Who Attacked Our Economy? Why Does No One Care?
The market was 500 trades away from Armageddon on Thursday September 18th, report traders inside two large custodial banks.
I want you to read something. It’s a snatch of transcript from a Jan. 27 C-SPAN interview with Rep. Paul Kanjorski, D-Pa., that has received zero coverage in what we think of as the mainstream media.
To set the C-SPAN scene, Kanjorski is harkening back to the
> middle of last September, when, as it happens, John McCain
> was enjoying his brief lead in the presidential polls and
> the economy as we knew it was imploding. Here’s what
> Kanjorski said:
> “I was there when the Secretary (of the Treasury Hank
> Paulson) and the Chairman of the Federal Reserve (Ben
> Bernanke) came those days and talked to members of Congress
> about what was going on. It was about Sept. 15. Here’s
> the facts, we don’t even talk about these things.
> “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, as being drawn out in the matter of an hour or two. $550
> billion of of $4 trillion in accounts. According to traders, who spoke on the condition of anonymity, money market funds were inundated with $500 billion in sell orders prior to the opening.
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…
> “The Treasury opened up its window to help. It 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. 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,
> and that’s what actually happened.” Had the Treasury and Fed not quickly stepped into the fray that morning with a quick $105 billion injection of liquidity, the Dow could have collapsed to the 8,300-level – a 22 percent decline! The panicked selling was directly linked to the seizing up of the credit markets – including a $52 billion constriction in commercial paper – and the rumors of additional money market funds “breaking the buck,” or dropping below $1 net asset value. While many depositors treat money market accounts as fancy savings accounts, they are different. Banks buy a variety of short-term debt, including commercial paper, with the assets. It is an important distinction because banks use the $1.7 trillion commercial-paper market to fund their credit card operations and car finance companies use it to move autos.
Without commercial paper, “factories would have to shut down, people would lose their jobs and there would be an effect on the real economy,” Paul Schott Stevens, of the Investment Company Institute, told the Wall Street Journal.
> Kanjorksi continued:
> “If they had not done that, their estimation was that
> by 2 o’clock that afternoon, $5.5 trillion would have
> been drawn out of the money market system of the United
> States, would have collapsed the entire economy system of
> the United States and within 24 hours the world economy
> would have collapsed.
> “Now we talked at that time about what would happen if
> that happened. It would have been the end of our economic
> system and our political system as we know it. And
> that’s why when they made the point we’ve got to do
> things quickly, we did.” Continued…
> These are staggering revelations. Given their sudden
> appearance out of the blue, you have to wonder, first, could
> they possibly be true? If so, why weren’t we the people
> told about this $550 billion electronic run on the banks?
> And why haven’t we heard a word of it since? Even since
> Kanjorski spoke on C-SPAN last month, there has been scant
> MSM coverage. The story’s biggest exposure came when
> Rush Limbaugh played the audio and analyzed it on the air
> this week. Otherwise, the story has been little more than
> blogfodder, appearing at places such as Politico.com and the
> Economist blog with little comment. Writing at Portfolio.com
> this week.
> Is it? If what Kanjorski says is “fiction,”
> Americans, particularly Americans in Kanjorski’s 11th
> district of Pennsylvania, need to know. After all, this
> isn’t a story that just goes away on its own,
> particularly not when Paul Kanjorski is chairman of the
> Capital Markets Subcommittee of the House Financial Services
> Committee. Of course, incredible as Kanjorski’s
> revelations were, almost equally incredible was the
> interviewer’s failure to ask the next obvious question
> of national interest: Who or what was responsible for that
> electronic run on the banks “to the tune of $550
> That’s where Limbaugh went with the story. “Now,
> let’s assume for a second here that elements of this are
> true,” Limbaugh said of Kanjorski’s statement.
> “Let’s assume that there was a $550 billion …
> 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?”
> I’ve heard serious people float similar theories
> regarding financial attacks on our economy emanating from
> the Middle East, but again, who knows?
> One thing we do know is that former President Bush made
> extremely cryptic public statements regarding the stability
> of our markets at this time in question last September,
> statements noted by Accuracy in Media’s Cliff Kincaid.
> These began with a Sept. 18 Bush announcement that the
> Securities and Exchange Commission (SEC) was stepping up its
> enforcement action “against illegal market
> manipulation.” As Kincaid wondered, manipulation
> “by whom or what? The President didn’t say.”
> On Sept. 19, President Bush further announced that the SEC
> had “launched rigorous enforcement actions to detect
> fraud and manipulation in the market. Anyone engaging in
> illegal financial transactions will be caught and persecuted
> (sic — good ol’ W.).” Again, what was Bush talking
> On that same day, Kincaid reports, “the SEC announced
> a `sweeping expansion of its ongoing investigation into
> possible market manipulation in the securities of certain
> financial institutions.'” Why? What was going on?
> If ever there was a vital, compelling reason for
> congressional hearings, Kanjorski’s “electronic run
> on the banks” story is it.