hurry to plump up their reserves.
Go back and look at the yields on WaMu CD’s before they went under. Boy, they looked fantastic! Well, there was as reason why.
It started that day and just accelerated:
See that first spike down? That’s on the 17th of September. And then as things started getting more and more bleak, you see the yield roll off to nothing.
http://seekingalpha.com/article/120220-kanjorski-and-the-money-market-funds-the-facts
Not certain what to believe at this point...
bump
***....It was pulled in two days from public view.***
I’m not surprised. Like I said, his tentacles - and influence - are everywhere. I would really like to know just how much of this country he owns. I think we would all be shocked. I believe he is the power behind Obama, and is our de facto dictator. Has he managed a stealth coup?
I didn't get directed to the chart you wanted me to see.
I am looking for where the money went on the 15th, not that I really expect to find it. I am not saying that was an evil genius or smersh behind the panic, but electronic funds moved, have to have a destination.
OK, when you sell off the “money market” mutual funds, you roll out of a mutual or “sweep” fund, and you’re left in cash, which has a 0.0% yield.
The money is still in your account, so technically it didn’t move anywhere, just as when you buy or sell a stock in your accounts, your money didn’t “go” anywhere - it was just buying or selling an asset held in your account. So the money didn’t have to “go” anywhere, it was just pulled out of the money market funds.
Correct.
The money market funds were exposed to risks arising from the collapse of Lehman, and that’s what they wanted to get away from, ASAP.
Thanks for the insights!!
Mucho thanks!!!
I've been reading your posts with great interest, and I wanted to say "thank you" for the education.
Now, you've said what you're doing, and why, but as you said, you are retired. I am 45. I suspect your primary objective is to preserve capital. My objective is growth, the more the better.
When the market tanked in early October, I started the process of picking funds, opening up a Roth IRA account, and then investing $5K from cash in late October.
I knew I couldn't time the very bottom, which we unfortunately haven't reached yet, but the DOW had dropped 40+%, which I figured was one hell of a discount.
The question is, when there is a recovery, will it be slow enough to get back in as it starts climbing out of the hole? Or do I continue to fund that IRA to lock in the current discount?
Thanks for your time.
I can’t predict the future, all I can do is tell you what past patterns have been.
Due to the change of psychology from credit-fueled booms to the psychology of thrift and saving reduces the growth of the economy. However, the stock market can take very rapid upward swings when the gloom starts to abate.
We might be nowhere near the bottom. The P/E on the SP500 is very high right now — people look at the approximately 40% drop in the SP500 since last July and say “Surely, stocks MUST be cheap!”
No, not so. While stock prices have certainly fallen hard, earnings have fallen even harder. Unless earnings recover quickly, the SP500 will be falling later on this year. How far, I can’t say. Right now the only thing holding stock valuations up are analysts’ expectations that earnings will recover. Sadly, I don’t think this will the case. Too many equity analysts are still running analysis based on post-WWII recessions. They keep saying “This is the worst since... WWII” or “this is the worst in 50/60/70 years...”
Blah, blah, blah.
THE fundamental difference here is that unlike recessions, which are normal contractions in economic expansion as a normal outcome of the business cycle and a rise in interest rates precipitated by either the bond market or the Fed, this is a debt deflation. Capital is being destroyed, sucked down into black holes on balance sheets.
Thanks for the reminder that it's not all about the price.
Where the eff is the media on this? Are they keeping the same secrets that Kanjorski and his colleagues have kept now FOR SIX MONTHS!!!!
J.D. Hayworth mentioned this on MSNBC the other day and the host pretended not to know what he was talking about.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.