Everyone remembers that Henry Paulson and Ben Bernanke went into a closed session in Congress in mid-September of 2008 and scared the crap out of the assembled politicians. According to a (very rough) transcript of a semi-coherent Rep. Paul Kanjorski (D-PA) on C-Span, here is what Paulson and Bernanke said:
It was about September 15th [sic]. … On Thursday at about 11 o’clock in the morning the Federal Reserve noticed a tremendous drawdown of, uh, money market accounts in the United States to the tune of $550-billion was being drawn out in in a matter of an hour or two.
The Treasury opened up its window to help, and pumped in $105-billion into the system, and quickly realized it could not stem the tide. We were having an electronic run on the banks. They decided to close down the operation, to close down the money accounts. … If they had not done that, in their estimation, by 2 PM that afternoon $5.5-trillion would have been withdrawn and would have collapsed the U.S. economy and within 24 hours the world economy would have collapsed.
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Interesting timing? We were definitely in a crash zone in the fall. That I hope is not in dispute. Everybody should also notice the MSM press on the new currencies being discussed. Another point from the original post. Try not to throw out babies with the bath water.
We live in an increasingly disruptive and unpredictable world and everybody is vulnerable. What numerical quantity what ever indices we use to measure “success” is at on a given date is really no longer relevant. They are becoming obsolete measures of reality. What everything boils down to is there is less and less to go around for ever and that is a bitter pill to swallow considering our programming and demands new rules. All the convulsions and contortions of the system and all the lying madman’s hidden agendas just boil down to trying to keep their slice of the power pie at the expense of everybody else. Nothing more, nothing less. With an ever morphing false narrative to sell us their dictates.
As far as a mad max scenario; that is a choice. So far it appears we are choosing that path. Our problems are cultural and structural and we have a political crisis not an economic one.
http://globalguerrillas.typepad.com/ This leads me to a broader topic. The real systemic risk we face isn’t from a financial seizure. That risk is mild in comparison to the risk of a widespread collapse in legitimacy. Due to excesses (too many to name), legitimacy is rapidly draining from the global financial system and the networked groups that give it their primary loyalty (like Fred above). In recognition of this, nation-states should hold this system at arms length to limit damage to their own legitimacy. Given the constraints on resources faced by nation-states, a plan that would bulk up legitimacy would focus on reorganizing financial institutions (not bailing them out) and repairing the balance sheets of individual citizens (the only group in the chart to the left that is still loyal to nation-states). That isn’t happening and the damage incurred from this mistake will be significant.
NOTE: The other thing that the inset chart tells us is that this crisis is due to debt, overreach, and insolvency. Until the US collectively writes/pays off $20 trillion plus in excess debt, not much will change. Transferring debt from financial firms to the government (as in the Paulson/Geithner plan), only accelerates the decline of nation-states relative to an already dominant global financial/economic system.
