Video: The day the global economy almost died
posted at 3:15 pm on February 10, 2009 by Allahpundit
It’s Paul Kanjorski, no stranger to blabbing about unpleasant truths, regaling C-SPAN last month with the economic equivalent of the Stanislav Petrov story. Remember the reports that trickled out in mid-September about a harrowing briefing Paulson and Bernanke had given to Congress? The specifics were never revealed, but whatever they said scared the hell out of attendees:
“When you listened to him describe it you gulped,” said Senator Charles E. Schumer, Democrat of New York.
As Senator Christopher J. Dodd, Democrat of Connecticut and chairman of the Banking, Housing and Urban Affairs Committee, put it Friday morning on the ABC program “Good Morning America,” the congressional leaders were told “that we’re literally maybe days away from a complete meltdown of our financial system, with all the implications here at home and globally.”
Mr. Schumer added, “History was sort of hanging over it, like this was a moment.”
When Mr. Schumer described the meeting as “somber,” Mr. Dodd cut in. “Somber doesn’t begin to justify the words,” he said. “We have never heard language like this.”
Take a drink of something hard and watch from 2:20 to 3:45. Now you know the specifics. This Journal story from that week described the financial turmoil through Wednesday afternoon, at which point $144.5 billion had already been yanked out of money markets, and then skipped ahead to Paulson and Bernanke meeting with Congress on Thursday night without a mention of what happened in between. That’s how closely guarded this secret must have been.
Blowback
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My dad also said he knew WaMu was gonna tank years before it did because they were the most aggressive at getting into the subprime market. He called it “giving out loans in the ghetto to people who couldn’t and wouldn’t understand they had to actually pay them back” though.
funky chicken on February 10, 2009 at 5:15 PM
It helped the Messiah but only a fool would figure a single person or group set it up that way. No person or institution would try to lose that much money to help a politician. This had been in the works for months. Remember Bush had done a stimulus in the spring . The underlying problem was there just a cascade effect.
Soros and Move on had used Acorn and the contributions to Obama. After all the MSM was free to use for Obama.
No the blame for Obama winning is us. We voters failed to vote for McCain and allowed the Democrats and Indies to vote for Obama.
RAH on February 10, 2009 at 5:17 PM
Paulson helped elect The One when he made the decision to let Lehman fail, IMHO.
Lehman was in trouble (but compared to TARP, not much trouble) but he chose to bail out his friends, and Goldman Sachs’s friends, at AIG instead.
funky chicken on February 10, 2009 at 5:18 PM
I dunno. I usually take a dim view of conspiracy theories (Occam’s razor is handy), but this was all just too well-timed from Obama’s perspective. He was flailing.
ddrintn on February 10, 2009 at 5:21 PM
What more really needs to be said?
TheBigOldDog on February 10, 2009 at 5:26 PM
this crisis kept Ayers from being an issue that could really hurt Obama and really made it impossible to use Ayers/Wright/Rezko against Obama…since we were in “Crisis”
jp on February 10, 2009 at 5:26 PM
You know these guys screwed the pooch and most likely have sent the World Economy into the dumper. WHERE IS THE ACCOUNTABILITY?
ronsfi on February 10, 2009 at 5:29 PM
No. You can thank McCain for that.
TheBigOldDog on February 10, 2009 at 5:30 PM
The Cloward-Piven Strategy of Orchestrated Crisis
An old read, but nothing the less, it connects the dots.
Kevin in Washington State on February 10, 2009 at 5:31 PM
Well, McCain certainly opted to go that route, but I disagree that it was impossible.
califcon on February 10, 2009 at 5:32 PM
McCain ran a lousy campaign, but it was doing pretty well before the “crisis”. That’s the point.
ddrintn on February 10, 2009 at 5:32 PM
politically, nobody wanted to hear about Ayers/Wright in the midst of a Financial Crisis, was my point.
Voters didn’t want McCain to go there during this, and Obama could easily mock him. Dismiss everything as “I’m trying to talk about this Economic Crisis and this guy is only talking about some guy in my neighborhood”.
McCain screwed up not bloodying Obama up during the Summer over Wright and then Ayers, before he picked Palin
jp on February 10, 2009 at 5:36 PM
Where do you get this “nobody” stuff? Because, in my world, everybody wanted that out there . . . Hopefully you are not a Johnny Mac sockpuppet.
califcon on February 10, 2009 at 5:39 PM
I don’t mean people like us, I mean non-political moderates McCain had to convince to vote for them.
To them that kind of stuff is ‘mostly b.s.’ in their minds anyway and they want someone to ‘speak to the issues’, it matters when there is an economic crisis. it gave Obama easy diversion lines that scored political points.
sure many did care anyway, but not enough.
jp on February 10, 2009 at 5:44 PM
Obviously, this handy axiom is useful in any scenario and no matter who’s diagnosis you’re given.
Trust not!..Fail not!
Or, if you prefer.
Trust explicitly!..Fail explicitly!
Speakup on February 10, 2009 at 5:51 PM
McCain looked like a fool suspending his campaign and then doing the debate anyway. He was flailing around and made Obama look good doing nothing. McCain is clueless about the banking system and Federal Reserve. All he cared about was the war and it was clear to me in the spring that Bush had won that and it would not be an issue.
Stop placing the blame on imaginary conspiracies. The exit polls showed in GOP counties that where the majority is GOP they failed to turn out. The GOP sat this one out and Obama won.
RAH on February 10, 2009 at 5:57 PM
I’m not saying it’s a conspiracy; I don’t think the evidence is conclusive either way. McCain was “flailing around” AFTER this “crisis”.
Obama was never a slam dunk until after Lehman Brothers went bust. No way.
ddrintn on February 10, 2009 at 6:00 PM
I agree McCain was not the conservatives’ choice… he got a big boost out of Palin who exposed Obamam for what he was\is in her convention speech…he was up 8 points and the Left was going crazy… then this “crisis” which was probably Soros’ plan b in case the MSM plan failed… I still don’t understand 90% of what is going on here or what you guys are discussing…but I do get that the average American borrowed to much, the mortgage mess was the catalyst and that someone, apparently we don’t know who, took 500b out in two hours…someone knows who and where … so I’m wondering what is next?
CCRWM on February 10, 2009 at 6:25 PM
No one wants to vote for a stinker. The Republicans will probably try to force Arlen Specter on us the next time and they will get the same results.
Johan Klaus on February 10, 2009 at 6:46 PM
and this would have been a bad thing? the entire idea of socialism needs to be destroyed…that would have done it…perhaps we could have rebuilt our country and economy like our founders did, only better…no tyranny of the judiciary…and base the country on freedom and capitalism..
you do wonder who was behind this…I’m sure SOROS had something to do with this, but he was not alone…probably a few countries like china, russia, etc…
right4life on February 10, 2009 at 7:05 PM
At the very least it seems Bush was not served well by Paulson, which is beating the crap out of the rest of the country now.
aikidoka on February 10, 2009 at 7:06 PM
I’m tempted to think Soros as well due to his past shorting and the Bank of England, however, he has what 9 billion net worth?, does he have enough to set off a panic in insitutional investors and/or did China start to bail as well?
aikidoka on February 10, 2009 at 7:11 PM
the answer to that is whoever the Fed gave all those trilliions of guarantees to…does anyone know?
right4life on February 10, 2009 at 7:15 PM
It is interesting to remember where the polls were on or about 9/15/08. McCain took the lead for the first time in the RCP on 9/7/08. On that date he lead by 1pt. He held the lead for ten days until a tie on 9/17/08. If you go back to 8/31/08 Obama’s lead started to collapse and was continuing down until 9/15/08. After Obama retook the lead on 9/18 there was no looking back. Any panic that may have been setting in for those who supported Obama was full blown at exactly the same time as the electronic run.
BrianBoru on February 10, 2009 at 7:21 PM
It sounds scary, but my rule-of-thumb is that Chucky Schumer is incapable of uttering any sentence without a) distorting the content, b) conscious attempting to manipulate the public with it, and/or c) outright lying. When you factor in that the Democrats have a lot invested in the “sky is falling” perspective as a means to ram “emergency” (albeit permanent) socialism down our throats, I’ve no way to determine to what extent or even if things were grave as they’re made to sound here.
Blacklake on February 10, 2009 at 7:25 PM
agree McCain was not the conservatives’ choice… he got a big boost out of Palin who exposed Obamam for what he was\is in her convention speech…he was up 8 points and the Left was going crazy… then this “crisis” which was probably Soros’ plan b in case the MSM plan failed… I still don’t understand 90% of what is going on here or what you guys are discussing…but I do get that the average American borrowed to much, the mortgage mess was the catalyst and that someone, apparently we don’t know who, took 500b out in two hours…someone knows who and where … so I’m wondering what is next?
CCRWM on February 10, 2009 at 6:25 PM
RAH on February 10, 2009 at 7:31 PM
The sort of thing he describes in the video doesn’t just “happen”. Someone or something caused it. The media is absolutely useless if it doesn’t uncover just what that person or thing is.
That means bloggers, too.
commenter on February 10, 2009 at 7:31 PM
Paul Kanjorski, Democrat, is impressive.
Kralizec on February 10, 2009 at 7:44 PM
RAH on February 10, 2009 at 7:31 PM
You make excellent points. Perhaps this was one of those ‘perfect storms.’ However long this debacle was forming I think many people are wondering what was the catalyst for the panic that hit the markets in September.
Christine LaGarde, French Fin. Min., counseled Paulson not to let Lehman Brother fail. http://www.insurancejournal.com/news/international/2008/10/08/94431.htm
For whatever reason, he did. Dick Fuld was under the impression that Paulson would help his firm, yet it never occurred. I don’t know why Paulson, Bernanke, et al underestimated the consequences of this event, but it may well have been a major factor in starting the panic selling we saw which lead to other things like cashing out MM funds.
Cody1991 on February 10, 2009 at 7:48 PM
conspiracy theory is not necessary. Smart people got an inkling of the problem and tipped off others, leading to bank runs. Some personal experiences: 1) in Jan of 2007 my son tells me his hedge fund buddy is going to short the sub prime market. The friend calls the premises of this market ‘insane’. I don’t get in since my (bank owned)
broker advisers says the Dow is going to 15000. Don’t worry. 2) In late 2006 my mother dies and we put her house in So CAl on the market for 50% more than we payed for it 2 years before. It is in the middle of the sub prime Universe. Within 2 weeks we get a bid for a “no down payment, we pay closing cost, loan”. We accept. In Jan of 2007 loan is approved and goes to escrow. The buyer is found to be an illegal when he mistakenly uses two social security numbers on his application.No sale. The house is still on the market.3)At that time, I ask a friend who works at a very large Bank, now getting Tarp cash, why they would support loans to just any body.He says because they bundle 90% of the loans and get the money back from Wall Street in 48 hours. The other 10% they loan themselves but only to the best credit risks. (Now he tells me they are approving only 5% of loans to people worth over 500G). 4)Bear Stearns tanks. Months before this, British Hedge funds short the stock while openly calling the CEO on the carpet at shareholder meetings. They make a fortune.The company is bailed out by Paulson. Lehman sinks but there is no bailout for unclear reasons. World wide panic sets in. Bank runs occur. In October the markets tank 20% or more in a few days, wiping out trillions in assets still in stocks. One New York Hedge fund rakes in billions in one day betting against the credit markets, others sink 80% or more. The Harvard endowment loses 31% So? Basically very bad decisions were made by Paulson, especially on Lehman, but more so by banks and other investors on the basic issue of credit and confidence, problems that were foreseen by only a few.In the last few weeks of October, The US electorate turned from Iraq to jobs and investment.Obama voted ‘present’ and looked cool, McCain got agitated, and looked confused.. In the end, Obama did not win because of a conspiracy, but by being in the right place at the right time,although now he is in the wrong place at the wrong time. McCain lost because he could not give people confidence in the then scary future. The “conspiracy” was that of chance. We should focus on the future not the past, and hold Obama accountable for once. Don’t let him vote “present” again and blame someone else(“Washington”), even as he is doing at this moment.The press is worthless and even complicit. He is on his way to being a President worse than Carter. The only hope is in the blogs.
mytralman on February 10, 2009 at 8:42 PM
+1
It’s tempting to believe that “Soros Did It.” and that there is some face and head upon which I can lay my anger. If real evidence shows up, alright. But this situation was worldwide, it was very complex, and the signs had been becoming more numerous over the last few years. Besides, if I play along with conspiracy theorists, there is a danger that I adopt the same lunatic paranoid mindset of the people who still think 9-11 was an inside job. It’s madness. Sometimes bad things happen and this one worked to Obama’s advantage.
tartan on February 10, 2009 at 9:00 PM
The guy does make one small mistake. Money Market funds are backed-up to the amount that was in the account of the date of the Fed announcement. The 250K is banks.
It is interesting to see the 3 to 4 trillion number coming up again. The way I’ve heard it, this number is a “recent” conclusion.
But this guy’s account makes sense. TARP 1 started by talking big about buying up assets, only to quickly find that the scale was huge…and that the leverage on the bank capital was huge, meaning that you are throwing money into a very deep dark well to try to find the bottom.
They were hoping that 350K (or 700K) would backstop 3 to 4 trillion, which implies a 10 X 1 leverage. But the de-leveraging spread.
So in the end, we still have the 3 or 4 trillion…and they are still trying to finesse it with a public/private partnership.
Wonderful.
r keller on February 10, 2009 at 9:04 PM
PS..wrt conspiracy..it is more likely that Schumer wanted the run on the Indymac Bank, and Harry R. tried the same with the insurance companies, and the big investors were shorting the hell out of the financials to help Obama.
But in the end they sparked they didn’t forecast.
Not saying that that happened, but only that its more likely that a full conspiracy.
r keller on February 10, 2009 at 9:09 PM
BOO!
Look we all just missed getting squashed. You better get behind Barry before we are!
Limerick on February 10, 2009 at 9:26 PM
Didn’t anyone catch Barry with Terry Moran on ABCs WN? The question to Barry was about the Republicans in the Senate opposing His Highness. Moran told Barry he need to do something to make the Senate Republicans fear him.
Journalism at it’s finest.
Limerick on February 10, 2009 at 9:33 PM
Uh…in exactly what way? The frantic woman on the phone made more sense. At least she realized that none of this crap is going to help her much.
I’m not sure what the big deal is here, and why this merited a topic on Hotair. There’s no new info here: the run on Money Market funds and subsequent fears of an related economic collapse were well reported at the time.
Once Treasury Dept. understood what was going on in the Money Markets they stepped in and provided what amounted to FDIC protection for hundreds of billions of Money Market funds using an emergency fund that really had nothing to do with TARP.
Kanjorski’s explanation is nothing new. Whether he’s correct about the imminent collapse of the “World Economy”, and whether TARP was the correct response, is pure conjecture, and in my opinion he is just running interference to indirectly promote the latest “Stimulus package” and further TARP legislation. “Politics of Fear” indeed.
And Schumer and Soros sre two of the biggest jackasses on Earth, and Schumer in particular did his little part to make the situation worse with his Indymac comments–but the conspiracy theories floating around are just plain silly.
Exactly.
Dreadnought on February 10, 2009 at 9:48 PM
funky chicken on February 10, 2009 at 5:15 PM
I agree about Wamu–when I saw our deposit slips printed in Spanish and the home loan signs in Spanish, I knew they were going after bad borrowers for easy money. All of us around here said the same thing: when this goes bad, it’s going to be ugly. Three of my friends sold their real estate in 2005, realizing the future was going to be dicey.
Of course the government knew! They’re still making bad loans for political purposes! How can we bail ourselves out of this with money we don’t have?
PattyJ on February 10, 2009 at 10:21 PM
I think. I wish they would.
watson007 on February 11, 2009 at 8:52 AM
That video is gone. Here is another link for anyone looking
http://www.youtube.com/watch?v=-xKPcyvlfnc
BrideOfRove on October 3, 2009 at 3:42 PM
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