Rep. Kanjorski: $550 Billion Disappeared in "Electronic Run On the Banks"

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108 Responses to “Rep. Kanjorski: $550 Billion Disappeared in "Electronic Run On the Banks"”

  1. Ceronomus says:

    Well, during the “Lost Decade” in Japan the prime lending rate dropped BELOW zero. The government was PAYING banks to loan money.

    Their employment wasn’t all that great either. They bounced back though, and we will too. At least once the panic mongers stop trying to destroy the last remnants of confidence.

  2. kabuko says:

    @mdh, my mistake, i could swear that i just saw a headline about the $250,000 just a few days ago, whew!

  3. noen says:

    “When Republicans are in office, the rich are in control.
    When Democrats are in office, the rich are in control.”

    “Me, I want off this ride.”

    Meh… Cynical troll is cynical. If you really want out you know where the door is. I understand, cynicism is a defense mechanism. So the first step is to understand that you are in emotion mind. There are steps you can take to calm down a bring yourself back to the center. I recommend breathing or meditation.

    Once one is calmed down one needs to realize that when we are emotional we cannot correctly perceive reality. Your cynical belief that it makes no difference who is in control is probably not true. The others here who fantasize that a Mad Max world would be loads of fun are equally deluded. That is just another defense mechanism: a flight into a fantasy world.

    Accept what is. Only then can you change it.

    I am cautiously hopeful. I see people on the left and the right who are terrified these days and reacting in their own unique ways. Do not listen to the counsel of despair and cynicism. Do not listen to those with nutty theories about how the world works. They have constructed their illusions in order not to have to deal with reality.

    Hope is only where despair is.

    In order to change the world we have to correctly perceive the world. But the world is too much, it floods us and overwhelms us. As this simple YouTube video flooded many who are over reacting here shows.

    In response to being flooded our minds freeze or else take flight. We shut down, we cannot move or even breathe. Or we construct a fantasy world that is more to our liking and then we climb aboard and live in it. It is comforting, in a way, to believe that powerful forces are in total control and we are helpless against them.

    The trick then is to accept reality, to move towards your center and relax. That isn’t always easy but you can do it. Ask Antinous, he knows. Once one is calm you are in a better position to decide what to do next. The next step is up to you.

    Sorry if this comes across as preachy. It’s all I can offer to what I perceive as a real need. Your mileage may vary.

    Take what you need and leave the rest.

  4. kabuko says:

    @mdh, my mistake, i could swear that i just saw a headline about the $250,000 just a few days ago, whew!

  5. Poshboy says:

    Rep. Kanjorski’s comments are amazing. It’s the first I have heard from USG sources confirming what was happening on 17 Sept 08. I can understand why Sec. Paulson would have dragged seven major bank presidents into his office and warned them of martial law if they did not agree to partial nationalization of their banks. With that kind of currency collapse, the State would have suffered irreversable losses. And the State plays for keeps.

    We citizens would ultimately win any fight, but these tools would rather let the country collapse like 1989 Romania than give up their cush jobs and high salaries in Treasury and Wall Street. Greed does terrible things to people, I suppose…

    The 1991 Czechslovakia breakup isn’t a bad way to progress through history, guys, if that is where we are heading. Everybody wins. And nobody gets shot.

    This meltdown sounds like programmed trading, rather than some wide-ranging foreign conspiracy. It’s kind of scary that enough financial IT guys have this kind of trading automatically set up. Unlike ’29-’33, where a much slower information exchange dragged it out over four years of decline, the speed of financial information transfer in ’09 will cause this one to hit the fan with amazing speed. And in the space of 48 hours, in today’s world. Amazing.

    I think Rep. Kanjorski let something out on C-SPAN that the State would have rather kept secret. I’d wager that after the interview persons in the Treasury Secretary’s office called his office in 2188 RHOB and gave his CoS an earful, trying to repair the leak in the dike.

    Thanks to Kanjorski–who as Capital Markets subcmte chair would learn about this kind of information–we intelligent, pitchfork-wielding peons now have another piece of the puzzle.

    Ke-rist, I can’t believe they have screwed this one up so badly. And have gotten away with it for six months.

    It always ends with public disclosure, though. But it’s up to us if it is going to be 1991 Czechslovakia, 1989 Romania, 1991 USSR–or 1791 France.

  6. jonico says:

    “It would have been the end of our political system and our economic systems as we know it.”

    And since there are no alternative economic systems which are better equipped to handle the “mass starvation and an insane level of violence all across the world” we all would cease to exist.

    Kickstart mass starvation and an insane level of violence take place all over the world mainly because of capitalism, globalization, and the privileged taking advantage of unprivileged.It is apparently just not happening where you are currently living, is that what makes you so worried?

  7. Chas44 says:

    Not to be persnickity or anything, but the “quote” displayed at the top of story has a couple of errors in it.

    Here’s the actual, EXACT transcript:

    “The Treasury opened up its window to help. They pumped a hundred and five billion dollars 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. And that’s what actually happened. If they had not done that, their estimation was that by two o’clock that afternoon, five-and-a-half 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 … It would have been the end of our economic system and our political system as we know it.”

    Quotes need to be exact, or they are not quotes.

    (And you kids get off my lawn…)

  8. jebus2012 says:

    Everyone needs to take a hit until we sort out the many problems that are plaguing us at the moment.

  9. djangofan says:

    This article is ignorant and makes no logical sense and should not have been posted on Boing Boing. You cannot withdraw 10% of the nations money supply (5 Trilion: as this article claims) and then say that it goes “poof” into nothingness.

    If money was going to be “withdrawn” from accounts in the US, money markets (which are the most liquid of all M2 accounts) would be the LAST to be withdrawn because they are the safest, being far less risky than mutual funds or ETFs, etc.

    To suggest that M2 would be the first to be withdrawn is pretty much laughable.

  10. Anonymous says:

    Zuzu, you said, “Assuming full reserves, this is a misunderstanding; there’s still only $100.”

    That’s true. But banks don’t operate on full reserves. If that were the case, you would pay banks to guard your money–they would turn into safe deposit box stores.

    Let’s think this whole story through:

    Person A takes $100 of cash and deposits in their checking account, they have on their balance sheet $100 in the assets column. They are not $100 poorer for depositing it in the bank.

    The lawn-mowing company that borrowed $80 from the bank to buy a new mower has an $80 lawnmower (an asset) and an $80 load from the bank (a matching liability), so the lawn-mowing company has zero change in value, aside from the negative value of any future interest owed.

    But the hardware store that sold the lawnmower now has $80 in cash as earnings from the sale. They deposit that $80 in the bank.

    Total cash now on deposit, $180. Total cash in Person A’s account and Hardware store’s account, $180. Of course $80 of that is loan, backed by the mower as collateral.

    That’s the way that commerce has been done in the west since jewelers in the middle ages realized they could lend out gold that they were guarding for clients at interest. Then, letters of credit for merchants followed after.

    If this bugs you, you could look into Islamic law–it forbids charging interest for loans. (Technically, I believe the New Testament Bible does as well, but I’m not an expert in such things). Muslims have been getting around the Islamic prohibitions in clever ways for eons. For example, you don’t get a mortgage, but rather you sign a contract so the bank buys a house and rents it to you at a specific monthly rate for 30 years and then gives it to you at the end. No interest charged–just rent.

    Without partial reserve banking, you couldn’t buy a house or start a company–we would live in a feudal society where all capital is owned by the lord of the manor and we pay rent to farm and work there.

  11. RobertSeattle says:

    Where was this money going electronically?

  12. Banksynergy says:

    #54 NOEN – “…when we are emotional we cannot correctly perceive reality.”

    A ‘correct’ way to perceive reality? Shit, I’ve been living incorrectly all this time.

  13. Anonymous says:

    Just print more money, heh.

    But seriously, where did the money go?

  14. Scuba SM says:

    Well, ROBERTSEATTLE, my guess is that the series of tubes that make up the internet sprung a leak, so the money is creating “money-damage” in the virtual house and other virtual infrastructure.

  15. mwschmeer says:

    So that’s how the Shadow Government got its most recent round of funding!

  16. jjasper says:

    And, after only two previous posts on BB, Djangofan decides he know what should or shouldn’t be posted here, and somehow figures that Mark agrees with the things that Rep. Kanjorski was saying.

    For bonus points, can you cry “censorship” if you get disemvoweled by a moderator? Because I’d like to see how fast you flame out here, son.

  17. zuzu says:

    So that’s how the Shadow Government got its most recent round of funding!

    If you mean the CIA, I thought that’s what SWIFT was for?

    If you mean our shadowy Overlords, why would they need money?

    Thulsa Doom: Ah. It must have been when I was younger. There was a time, boy, when I searched for steel, when steel meant more to me than gold or jewels.
    Conan: The riddle… of steel.
    Thulsa Doom: Yes! You know what it is, don’t you boy? Shall I tell you? It’s the least I can do. Steel isn’t strong, boy, flesh is stronger! Look around you. There, on the rocks; a beautiful girl. Come to me, my child…
    Thulsa Doom: [coaxes the girl to jump to her death]
    Thulsa Doom: That is strength, boy! That is power! What is steel compared to the hand that wields it?

  18. Zombie says:

    Just $550 billion dollars? It’s not like we need that or anything huh?

  19. Anonymous says:

    Where did the money go? It was going was out of money market funds and banks and into cash (aka “Bank of Sealy”). That’s what a bank run is–enough depositors pull cash out that there’s a danger that the banks fractional reserves can’t cover future withdraws, so everyone rushes to be the first to get their cash out rather than be stuck holding the bag (or, in this case, only $100k of deposits, as that’s the FDIC limit, and zero for money markets as they weren’t FDIC insured).

    The problem is twofold–one is that a run on banks causes banks to fail and depositors, shareholders, and bondholders lose their money. The other is that runs on banks suck cash -out- of the economy, because bank lending is what makes more money available in the economy (you deposit $100. The bank lends out
    $80 to me to buy a lawnmower and start a business. Bam, there’s $180 bucks where the was just $100 before).

  20. Andrew says:

    Money doesn’t disappear during a bank run — a bank run is the consequence of the money not existing in the first place.

  21. Moriarty says:

    “mass starvation and an insane level of violence take place all over the world mainly because of capitalism, globalization, and the privileged taking advantage of unprivileged.”

    Actually, the exact opposite is true. But, you know, whatever.

    So, anyway, pretty scary, eh? We should probably all take our money out of the banks!

  22. sandyfeet says:

    Jesus.
    Sleeping tonight could be a problem.

  23. drabheathen says:

    I can’t believe the Boing Boing moderator didn’t (a) find the source, which happens to be a crazy way-right website (which advocates hoarding canned food, btw) and (b) after research, realize and say that this video aired five months ago.

    Go, go, master reporter.

  24. dbx says:

    There’s an article from CNN Money in late September that talks about a run on money market funds. I would assume that it’s the same event that’s being discussed here.

    From my limited economic understanding, it looks like the Lehman bankruptcy made money market funds look somewhat risky. Since money market funds are supposed to be very safe but aren’t insured by the FDIC, investors rushed to move their money into Treasury bonds or insured accounts. The government’s response was to temporarily insure money market funds.

    It reminds me of what Ireland around the same time period: they decided to insure ALL deposits in their banks, which caused investors across the EU to drain their local accounts which weren’t fully insured and move it all to Irish banks. It basically caused a run on non-Irish banks, despite the fact that they weren’t fundamentally any more unstable than the Irish ones.

  25. eclectro says:

    I think the issue of corporate sustainability occurs at some point, i.e. the whole model depends on economic growth of some kind. If there is no growht you get Japan in the nineties. Whether there would be violence or not is pure speculation. I think the ones at the top aka CEOs who drove things into the ground would need to worry though. But they don’t, like Marie Antoinette saying let them eat cake!

  26. Banksynergy says:

    NOEN – Fair enough. Those are some interesting and obviously well thought-out views you have.

    So, no to the kidnapping then? Darn. Now I have to unpack. =P

  27. alllie says:

    Like RobertSeattle I want to know “Where was this money going electronically?”

    I don’t think the American people did this run on the banks, or even knew about it. So who did it? The oil rich arab countries? Cause I am sure the CIA and the government know what group suddenly decided to pull $550billion out of US banks. Was it a deliberately unfriendly act? Whose money was it?

  28. userw014 says:

    What alternatives does the common person have? Keep a stock of canned goods. Keep some cash on hand (although I don’t know how much.) Stay on good terms with your neighbors.

  29. kabuko says:

    “we’re not geniuses!””

    not that it comes as any surprise, but did anyone else notice that rep. kanjorski mentioned more than once that they have no idea what they’re doing in congress? at least they’re admitting it now.

    “we. don’t. know.”

  30. barbedwiresmile says:

    Do not confuse capitalism or the free market with corporatism (fascism lite). This is the system we have today and, yes, it is facilitated by, among other things, fiat currency and fractional reserve lending.

    http://barbedwiresmile.wordpress.com/2009/01/24/the-corporation-and-the-state-in-a-regulated-economy/

    http://barbedwiresmile.wordpress.com/2009/01/29/the-reichstag-is-burning/

  31. ekricyote says:

    So I quote the MIB’s statement on this:

    “There’s always an electronic run on banks of the world’s economy. The only way that these people can get on with the miserable lite lives is that they do. not. know. about. it.”

    So, do you like your chamomile tea hot or iced?

  32. noen says:

    “I hope all of the gleeful comments are in jest”

    No, they are not. There are some seriously eff’d up people here.

  33. noen says:

    Banksynergy
    “A ‘correct’ way to perceive reality? Shit, I’ve been living incorrectly all this time.”

    Yes, you have, we all have. Or to put it another way, it’s just a short hand way of indicating something. There is no “correct” perception. There is just better perception.

    As you can see, this whole article and most of the comments in it are an exercise in hysteria. The title is a misquote, the source is famous psychotic Alex Jones and the video is five months old. I couldn’t have asked for a better example.

    “When in danger, or in doubt, Run in circles, SCREAM and SHOUT!”

    Not a good program for living if you ask me but… whatever works for you.

  34. undrgrndgirl says:

    i’m not sure the collapse of the u.s. political and economic systems is necessarily a bad thing!

  35. Aneurysm says:

    For the enjoyment of my fellow BoingBoing’ers:

    HOBO CHASER!

    http://www.youtube.com/watch?v=RbpRp5vZtAU

    (don’t forget to click the “watch in high quality” link in the bottom right corner)

    I’ll see you all at HoboCon. I’ll be serving Pasta Strap with good ‘ol Snaps.

  36. gypsydoctor says:

    On September 17, the day before the event described, Floyd Norris wrote on his New York Times Blog:

    What is going on here? I suspect there is a run on money market funds, or at least the ones that do not own only super-safe assets. With the money going into Treasury funds, they must find very-short-term Treasuries to buy.

    This was after Primary Fund had frozen withdrawals from their MM fund the day before.

    The people who pulled the $500 billion were not conspirators. They were just smart and attentive to the news. Where did the money go? It went into Treasuries.

  37. lakelady says:

    we are sooooo f’ed

  38. gobo says:

    Er… so, I’m not the brightest bulb on the chandelier, but am I understanding this correctly: that $550 billion dollars vanished without having any idea where it went?

    And this is mentioned only by a subcommittee chair in an interview to C-Span, rather than being headline news as our congress bickers over a few billion dollars to help build new colleges?

  39. MrJM says:

    The only thing we have to fear is fear itself… oh yeah, and the global economic system.

    – MrJM

  40. zuzu says:

    The other is that runs on banks suck cash -out- of the economy, because bank lending is what makes more money available in the economy (you deposit $100. The bank lends out $80 to me to buy a lawnmower and start a business. Bam, there’s $180 bucks where the was just $100 before).

    Assuming full reserves, this is a misunderstanding; there’s still only $100.

    What people have institutionally forgotten is that depositing in a bank is an investment facilitated by that bank to the lend your money (pooled with other depositors) to borrowers at interest. The bank then pays you interest for risking use of your money.

    When you deposit your money in a bank, it’s no longer “your” money, it’s “theirs”. You’ve exchanged it for an account and a promise of withdrawing money according to the terms of that account (which may be immediate, as with checking accounts, or after an agreed period of time, such as deposit certificates — which earn higher interest due to the certainty of the bank being able to use your money for at least that much time).

    “Stones into bread” (claiming to have $180 when really you only have $100) is called fraud, and it’s central to the Keynesian scam. To quote Jon Stewart, “How about from now on we call dog shit money and park benches mansions?”

  41. Anonymous says:

    > Total cash now on deposit, $180.

    new money (value) is created when you make a new lawnmower
    virtual money is mostly destroyed by inflation (often pushed off to poor countries) and rich people making wallpapers or rolling joints with hundred dollar bills

  42. Takuan says:

    Hazeleyes: three full block quoted articles in a row? You could use links you know. Also, since these are your sole comments, who are you and what do YOU think?

  43. zuzu says:

    Er… so, I’m not the brightest bulb on the chandelier, but am I understanding this correctly: that $550 billion dollars vanished without having any idea where it went? And this is mentioned only by a subcommittee chair in an interview to C-Span, rather than being headline news as our congress bickers over a few billion dollars to help build new colleges?

    This is the legitimate aspect of when people refer to the “Wall Street” versus “Main Street” two-tier system. Most of us have to treat money as if it were something real — as a medium of exchange, consequently by earning it through trade.

    But to the political elites (politicians, bankers… the “commanding heights” as Lenin famously referred to them) money is something they can create out of nothing (i.e. fiat) and spend in the real economy with us suckers absorbing the costs through inflation.

    They know that fiat currency is a phantom sustained only by “confidence”, but in reality the emperor wears no clothes!

  44. Icaruswing says:

    Chaser?

  45. Banksynergy says:

    #64: NOEN – “Not a good program for living if you ask me but… whatever works for you.”

    Don’t get me wrong, nothing about the economy, much less this article (which I agree seems to be fear-mongering) has made me panic.

    My point of contention was the idea that “emotion mind” as you put it, is wrong.
    I disagree wholeheartedly. Emotion is a powerful and valuable tool. Emotion pushes action, action pushes change.

    At the core of the issue, I agree with you – but emotion should not be the fall guy. Emotion is quintessential to the human state and to positive progression as long as it is kept within the bounds of reason. Panic instincts can save a life, but will only hinder us if evoked without reasonable cause. Cynicism can save us from blind faith, from tricks and scams and even from unfounded panic as long as it is based on reason.

    Secondarily, your rant did come across as a little preachy, but more so as the writings of someone who just completed Psych 101. You write as though you understand everyone here and have all the answers. I think very few of the minds here are freezing or taking flight. They’re thinking. Some might wonder if we would not be better off in a world of disorder, and for a few people (though far less than may claim it) this may even be true. We are not that far evolved, after all.

    To slap a “living in a fantasy world” label on people with cynicism towards government, or a particular style of government, is entirely unreasonable. Yes, action is more useful than bitter commentary, but the existence of the latter does not mean the former is not present also.

    I understand your opinion, and will respect it as just that, not as the word of some enlightened being.

    And remember, kids: “The sleep of reason produces monsters”

  46. Anonymous says:

    We dodged this bullet (perhaps we were intended to). If I wanted to grab control of the US financial system via a crisis this is a perfect scenario. As citizens we ought to observe some coincidences/synchronicity and ask some questions.

    2PM in New York-humm-Tokyo and London not really available. So, even though it is likely ALL of the instruments to be negotiated could have been traded on any or all 3 of the big exchanges, timing just happens to make it likely everything will wash out only via the NYSE. So everybody made up their mind to the tune of $505 billion, right at 2PM? LOL

    We ought to ask how many trade orders there actually were and what was the distribution of the amounts? 500 billion $ is A LOT OF MONEY. If it really was a classic run, then there should be huge numbers of trades in smaller amount (low millions and below) representing sudden massive decisions by lots of traders and investors to pull out.

    I expect the answer to my question above is that there were relatively few trades and they were concentrated or queued up in automated trading systems and all dumped at once.

    In which case, it seems like there was perhaps prior planning/premeditation and intent to provoke a crisis. If the perpetrator(s) are US citizens that is probably treason; if foreign nationals its probably an act of war. I doubt terrorists have the resources to mount this kind of attack.

    If I had the connections I’d have French or Israli intelligence look into this. And how about someone with deep pockets file suit to obtain the sell orders from that period of time?

  47. Anonymous says:

    FYI: I think the final quotation on the front page should be “It would have been the end of our economic system and our political system as we know it.”

  48. mdh says:

    Sheep are slaughtered.

    and sheepdogs die of heartworm.

  49. jjasper says:

    “The people who pulled the $500 Billion”? You think this wasn’t done automatically, by some market watching computer program? That’s what I suspect.

  50. Anonymous says:

    fortunately it’s ALL an illusion (maya)
    lather rinse repeat
    how’s about some gratuitous unicornage?

  51. Takuan says:

    with a cheap (damn near free) and universally available internet, perhaps different people will suffer this time.

  52. Banksynergy says:

    #22 ALLIE – “I don’t think the American people did this run on the banks, or even knew about it. So who did it? The oil rich arab countries?”

    Clearly it’s those rich bastards fleeing Dubai…

  53. anharmyenone says:

    He said “around September 15″, then he said “on thursday”. The thursday just before September 15 was September 11. Who withdrew all this money? Why is this information being kept from us? Was this a financial terrorist attack? We need answers.

  54. mdh says:

    barbedwiresmile – you might want to look a the 1943 definition of fascism. It’s just the word Mussolini made up to describe corporatism. The state steered by capital. It had nothing to do with Nazism, intially, just thuggery. Most of its later meanings came after we won the war, when nazism was rolled into it, so corporatism could have a good name.

  55. Takuan says:

    one percent of the American population makes/holds twenty percent of the money. Who needs Arabs?

  56. Anonymous says:

    Listen to the Woman who calls into C-Spam. She not only expresses the anger and frustration with this economic debacle but tells it like it is. It will be Americans who will move us out of debt, recession and possibly (likely)depression. The Capital Markets Subcommittee Chair, Rep. Paul Kanjorski of Pennsylvania, tells C-Span how the world economy almost collapsed in a matter of hours. He dances around only to say “we don’t know”.. Some one throw us out into the Atlantic with out a life raft. Well start by bring who throw us out into the Atlantic who are responsible for this on going fraud to Justice. Then you would see that people all over the world would start to regain confidence that you are actually listening when the we voted for change..this is change we can believe in. The rule of Law! You break the law you do the time! That is not what we are hearing. And that is exactly what would restore confidence. This did not happen by accident and I personally don’t like where we have been lead for low this many, many years. When they declare a Bank Holiday and People can’t get to their money it will be those that show anger, frustration, who take to the streets in protest that will be rounding up and put in jail…No Doubt! Where is the Justice in that?

  57. treacle says:

    Where did the money go?
    My guess is some of it was pulled out by automated banking computers that are programmed to make transactions when market figures hit certain thresholds.
    That and perhaps economic warfare by some nation or nations.

    As regards currency systems…
    I believe Douglas Rushkoff pointed Boing Boing in the direction we need to go, Alternate Currencies. Not “replacements” for the federal postive-interest currency, but parallel ‘negative-interest’ or even ‘mutual credit (zero interest)’ currencies.

    These allow people to trade goods and services without putting so much inflationary pressure on the federal dollar. Plus, they act as an established backup if the national currency destablizes. We’d be smart to make these happen in our localities now, before the worst of this ‘Recession’ kicks us all in the teeth.

  58. Anonymous says:

    Wow, I think I know what part of the problem is…

    Back in the medieval period, monarchs and lords ruled the lands. The vast majority of the people were heavily taxed and in poverty, essentially slaves to their lords.

    I believe what has happened here is similar yet with a new appearance. This time, the upper classes are running the show. When a CEO of a bank requests TARP funds and then withdraws a bonus for himself, is this not a corrupted system as a result of capitalism?

    Something needs to change; and this time for the entire world. No longer can nor should we ignore the poverty that cripples many throughout the world>

    After all, the hallmark of democracy is equality. Yet how can two people be equal when one can barely afford a loaf of bread whereas the other can afford to buy a multi-million dollar mansion?

    Revolution anyone?

  59. jacobian says:

    @58

    “Without partial reserve banking, you couldn’t buy a house or start a company–we would live in a feudal society where all capital is owned by the lord of the manor and we pay rent to farm and work there.”

    This is absolutely absurd. In order to invest we need to divert resources from immediate consumption towards non-immediate needs.

    For instance, in a planned economy we could build houses by diverting resources when there were shortages in danger of developing based on the actual number of people who were likely to need it. In the uncoordinated capitalist world you get a bunch of capital being diverted to building, a building boom, speculation and subsequent price collapse due to the over diversion of capital because of the total lack of coordination.

    It’s just not true that the choice is between modern capitalism and feudalism. We have the computational power and networking capabilities now to do distributed planning. This could be open, democratic and rational. Capital could be duplicated only when people thought trying various models was worth while. We could end the total monopoly on investment by the super rich and put it in the hands of people. We could all be richer and with a more stable economy not driven by business cycles.

  60. kabuko says:

    i think it makes a resource-based economy, ala venus project, a pretty attractive alternative. of course, we’d have to find a way to rid the planet of greed…

  61. Anonymous says:

    Listen to the Woman who calls into C-Spam. She not only expresses the anger and frustration with this economic debacle but tells it like it is. It will be Americans who will move us out of debt, recession and possibly (likely)depression. The Capital Markets Subcommittee Chair, Rep. Paul Kanjorski of Pennsylvania, tells C-Span how the world economy almost collapsed in a matter of hours. He dances around only to say “we don’t know”.. Some one throw us out into the Atlantic with out a life raft. Well start by bring who throw us out into the Atlantic who are responsible for this on going fraud to Justice. Then you would see that people all over the world would start to regain confidence that you are actually listening when the we voted for change..this is change we can believe in. The rule of Law! You break the law you do the time! That is not what we are hearing. And that is exactly what would restore confidence. This did not happen by accident and I personally don’t like where we have been lead for low this many, many years. When they declare a Bank Holiday and People can’t get to their money it will be those that show anger, frustration, who take to the streets in protest that will be rounding up and put in jail…No Doubt! Where is the Justice in that?

  62. treacle says:

    OH wait!

    According to Bernard Lietaer one likely scenario for collapsing money market value is if approximately 5% of CURRENCY TRADERS move their funds away from the dollar, flooding the money markets and causing a collapse in value, and essentially a currency crash.

    I can’t determine the details from the YouTube clip there, but it’s possible that is what happened.

    If that didn’t happen, it still could.

  63. Anonymous says:

    I am concerned that our system is based on people who do not understand math coming up with nonsensical economics theories which have destroyed is. For example, it is popular to claim that printing money creates wealth. A typical argument is “Joe deposits $100. The bank lends out $80 to Bob to buy a lawnmower and start a business. Now there’s $180 bucks where there was just $100 before.”

    This reasoning is not correct though. Joe now has $0. The bank has $20. Bob has a lawnmower. The lawnmower store has $80. Total – $100. Same as before.

    Now, hopefully Bob will be able to leverage his lawnmower, adding in his own labor and smarts, and charge for mowing lawns. As he does this, he can pay back the loan with the new income he has generated through labor. The source of the new wealth is Bob’s ingenuity and labor, not the printing of money.

  64. mesrop says:

    It looks like its about time to stock up on ammo, board up the doors and windows, and convert the SUV into an armor plated tank!

  65. coldspell says:

    Whenever Kanjorski says “bad assets”, all I hear is “BAD ASS”.

    When Congress gave free money with no oversight or accountability to Paulson and his bank buddies, who would have imagined that bad things might happen??

  66. hazeleyes says:

    I’ve stated what I think: we’re being looted and should revolt, at the very least.

    Sane people fight to protect themselves.

    Sheep are slaughtered.

  67. airship says:

    Ewwww! This tastes horrible! What exactly is IN this Soylent Green, anyway?

  68. Anonymous says:

    UNDRGRNDGIRL, regardless of whether or not you live in the US, “the collapse of the u.s. political and economic systems is necessarily a bad thing!”

    I watched a year and a half ago while internet posters from Europe, Asia, Australia, etc., posted laughing hateful screeds against the US. George W. Bush was a royal f#ckup, and we’ve all paid the price. The only thing was, the US, as always, was about 6 months ahead of the rest of the world in the financial collapse.

    The collapse of the entire system is a bad thing. And it’s coming soon (or not, we shall see). The collapse would only be good only
    for those with the most guns, as money and power become divorced at the point of a gun when money has no value.

    Please, think before you post, and if your thoughts are this stupid, please spare yourself the embarrassment.

  69. InsertFingerHere says:

    Wow.. that’s the scary sort of tale Capitalists tell around camp fires.

  70. BDewhirst says:

    He didn’t really address her question. Instead, he used fear of “everything going bust” to divert attention from why more aid wasn’t being provided to those at the lower strata of the economy.

    This is just the other party’s version of “we’ve got to torture, ticking clock don’t you know”– though, in this case, the WMD-analogues are perhaps more real.

    When the economy is up, the rich are in control. When the economy is up, the rich are in control.

    When Republicans are in office, the rich are in control.
    When Democrats are in office, the rich are in control.

    Me, I want off this ride.

  71. ethancoop says:

    Someone explain this to me:

    What good does it do to pull all your money out of a bank when you fear a complete economic collapse if that same money will be rendered useless by the very same collapse that your actions helped precipitate?

  72. Whiskey Tango says:

    Not really. You’d be seeing mass starvation and an insane level of violence all across the world.

    On the upside, the anthropogenic Global Warming people will be satisfied.

  73. hazeleyes says:

    Obama ‘stimulus’ just passed.

    Funeral for the free USA.

  74. historyman68 says:

    I’ve been wondering- what exactly would be so bad about what japan had in the 90s? So they had little growth, but their employment seems to have been okay, and they produced some great pieces of culture and art. Personally, all I’m worried about is getting a job. If I can do that in 90s japan, I’ll take it.

  75. Cupcake Faerie says:

    This insanely criminal. Where is the outcry – other than the poor woman caller at the beginning of the video? Why isn’t Obama taking the MoFos to task? A real mob mentality wants to take over here in my mind – line ‘em up and shoot ‘em all!

  76. dcamsam says:

    “I don’t think the American people did this run on the banks, or even knew about it.”

    Because since the run, the wealthy Americans in positions of power in the financial system have shown themselves to be patriots, willing to place the interests of the nation and the world before their own?

    At this point, I’d be shocked if they weren’t the participants in the run.

  77. mdh says:

    Where was this money going electronically?

    And all within an hour and a half, before anyone reacted, one Thursday in September?

    “nothing to see here” is not an appropriate response.

    Does this remind anyone else of the ATM thief ring?

  78. hazeleyes says:

    Takuan: sorry, I understand. But i have no links fo those articles but only individual files I’ve found in searches and have been keeping in ‘save’ files under WORLD ECONOMIC COLLAPSE.

    It’s not ideal but at least I can find them, as they have titles.

  79. Clay says:

    I don’t generally follow links to posters’ own blogs, but the cut of BarbedWireSmile’s jib somehow convinced me. There are some interesting explorations there that surprisingly avoid the ranting and code-wording that so many end up mired in when writing on fractional reserve banking:

    It’s a choice: inflation affects everyone, but disproportionately affects the worker, the wage earner. Asset deflation hits the wealthy far more than the poor. The reason is simple: the wealthy own assets, the poor own money.

  80. Takuan says:

    what an extraordinary person.

  81. hazeleyes says:

    Ethancoop:

    I’ve been pondering the same question. Take my stash out and put it under the bed but what happens when the new-currency conversion occurs and my money can’t be converted because it isn’t in the bank.

    Let’s return to US currency in silver and/or gold coins.

  82. kabuko says:

    @mdh this run happened just last week, not in september.

    this had to be some very connected people pulling their money. that much money, that fast, the government jumped up and made a quarter million dollar quarantee, and the run stopped just in the nick of time? it *almost* seems like it was some sort of shakedown of the system. i wonder how much actual gold (not futures) has been bought since then. gold will be a standard when the paper is worthless, best fill your pockets while you can…

  83. hazeleyes says:

    Takuan: “one percent of the American population makes/holds twenty percent of the money.”

    Much of what we call “American’ money is in the hands of foreign investors, including Arabs, Asians, George Soros.

  84. HotPepperMan says:

    So, apart from the pontificating in relation to how bad this was/could be, I see no-one really coming up with a solution to this ‘bad’ or ‘corrupt’ or unstable’ system.

    A lot of bitching and explanation but little constructive commentary. WHAT alternatives do we, the common person, have? A co-operative? What exactly?

  85. alllie says:

    As ethancoop asked:

    What good does it do to pull all your money out of a bank when you fear a complete economic collapse if that same money will be rendered useless by the very same collapse that your actions helped precipitate?

    Well, if you get your money out, before there is a complete collapse, then you can buy real things, like food and batteries and toilet paper. In the old days, before FDIC, people put the money under the mattress. Now people are getting afraid that money will have no value so in a bank run, buy stuff you would normally use, mostly nonperishable stuff. If nothing happens you still have it. If something happens you still have it. Gold? Well good luck finding gold to buy during a crash. But there will still be some goods in the stores you can still buy, for a while, even if it’s nothing but that laptop you wanted. You can use a collapse as an excuse to be the consumer you want to be, maybe for the last time

  86. Daemon says:

    The money didn’t “disappear”, it was withdrawn. It’s a fairly important distinction.

  87. airship says:

    It would have been fun to see that!

  88. hazeleyes says:

    Anonymous Feb 10:

    Soros?

    Russia?

    Saudi?

  89. zuzu says:

    According to Bernard Lietaer one likely scenario for collapsing money market value is if approximately 5% of CURRENCY TRADERS move their funds away from the dollar, flooding the money markets and causing a collapse in value, and essentially a currency crash.

    c.f. dollar hegemony

  90. hazeleyes says:

    mesrop February 9 – you bet!

  91. hazeleyes says:

    “userw014 , February 10, 2009 7:02 AM
    What alternatives does the common person have? Keep a stock of canned goods. Keep some cash on hand (although I don’t know how much.) Stay on good terms with your neighbors”

    Absolutely. And stay alert.

  92. jjasper says:

    “It would have been the end of our political system and our economic systems as we know it.”

    Well, it needs to happen sooner or later. Seriously. Our excuse for a banking system is a joke. As is politics. Yes, there’s worse systems, and bigger jokes out there, but this one was big and bad enough. It needs to be replaced with something that works.

    “Somebody threw us into the middle of the Atlantic Ocean without a life raft”

    And who’s holding those people accountable? Oh, that’s right, they’re still in charge of the damn banks, aren’t they?

  93. mdh says:

    @kabuko, I just listened again. I’m pretty sure I’m right, the massive withdrawl he mentions was in September and not last week.

    I agree with you that it’s interesting and disconcerting that he admitted to not being a sufficient expert to explain the whole problem, but he did name a where and when it started, which was in September, as I mentioned above.

  94. zuzu says:

    Bank runs are only possible because fractional-reserve banking is insolvent by definition. That insolvency is never allowed to go into actual bankruptcy because central banking imposes a government-granted monopoly on currency. (As opposed to free banking and currency competition.)

    This kind of government protectionism is no different than the U.S. Military fighting wars for oil companies.

  95. Banksynergy says:

    NOEN – Would you be up for kidnapping HazelEyes in order to test our emotion/reason hypothesis?

  96. jacobian says:

    @67

    Rational, democratic, distributed, participatory planning. Wiki for Inclusive Democracy, Economic Democracy, Parecon or see red-anti-state.blogspot.com

  97. Gilgongo says:

    “It would have been the end of our political system and our economic systems as we know it.”

    And since we know it as fucked anyway – his point is what, exactly?

    Joking apart though, see how glibly he makes the connection between economics and politics? One would at least hope that politics has some independence from commerce – but perhaps we can now give up on that notion entirely now that the gloves are coming off (or the mask has).

    As a bonus observation, is financial meltdown the new terrorism? If so, we need protection from the masters of the universe! Save us from oblivion!!

  98. Kickstart says:

    It would have been fun to see that!

    Not really. You’d be seeing mass starvation and an insane level of violence all across the world. You’d see comparatively peaceful government taken over by whatever warlord managed to amass enough weaponry and bodies to do it.

    I’m in no way religious, but I’d consider that an apocalypse.

  99. lsdc says:

    a flurry of CEOs taking their last bonus?

  100. jjasper says:

    Talking Points Memo Interviews Robert Riech who sems to think that we’ll somehow get out of this mess eventually, but if we don’t change the deep structural problems, the next crash will be even worse.

  101. mymarkx says:

    All my money is in my wallet and I suddenly discover that my wallet is lying open on a table and my money is being taken from it.

    If all my money is taken, I won’t be able to pay my rent, buy food, or even put gas in the car to get home. Life as I know it will collapse completely.

    So I quickly demand that everyone I know give me more money and I take their money and put it in my wallet and leave the wallet lying open on the table so that their money can be taken also.

    Saved!

    I don’t think so.

  102. Anonymous says:

    The first rule of Fight Club is – you do not talk about Fight Club.

    Rep. Kanjorski: ixnay on the andorcay

  103. Anonymous says:

    I hope all of the gleeful comments are in jest–we would have faced 20% unemployment within a matter of months. Everyone would suffer but none as much as the poor.

  104. AliasUndercover says:

    The idea of this happening should bother me more than it does. I know it.

  105. Duffong says:

    @7 – JJasper

    You’re taking about things like the Kondratieff curve:

    http://en.wikipedia.org/wiki/Business_cycle

  106. disarticulate says:

    Hey! What happened to the mushroom cloud in new york city?

    I love terrorism.

  107. noen says:

    @ Banksynergy
    “My point of contention was the idea that “emotion mind” as you put it, is wrong.
    I disagree wholeheartedly.”

    I agree. There is nothing “wrong” with emotions. It’s just that it gets very long if I have to write several paragraphs explaining all the exceptions and so on. So I use a shorthand but that also causes problems. I don’t have a solution for that other than coming back and explain later.

    “Secondarily, your rant did come across as a little preachy, but more so as the writings of someone who just completed Psych 101.”

    I don’t know how else to put it. It seemed like people were, are, freaking out and I wanted counter that. I also wanted it to be very basic, simple and direct. Not Psych 101, more like psychotherapy 101. I understand that there are smart people here but there are many others who also comment and read and I want to keep them in mind too. How do you tell people to take a time out, breathe, relax without sounding a bit preachy? There are specific techniques that one can use to cope with stress. It’s not conjecture, they are known to work.

    I’m a bit of a fish out of water here. I’m not a geek, do not think like a geek and do not share many of those values.

    “To slap a “living in a fantasy world” label on people with cynicism towards government, or a particular style of government, is entirely unreasonable.”

    I’m going for something a bit bigger than that. More like the Lacanian “ideology is that which structures our very perception of reality”. But I don’t feel I can say that directly without getting flamed.

    “I understand your opinion, and will respect it as just that, not as the word of some enlightened being.”

    I don’t think I am and didn’t intend to give that impression. I do believe I’ve got a handle, a foothold or maybe just my big toe, on something real. That would be that the dialectical/behavioral + mindfullness approach really does work. More people should know about it. Oh, here is a perfect opportunity to sketch out some of it’s basic ideas.

    The world is a mess. It’s always been a mess and always will be. One’s best strategy is to accept reality for what it is. Just deal, you’ll be much better off. All that stress you feel, that’s you doing that. Want it to stop? Good, I suggest you do that. You’ve always had everything you need.

  108. Duffong says:

    ^^ or “wave” as it is commonly known:

    http://en.wikipedia.org/wiki/Kondratiev_wave

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