I was wrong. We came alot closer to financial collapse than I thought

[Azale]

Well, that OP gave me chills. Sounds like a good idea for a Roland Emmerich movie.

Apparently it was sufficiently scary to scare most of Congress to action. That's saying something.

 

[bhsup]

Shame it didn't happen if you ask me.

Earth needs Resetting.

You'd lose your Lordship. And your 16 year old jailbait girlfriend.

 

[I'm Cleo!]

What was the motivation behind the "bank run"?

My guess is that it's because a number of very large banks are now insolvent.

Cleo

 

[Mowque]

It would have been the end of our economic system and our political system as we know it.

What would that exactly have entailed? Shooting and riots in the streets or what?

 

[Stolen Rutters]

Of course, I didn't have this information, no one did, except those on the inside, and I suppose that's why it didn't leak until now, because then collapse really would have happened. But wow, I'm shocked.

But here's this, today: (politico)

Rep. Paul Kanjorski's description, late last month, of how close to the brink the global economy came on September 18. That was the day, recall, when Congressional leaders emerged stunned from a meeting with Henry Paulson, and gave him broad authority to spend $700 billion.

Part of what he said:

On Thursday at 11:00 a.m. the Federal Reserve noticed a tremendous draw-down of money market accounts in the U.S., to the tune of $550 billion was being drawn out in the matter of an hour or two. The Treasury opened up its window to help and pumped a $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 is that by 2:00 p.m. that afternoon, $5.5 trillion would have been drawn out of the money market system of the U.S., would have collapsed the entire economy of the U.S., 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.

Sobering. I remember that day the congressional leaders changed their tune after a meeting. The congressional delegation looked a bit worried while they were talking, like they saw a ghost. (I wish I could remember what program that was I saw. The guy's name was Shelby or something like that.)

 

[GoodGame]

On Thursday at 11:00 a.m. the Federal Reserve noticed a tremendous draw-down of money market accounts in the U.S., to the tune of $550 billion was being drawn out in the matter of an hour or two.

Okay, question #1, who was doing this cashing in? Alien Space Bats?

It would have been the end of our economic system and our political system as we know it.

By what exact means? No businesses with international investors would be able to open that day?
I think at worse, it'd lead to temporary nationalization of necessary infrastructure, followed by paybacks. Then Inflation and potentially isolationism if countries investing in our country refused to give the USA some grace time. Absolute collapse? I don't think so.

 

[mrt144]

That 5.5 trillion number seems like it was pulled out of thin air or extrapolated from the delta of withdrawal in a specific time period (Which seems like the wrong way to do it).

 

[Zarn]

Yay silly hypothetical scenarios!

 

[Rashiminos]

My my my.... how late we are to the party....

Gum in the dam.

On a similar note, I've heard such rumors as increasing forms of global protest.

 

[JerichoHill]

I'm wondering the same. JerichoHill, do you know?

Nope

So JH, with what's now known, did Congress act as it had to?

I have no idea. I don't think all the bickering is helping matters. Confidence in government has eroded so badly that the only official over 50% support is Obama, and well, I expect those numbers to drop shortly

 

[JerichoHill]

That 5.5 trillion number seems like it was pulled out of thin air or extrapolated from the delta of withdrawal in a specific time period (Which seems like the wrong way to do it).

No, it wasn't pulled out of thin air. I checked it out and its close to being right, give or take 1 trillion.

 

[emzie]

No, it wasn't pulled out of thin air. I checked it out and its close to being right, give or take 1 trillion.

Well, a 4.5 trillion dollar loss is okay in my book.

 

[BSmith1068]

Well, a 4.5 trillion dollar loss is okay in my book.

What about a 6.5 trillion dollar loss?

 

[JerichoHill]

By what exact means? No businesses with international investors would be able to open that day?
I think at worse, it'd lead to temporary nationalization of necessary infrastructure, followed by paybacks. Then Inflation and potentially isolationism if countries investing in our country refused to give the USA some grace time. Absolute collapse? I don't think so.

Banks would have quit lending. That would have led to bank runs. People pulling money out fast. Look at historical examples of bank runs.

That would be exacerbated by that a good bit of the world's economy runs on the dollar. Basically, from what I now understand by talking with a few Treas friends, and they didn't feel that forthcoming, was that we'd have been looking at heavy devaluation, stopped markets worldwide, and an unknown psychological factor of how workers would react. Not. Fun. I guess this explains why everyone came out of that meeting singing a different tune.

 

[JerichoHill]

Well, a 4.5 trillion dollar loss is okay in my book.

Umm, it doesn't matter if it was 4,5, or 6 trillion. A devaluation of that magnitude would have severe economic consequences felt worldwide. You do not understand what you're okay about at all.

 

[emzie]

Umm, it doesn't matter if it was 4,5, or 6 trillion. A devaluation of that magnitude would have severe economic consequences felt worldwide. You do not understand what you're okay about at all.

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

It's okay. I still love you.

 

[Rashiminos]

Umm, it doesn't matter if it was 4,5, or 6 trillion. A devaluation of that magnitude would have severe economic consequences felt worldwide. You do not understand what you're okay about at all.

I think augurey was being sarcastic.

Edit: almost a simul-post

 

[Dachs]

Well, that was terrifying. Kinda makes me feel a little bad for making fun of Paulson earlier.

Umm, it doesn't matter if it was 4,5, or 6 trillion. A devaluation of that magnitude would have severe economic consequences felt worldwide. You do not understand what you're okay about at all.

He's not being serious.

 

[gangleri2001]

Shame it didn't happen if you ask me.

Earth needs Resetting.

Looks like someone needs to take a trip to Reykjavik.

 

[Narz]

I was wrong. We came alot closer to financial collapse than I thought

Well good thing that's behind us now. Everything's rock solid now I'm sure, from our energy situation to our currency, to our economy & the environment of course. I for one, am relieved the worst is over.