[Decomposition]

Somehow I had not heard this:

http://zerohedge.blo...-at-2pm-on.html

Key quote:

Quote

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 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.

We are no better off today than we were 3 months ago because we have a decrease in the equity positions of banks because other assets are going sour by the moment.

Not sure what else to say about all this. Had anyone heard about this before? Your thoughts? Is this guy just making stuff up or did this really happen?

This post has been edited by Decomposition: 10 February 2009 - 09:35 AM

[Lamuella]

I read this elsewhere. Scary if true.

[Electron Sponge]

It's a good thing they weren't asleep at the switch then.

[Foggers]

Quite exciting to be honest.

[flak attack]

I was finally going to get a chance to live in a post-apocalyptic world and the fed has to go and ruin it for me. I told you guys they weren't good for anything, but you never listen to me. See what happens?

I think I typed less than 1/3 of the words in this post correctly the first time.

[Sunake]

Great Depression all over again. That's scary to think about.

[Foggers]

Isn't there a part in 'Fahrenheit 9/11' about how much money Saudis have in the US banks and if they withdrew it then the American economy would collapse from that?

[Sunake]

Foggers, on Feb 10 2009, 04:42 PM, said:

Isn't there a part in 'Fahrenheit 9/11' about how much money Saudis have in the US banks and if they withdrew it then the American economy would collapse from that?

That's the real terrorist threat, if I believed that tub of lard Micheal Moore-on.

[Lamuella]

sunake, you've seemed very reasonable and pleasant lately. Please don't ruin it by randomly spewing insults against a commentator you disagree with, especially not because of their weight.

[Kenadian_2006]

Sunake, on Feb 10 2009, 10:40 AM, said:

Great Depression all over again. That's scary to think about.

I think the Great Depression would have looked like a mild case of dissatisfaction compared to this.

[Andy Rooney]

Decomposition, on Feb 10 2009, 07:32 AM, said:

Not sure what else to say about all this. Had anyone heard about this before? Your thoughts? Is this guy just making stuff up or did this really happen?

It really happened and I was at work when it happened. I work in an investment bank and what happened was the M1 multiplier reached a null value and trading systems started doing what they were programmed to do to preserve the value of assets under management (AUM). It happened at our bank and at every other bank in the USA and a few out in the world, too. The Fed automatically suspended these moves and that's something they will do frequently enough.

I know this sounds really bad, but what happened was mostly all automated and the automated systems at the banks worked fine and then the automated systems at the Fed worked fine and that's why nothing too bad really happened. Once the banks' trading systems were shut down and actual people started making the decisions things stabilized.

The SEC has similar safeguards to prevent massive moves on Wall Street and they implement their stops rather frequently. The Fed has used stops before but less frequently.

The market trend, obviously, is down. But the system will prevent a collapse from happening all on the same day which is what could have happened had the banks automated systems been left alone. And it could have happened inside of an hour.

[Sunake]

Lamuella, on Feb 10 2009, 04:47 PM, said:

sunake, you've seemed very reasonable and pleasant lately. Please don't ruin it by randomly spewing insults against a commentator you disagree with, especially not because of their weight.

Me? Reasonable? I must be in a scarily bad mood lately.

Kenadian_2006, on Feb 10 2009, 04:53 PM, said:

I think the Great Depression would have looked like a mild case of dissatisfaction compared to this.

o_o I think you got one-upped Lam. That takes the cake.

[NewPoseidon]

....waiting for someone to explain how government regulation of banks caused this.

[Kenadian_2006]

Sunake, on Feb 10 2009, 11:40 AM, said:

Me? Reasonable? I must be in a scarily bad mood lately.



o_o I think you got one-upped Lam. That takes the cake.

Well, judging from what the article says. If it causes our entire economic and political system to fall like a deck of cards in a matter of hours...

[El Pilchinator]

NewPoseidon, on Feb 10 2009, 12:05 PM, said:

....waiting for someone to explain how government regulation of banks caused this.

"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."

guaranteeing 250k sounds like the lovely work of an FDIC-type maneuver.

[Sunake]

NewPoseidon, on Feb 10 2009, 06:05 PM, said:

....waiting for someone to explain how government regulation of banks caused this.

Because they coddled the banks and once they were set loose on their own they made bad decisions. Plus LBJ set up a federal regulation that banks had to take a certain number of high-risk loans to keep their FDIC insurance. He didn't have the teeth to enforce it but Clinton did.

[edikroma]

9/18/2008

7 years and 7 days after 9/11/2001. Coincidence?!! I think so!

[Foggers]

edikroma, on Feb 10 2009, 05:42 PM, said:

9/18/2008

7 years and 7 days after 9/11/2001. Coincidence?!! I think so!

Seven is quite a symbolic number in the Bible. This means something as there is no such thing as coincidence. Perhaps yet another sign of the end times....

[Andy Rooney]

NewPoseidon, on Feb 10 2009, 09:05 AM, said:

....waiting for someone to explain how government regulation of banks caused this.

Well, call it the law of unintended consequences.

The government sought to end what some people called "redlining" {1} and put in place regulations to effectively force banks to come up with ways to make loans to people in neighborhoods where apparaised values were low and to people with poor credit scores. It was all very well-meaning.

But then the banks also have to operate under the 14th Amendment so once they allowed low (loan to value) LTV and low FICO loans in bad neighborhoods they also had to allow them elsewhere and then some clever people came up with some new and inventive ways to market paper and the party was on.

What we need now is to end the regulations that still require banks to lend to people with poor credit and whose LTV is 90% or higher.

{1} http://en.wikipedia.org/wiki/Redlining

[SilverHawk]

This has more to do with automated computer trading then any malignant intent by some shadow power.