February 11, 2009

US Was on Edge of Economic Armageddon

So says Rep. Paul Kanjorski (D) PA, who was there for the briefings by Paulson and Bernake back in September.

I was there when the secretary and the chairman of the FederalReserve came those days and talked to members of Congress about what was going on... Here's the facts. We don't even talk about these things.On Thursday, at about 11 o'clock in the morning, the Federal Reserve noticed a tremendous drawdown of money market accounts in the United States to a tune of $550 billion being drawn out in a matter of an hour or two.The Treasury opened up its window to help. They pumped $105 billion into 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 and there. And that's what actually happened.If they had not done that their estimation was that by two o'clockthat afternoon, $5.5 trillion 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 have happened if that happened. It would have been the end of our economic system and our political system as we know it.....

Ya know, we're not any geniuses in economics or finances... We're representatives of people. We ought to take our time, but let the people know this is a very difficult struggle. Somebody threw us into the middle of the Atlantic Ocean without a life raft and we're trying to determine what's the closest shore and whether there's any chance in the world to swim that far. We. Don't. Know.
Half of America is very wary of the TARP bailout and the other half loathes it and nobody understands the logic going into it. Is it just me, or would it have made a whole lot of sense for there to have been some disclosure of these facts to the public so that there was at least some understanding in the body politic that there was an urgency and an emergency. If the economy is still essentially on as shaky a foundation now as it was apparently in Sept. (if Kanjorski is taken at his word) then Obama's warnings of imminent disaster if the recovery bill is not passed swiftly are far from the "fear mongering" its been branded on the right from Redstate to Rush. While you might still disagree with Obama's characterization, in the context revealed by Kanjorski's comments, you can't fault him for pressing the case in those tones.