Shocker: Electronic Money Market Run Nearly Destroyed US Economy

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.

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.

Not all conspiracies are fiction. Soros has made his money doing this stuff for years. Manipulating markets is what he does.

It’s pretty clear what happened, housing was going down companies like Bear and Lehman had to make good on the ‘insurance’ they provided investors...it was becoming quite clear they didn’t have the reserves to cover the losses...investors panicked. Had the government rescued Lehman it might have been avoided...Lehman going down triggered fear and uncertainty certainly. No matter what it would have happened eventually.

Thank God...I love Rush-don’t want to see him damaged by wading into conspiracy theories. If you look at history...how many parties retained the presidential office after two terms? Truman (war going on) and Bush (Reagan was beloved) are the only ones that I can think of...Pres. Bush had a terrible approval rating... so this hurt also. McCain was not a good candidate, but he faced terrible odds.

I can’t think of one theory that was ever proven to be true...Soros is a trader. He engaged in the same practices as all of them. He has lost a bundle as well.

Strange this happened just when the “Drill Now, Drill For Oil” was hurting the Dem. The Money Lenders from the Middle East and China were suddenly scared their mo-si-a wouldn’t be elected.
The same for Rick Santorum of Pa. The Dem. “Money Men” brought the price of milk to an all time low just before the election to ensure he would lose.

Soros has a method by which he always profits on the deal, read up on his attack on the Bank of England called Black Wednesday and well as how he manipulated the economies of Russia and other former soviet satellites to reap huge profits in the long run.

Just a quick note in case you don’t know, Moveon.org is Soros so when porkulus is paying money to Moveon.org that money is going to Soros.

86 posted on 02/11/2009 6:34:11 AM PST by usmcobra (Your chances of dying in bed are reduced by getting out of it, but most people still die in bed)

“Rush is either kidding or has lost his mind...hope it’s the former.”

Your conclusion sounds like it’s soaked in DEmocrat thought.

This post sounds like it should be on DU...substitute Keith Olberman for Rush Limbaugh and bring up some leftard conspiracy...same thing.

This was the deal all of wall street was in on...use derivatives so that if the company goes up you win...if it doesn’t AIG or some other company covers your losses...this is what lead to investors taking excessive risk. They could not lose...only there was not enough reserves to pay off the bad stuff which is what caused the crash.

Had the government rescued Lehman it might have been avoided...Lehman going down triggered fear and uncertainty certainly. No matter what it would have happened eventually.

This is exactly what Soros wrote he expected the government to do was bail out Lehman. Why would he have that expectation? And did he have anything to do with a need for government to bail out Leham?

all the derivatives babies thought Lehman would be bailed out...the story is that Paulson wanted Lehman bailed out, but that Bush refused to do it. When traders realized that there would be no bailout-panic ensued...as they knew their essentially gambling losses would not be covered-sell, sell. All the traders had that expectation...Fox business discussed it endlessly

The old story is that Joe knew it was time to get out of the market because a shoeshine boy confided he had bought stock.

There's truth in the concept, even though the old story may be apocryphal.

Just like it was time to get out of the housing market when strawberry pickers started buying $500K houses, but only a few of us saw that one in time too.... there were as many Kool Aid addicts in 2006 as there were in 1928.

The old story is that Joe knew it was time to get out of the market because a shoeshine boy confided he had bought stock.

There's truth in the concept, even though the old story may be apocryphal.

An article discussing the government bailing out Lehman before the collapse; Everyone knew about the situation and expected a government bailout.

“Despite the announcement, Sean Egan of the credit rating company Egan Jones said he thought a government bailout of Lehman was still likely, despite the moral hazard — the risk that companies will start making irresponsible decisions on the assumption that the government will save them should things go awry.

“In the struggle between moral hazard and market collapse, the fear of market collapse is too high,” Egan said.”

You are so correct...there have always been those who drink the kool aid...what do you think they called it before there was well kool aid...like in the middle ages?

If only Soros manipulated market, we would not be in the terrible shape we are in...they all do it.

Lehman going down triggered fear and uncertainty certainly. No matter what it would have happened eventually.

That's the key there. If we had kept Lehman running, the government would have had to nationalize the banking sector through the Fed instead of TARP. The TARP crap at least pushed the problem out into the open instead of on an opaque Fed balance sheet. Either way we were/are screwed.

***IMO it was an intentional act***

George Soros

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