Important video on banking system on Sept 15 2008

**scottp999** · 02-09-2009, 05:51 PM

People don't really discuss what happened on September 15th or are not aware of it, but the entire US Economy and Banking system was a couple hours away from shutting down. I know there is usually only discussion on personal finances, but I think this would have impacted us all in a personal way.

Listen the the Congressman that is the chair of the Capital Markets sub-committee talk (on CSPAN) a little about what happened that day.

Really starts describing it a just after 2 minutes into the video.

I just post this to get people's awareness up about what happened and how close we were to going back to the stone ages that day, in economic terms. Also, to understand the consequences if the politicians and cental bankers do not get things right:

[media]http://www.youtube.com/watch?v=_NMu1mFao3w[/media]

Mohamed El-Erian who is the CEO and CIO of PIMCO has mentioned on CNBC that he called his wife that day and told her to go straight to the ATM and withdrawl the max. He was able to see and/or hear about the massive electronic bank run going on that day.

Mohamed's BIO: http://www.pimco.com/LeftNav/Bios/Mo...A+El-Erian.htm

While the bank run was stopped (by closing access to people's accounts) after 550 billion dollars were removed from the system, the Treasury estimates that by later that day over 5 trillion dollars would have been sucked out of accounts, causing the US system to collapse, and the world system shortly after.

**ncarr** · 02-09-2009, 07:34 PM

thanks... i found that video really interesting

**scottp999** · 02-09-2009, 07:45 PM

Another article I found really interesting says that the Bailout tab so far will be 9.7 trillion if the stimulus/spending package gets passed.

Enough to pay off 90% of the mortgages in the country:

Posted on Bloomberg today, a washington post story. The mortgages are mentioned in the first paragraph:

http://www.bloomberg.com/apps/news?p...q2B3XeGKok&sds

Sickening!

**Luv2BeFrugal** · 02-10-2009, 03:13 AM

Wow! That's scary about the run on the banks! Makes me wonder how much happens that "we" don't know/see...

**scottp999** · 02-10-2009, 10:45 AM

For those that don't want to sit through the video, here is the Congressman's quote:

“Look, I was there when the Secretary (U.S. Treasury, Hank Paulson) and the Chairman of the Federal Reserve (Ben Bernanke) came those days and talked with members of Congress about what was going on. It was about September 15th (2008).

Here’s the facts, and we don’t even talk about these things. On Thursday, at about 11 o’clock in the morning, the Federal Reserve noticed a tremendous draw down of money market accounts in the United States, to the tune of 550 billion dollars, was being drawn out in the matter of an hour or two. The Treasury opened up it’s window to help. They pumped 105 billion dollars into the system and quickly realized they could not stem the tide. We were having an electronic run on the banks. They decided to close down the money accounts and announce a guarantee of $250,000 per account, so there would not be further panic out there. That’s what actually happened.

If they had not done that, their estimation was that by 2 o’clock that afternoon $5,500,000,000,000 (5.5 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.

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.”

-Rep.Paul Kanjorski (D-PA), Chairman of the sub-committee on Capital Markets, Sr. member of the Financial Services Committee, Feb 6th, 2009, from an interview on CSPAN

**Denvergirlie** · 02-10-2009, 01:46 PM

For years and years the US has been one step away from this house of cards coming tumbling down.

Our gov't keeps making the same moves that have failed time and time again in history and yet somehow "expect" different results.

**ConnieD** · 02-10-2009, 02:38 PM

Wow................. VERY scary!
Makes you wonder how much longer the governments can keep going this way

**C@rol** · 02-10-2009, 03:09 PM

Originally Posted by scottp999

If they had not done that, their estimation was that by 2 o’clock that afternoon $5,500,000,000,000 (5.5 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.

So that's why our money market accounts are participating in the insurance that protects MMA's up to $250k. Sept. 15, 2008 is the date it started and whatever amount you had in your MMA on that day is what you are covered for if your MMA is participating in this goverment sponsored insurance.

It's to insure you against your MMA's shares from falling below a $1. This is scary and it could still happen.

**knitnmom** · 02-13-2009, 08:52 AM

Wow, that is scary! So, how do we protect ourselves?! What is the smart thing to do? It really isn't realistic or convenient to pull all your money out of the bank, but I sure feel tempted!!!!

**Denvergirlie** · 02-13-2009, 09:18 AM

Originally Posted by knitnmom

Wow, that is scary! So, how do we protect ourselves?! What is the smart thing to do? It really isn't realistic or convenient to pull all your money out of the bank, but I sure feel tempted!!!!

Pulling cash out of the bank wouldn't do a bit of good if the entire monetary system collapsed. That dollar would just be pretty printed paper. There is no value in paper. The gold that used to back up our dollars is long since gone. Starting with FDR and the final nail in the coffin was Nixon.

That's the problem. There really is no value in our fiat money system.

So now one has to balance the two results of what could happen.... one, the dollar remains of value and it continues to exsist and we bounce out of this downturn. Foreigh gov'ts will continue to see the dollar as having a value and things will thrive once again.

Or two, the dollar collapses and is nothing more than paper. Most of the trading markets and exchagne rates are pegged against the dollar, if it has no value other fiat money systems will fail as well. Gold and silver will still retain value and will once again become the backbone of trade and commerce. Your stockpile of food and your skills in creating something of actual value will skyrocket in value. Real things will have value.

These are the two extremes, but we are doing our best to prepare for both. We save money for retirement should it all shake out okay, but we also stock our house and our minds with raw materials and skills.

I don't know how many fo you are familar with Chris Martenson, but he has a great video course about economics.

If nothing else, watch the last two in this series;

Chapter 19 - Future shock (really a recap of the entire series) (8 minutes)
http://www.chrismartenson.com/crashc...9-future-shock

Chapter -20 - What should I do? (19 minutes)
http://www.chrismartenson.com/crashc...at-should-i-do