Financial Armageddon, a good web site, run by author Michael Panzner, has a story about the crisis of September 18th, 2008. I was hyper-aware of what was going on and to back up the information of Panzner’s news story, I want to review my own postings from that important week. Click on all the cartoons to enlarge. They are quite funny, actually.
Now, though, as the Zero Hedge blog reveals in a post entitled “How The World Almost Came To An End At 2PM On September 18,” it appears that those giving the warnings were deadly serious.
LiveLeak has caught a scary moment of previously undisclosed insight by Paul Kanjorski where he reveals some facts that have not been captured by the media previously. At 2 minutes and 20 seconds in the video below, Democratic Representative Kanjorski explains how the Federal Reserve told Congress members about a “tremendous draw-down of money market accounts in the United States, to the tune of $550 billion dollars.” According to Kanjorski, this electronic transfer occurred over the period of an hour or two. And it gets worse. Kanjorski paraphrases the following disclosure by Bernanke and Paulson:On Thursday (Sept 18), at 11am 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 2pm that afternoon, $5.5 trillionwould 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.
The bankrupt system barely pulled through, last September. Just for the historic record, I wish to show how I covered this news from Sept. 15th through to Sept. 18th. Because, I called all the shots pretty closely to reality. I even stayed up at night to cover the news as the world seemed in total collapse. It was pretty obvious, to me, at least. The problem is, not only has NOTHING been fixed at all, the terrified efforts of the bankrupt bankers to dump the entire mess onto countries that are now going bankrupt…this is an even bigger crime.
Fixing the banks by destroying Iceland, Ireland, Scotland, England, Spain, Greece, all of Eastern Europe, etc, etc, is stupid. All countries must exist and they must serve their people and not starve them to death or destroy their ability to have an economy. If bankers create conditions like a global credit crash, they should be eliminated, punished and we start from scratch except if a country owe OUTSIDE money, that has to be paid off, eventually. This means, the biggest debtor nation on earth, when it comes to outside debts, the US must put its own house in order!
And not one of our trade partners want this! So, off to the past to review the Great Crash of September, 2008:
The Derivatives Beast is a teenager. It isn’t very old at all. And like all teens, it is destructive and active at the same time. Now that is has appeared in public, the bankers and the G7 governments must figure out fast, how to defang this Godzilla-sized monster. They can’t do it, of course. So now we look at today’s news to see exactly how futile the governments and bankers are in the wake of the destruction of this terrible teen. And of course, we have to also examine Mother Nature who has made things much, much worse.
The inevitable finally happened: a major investment bank has gone under. Destroyed by sea surges from Hurricane Greenspan. Lehman is dead and Merrill Lynch is part of the goofy bank called ‘Bank of America’. The Derivatives Beast is now activated. With Bear Stearns, the Federal Reserve and the Treasury were able to prevent the credit default swaps from being activated. Now, they are unable to do this. $600+trillions of CDS deals are at stake now. They will be revealed as FRAUDS. The dollar is again, falling. And our trade partners are in hysterics. McCain’s economic advisor claims that there is nothing wrong with anything. Except his brains.
On Sunday, the Treasury and Federal Reserve asked the Derivatives Beast’s handlers to come to Manhattan and open trading of credit default swaps. No one showed up and nothing was traded! So today, the bankers who fear this beast, are talking in a desultory way about opening a market for their hideous monster. Japan was caught in the latest wringers as they lent lots of loot to both AIG and Lehman Brothers. And god knows, everyone else in this stupid mess. China’s markets are also falling but the Chinese government wanted this back in 2005. So now, everyone is following China’s lead. No surprise. They are in the driver’s seat now.
The Federal Reserve went bankrupt today. Now, Treasuries are the last place left where the money people can park their loot. And Treasury bills collapsed in value. Lower than any time since the damn Great Depression. It is now at Japanese levels! Namely, below 0.05%. This is INSANITY. Holding money where it gains nothing is what? The dread 0% down, 0% interest and 0% principal paid? That is the domain of the Goddess of Depression. Her rule is twice as cruel as the Goddess of Inflation. And that can still happen! For Inflation lurks nearby, she will take over the instant Depression releases her grip on all the loot in the Treasury and foreign FOREX reserves!
IT IS OFFICIAL; THE US IS BANKRUPT. The Federal Reserve, which I have said repeatedly, has virtually no reserves, now has NO reserves!!!!! This is AMAZING like in the realm of ‘The Chinese who have almost $2 trillion in FOREX reserves are now the world’s bankers’ type of nasty news. The Chinese 50 year plan has succeeded in a mere 25 years. Congratulations, Sheng. I wish I could shake your hand, you were right when you blurted out, ‘I be bank!’ in 1986. Wow.
Once again, with the usual suddenness, the Plunge Protection Team leaps into the abyss. Just one day after the media was putting out stories that the government was no longer saving any of the banking gnomes, the government takes on all the debts and problems of one of the biggest, übergrössig gnomes of them all, AIG. It is now a dead corporation and is now being resurrected as a government agency. Note, please, how bankrupt bankers and other scion using the Cave of Wealth and Death are gathering under the umbrella of the biggest debtor on earth, the one whose bankruptcy will tower over all others….!
When terrorists were allowed free rein to attack the US seven years ago, the ruling elites believed this would grant them vast powers. Which it did. Happy as larks, they imposed a Stalinist-style government on the once-free American people. Just before 9/11, the GOP cut taxes and reserve requirements. They eliminated rules and regulations, etc. so Wall Street could go hog-wild. The US boasted that it would be stronger and better than anyone after 9/11 and then went on a spending spree from hell based on ridiculously low interest rates of 1% set by the crooks at the Federal Reserve. Now, we are in a collapsing economy due to a debt overhead that is hideous. Time to examine the ramifications of the total banking collapse of the G8 nations.
Well, here we are, today’s news:
Bad lingo | 3:59 p.m. Emanuel Cleaver, a Democrat from Missouri, condemns the term “bad bank.” He says the term does not exactly inspire support for the program. Maybe it should be called the “Damascus Road” bank, he says, or maybe the Fed should have a linguist look into something else more appealing.
Mr. Bernanke replies that it’s officially called an “aggregator bank,” not a “bad bank.”
Mr. Cleaver says that term is unlikely to catch on, and that perhaps a three-year-old should come up with something that rolls a bit more trippingly off the tongue.
AGGREGATOR Bank? Sounds too much like ‘Alligator Bank’. Makes me think of de Nile. Heh. Or how about Aggravation Bank? Closer to reality. We could cut to the chase and call it ‘Asshole Bank.’ The building next to it could be the ‘Asshole Prison’. Shuffle all the gnomes from the bank to the prison. Lock it up and we are safe again.
Since the Committee last convened in early November, the contraction in economic activity has deepened and broadened, while financial markets have remained under duress. The unprecedented volatility present in capital markets when the Committee last met has diminished somewhat but conditions still are exceptionally challenging. Policy efforts have begun to unlock credit for select high-quality borrowers. But the magnitude of wealth destruction, the still heightened cost of economy-wide capital and the impaired system of financial intermediation continue to cast a dark cloud over the economic outlook. [The houses are still standing, the factories are still there, what has fallen has not been ‘wealth’ but the value in $ attached to things that still exist, mostly intact.]
Monetary and fiscal policy action now being implemented will help to prevent an even more serious downturn than otherwise would be the case. Policymakers’ efforts to restore the flow of credit to households and businesses, backstop critical financial intermediaries through capital injections and loan guarantees, and stimulate economic activity via lower interest rates, tax cuts and government spending are positives. Nonetheless, the necessary deleveraging of both the financial and household sector is considerable and has further to run. [In other words, deflation is necessary and thus, absolute???]
Price pressures are receding rapidly. Headline inflation already has collapsed toward zero due in large part to the steep declines in commodity costs. [I am happy the Fed is finally admitting to what I have been yelling about for years, namely, that commodity price inflation is what they are really tracking and this scares them the most because it hits the hardest] More notably, core inflation also is cooling quickly amid the slump in demand and rising unemployment and remains close to the Federal Reserve’s comfort range for this series. Moreover, the speed at which businesses are cutting headcount and reducing compensation is raising the risk of deflation. Given elevated debt levels, such an outcome would be extremely problematic for the financial sector and real economy. [No kidding!]
Federal Reserve officials have dropped the funds rate to effectively zero and are focused on using the bank’s balance sheet to help to restore the flow of private sector credit. Forthcoming implementation of the TALF program to restart the flow of credit in the asset-backed securities market is one example of the Fed’s efforts, as is its ongoing purchases of agency and agency-backed mortgage debt. Additional asset purchases – including the buying of Treasury securities if the FOMC determines that such purchases would be “particularly effective in improving conditions in private credit markets” – also are possible.
There are no ‘private credit markets’ anymore. Everything on earth is being held up by glue, bubble gum, string and zillions of pieces of paper I call ‘funny money’. People will commit all sorts of crimes to get their paws on this funny money. What is so pathetic is, the highest-denomination money on earth is the Zimbawe currency and it is totally worthless. And the banks no longer process it as money. This is how infinity becomes zero.
Peter is buying Paul’s money and lending it back to Paul with interest. Isn’t this a closed circle to nowhere? If Peter and Paul keep adding more pieces of paper while they do this, the paper gets more and more worthless. They have to somehow attach it to real things: property, businesses, technical systems or labor. Or sex, for that matter. It can’t be used to buy things that are consumed. It has to be held against things that are not consumed. For example, we are not supposed to let houses we are using for collateral, burn down or be vandalized. We have to keep them up and pay off the loans to these Peter/Paul Bank/Treasury twins.
We just did our taxes. We saw on TV promises from Obama and Congress that they will, again, hand out more Peter/Paul fake money so we can spend it again on high food and fuel costs which I am betting, will match the bounty the politicians are giving us. There is still an army of hedge fund pirates desperate to make money somehow and are itching to bid up the price of commodities again.
The FBI is conducting more than 500 investigations of corporate fraud amid the financial meltdown, FBI Deputy Director John Pistole told the Senate Judiciary Committee on Wednesday, and there is an even bigger mountain of mortgage fraud cases in which hundreds of millions of dollars may have been swindled from the system.
Pistole says there are 530 active corporate fraud investigations, and 38 of them involve corporate fraud and financial institution matters directly related to the economic crisis.
Additionally, the FBI has more than 1,800 mortgage fraud investigations, more than double the number of such cases just two years ago.
There are so many mortgage fraud cases, he said, that the bureau is not focusing on individual purchasers, but industry professionals generating fraud schemes that could total as much as hundreds of millions of dollars.
500 cases? Gads! That barely covers the ones associated with the Madoff mess! I suspect there should be about 100,000 cases. We should spend part of the trillion dollar bail out to put these creeps behind bars with no bail! We should not take on another couple trillion in future obligations to bail out a bunch of bastards! OK?
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