Free Markets, Free People

Can Someone Explain This To Me?

Supposedly, this video explains what took place behind closed doors with Hank Paulson and members of Congress to include Rep Kanjorski which caused them to throw $700 billion at Paulson.

At 2 minutes, 20 seconds into this C-Span video clip, Rep. Paul Kanjorski of Pennsylvania 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.

Has anyone heard this story previously?  If so, has there been any explanation of the “tremendous draw-down” offered?

If true, this seems like it may have been something other than a “bubble” which precipitated this crisis. I’m not normally a conspiracy buff, but this seems more than a little odd.


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19 Responses to Can Someone Explain This To Me?

  • All I know is, whenever Geithner speaks now, I see some stock.  The link between him opening his mouth and the market plummeting is depressingly strong.

  • McQ, I saw that video a couple of days ago.  I think Kanjorski’s got a good read on the situation.  But, like you, I can’t help but wonder what the “prime mover” was in all of this.

  • Heard a rumor about this, which explains why Bush said that the government had to move NOW when he pressed for the initial bailout.  Something about trying to avoid totally collapsing the economy… Not sure if I believe it.

  • Saw it last week along with the beginning wisps of conspiracy theory centered around a name that rhymes with “Soros.” 

    Umm … and it’s spelled the same way too.

  • I started to hear about this last week.  I have never heard anyone state conclusively who was selling down/drawing out the money.  (although I heard some implication of Soros, not any conclusion.) 

    I think Rush talked about it last week as well, and that this is what stampeded Bush into his TARP plan.

  • If anyone could do it then Soros could.  He almost bankrupted the UK and pretty much killed off Southeast Asia in the 90s with currency speculation.

    But conspiracies are always like that.  They are silly until they are true.

  • I have read that this is somewhat of a misinterpretation.  The problem was not a run on the banks, but rather a run on money market funds when State Street broke the buck.  Since money market funds were not insured, the big boys had no choice but to pull their money and stuff them into treasuries.


  • One would think that if they can track all that money, they would know where that $550 billion  went. I doubt that it was stuffed in some mattress. That large a chunk must have shown up somewhere. Perhaps we peasants just don’t have the need to know.

    Hopefully someday soon our political leaders will learn to discern the difference between panic and anger.

    At least his final words were true and accurate;  “We Don’t Know”.

  • Haven’t seen anything in the MSM about it because they might have to actually investigate the issue if they mentioned it but it’s been mentioned on a few blogs and limbaugh as others have mentioned.   and apparently msnbc did a very high level fly over doing little more than to acknoledge it’s existance.

    The Kanjorski tape: The Pennsylvania congressman recounting a kind of Cuban missile crisis of economics last September.
    REP. PAUL KANJORSKI, (D) PENNSYLVANIA:  It would have been the end of our economic system and our political system as we know it.
    OLBERMANN:  Two weeks after he said that, that tape is everywhere.  Is it true?  Is it over?

  • I tend to accept the explanation that it didn’t happen.

    But it should also be pointed out that bank runs are like forest fires. Until the forest reaches critical burning mass, you can’t light it on fire, even if you’re George Soros. Once the forest reaches critical mass, you can’t hardly <i>not</i> light it on fire, and blaming the fire on the actual spark isn’t really correct; the real problem was the mass of tinder ready to go off, a spark was inevitable.

  • Glenn Beck was saying this amounted to an economic attack….but it is Glenn Beck, so take that with a grain of salt.

  • If money is taken out by wire transfer, or whatever, it has to be sent “somewhere”.  That “somewhere” can be tracked.  I am with those that think it was large money managers getting their customers’ investments out of harm’s way.  The simplest explanation is usually the right one.  Still, it would be interesting to see where that money went.

  • I heard about this one myself, about a month back now, but I’ve heard it more frequently within the last week.
    Beck’s right, by the way.
    Oh.. and Jim Quinn’s been on about this one, too I think.

  • Anyone doing it with the aim of destroying the system will have taken pains to launder the transfers so it isn’t instantly obvious where it went.  Tracking this could easily turn in to something like trying to figure out where the 5 gallons of water you dumped into the 50 gallon tank actually went when you took 8 gallons back out of the tank afterwards.  Think back on the the disengenuous answer some of the big banks gave about not being able to track where their bailout funds went because they placed them into a pre-existing ‘general fund’ for dispersal.  Same situation here, it’s not like  the bits representing money are special and can be tracked. 

  • George Soros?  Yes, with a few of his “friends.”  Very well timed to help swing voter sentiment toward the Messianic Movement of Mope and Mange.  Obama, you’s gots some mighty impotant friends, dere!

  • Felix Salmon over at Portfolio has written about it.

    With the Kanjorski Meme still spreading (see Ben Smith, Andrew Leonard, Moldbug, and more), I think I’m finally able to squash it with some hard figures: there never was a $500 billion outflow from any asset class in the space of a couple of hours or even weeks, and the Fed never shut down or froze any money-market accounts.

  • If you read the comments at the sweetness and light link, there is a countervailing comment which disputes the article in a fairly persuasive way.  It also states that some actions the Fed took before market open caused the at open orders to be withdrawn.  So the actual outflow never happened. 

    Which is right?  IDK.