We all remember 9/11. We know exactly where we were when the first and second towers were attacked. But how many of us remember the particular events of 9/15? Where were you and I the morning when the American economic system was struck?
In response to consistent claims by Democrats that the Republicans caused this economic crisis, I developed a rough sequence of events which I thought lent themselves to helping us understand the bipartisan involvement in this recession. It turns out I was missing a most significant event. This event came to light in an interview between Rep Paul E. Kanjorski (D-PA) and C-SPAN's Washington Journal in which Kanjorski was explaining his support of the first bailout of Wall Street. Here's a portion of that transcript, h/t Townhall.com:
"I was there when the Secretary (of the Treasury Hank Paulson) and the Chairman of the Federal Reserve (Ben Bernanke) came those days and talked to members of Congress about what was going on. It was about Sept. 15. 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 the tune of $550 billion, as being drawn out in the matter of an hour or two.
"The Treasury opened up its window to help. It 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 out there, and that's what actually happened."
Kanjorksi continued:
"If they had not done that, their estimation was that by 2 o'clock that afternoon, $5.5 trillion would have been drawn out of the money market system of the United States, would have collapsed the entire economy system of the United States and within 24 hours the world economy would have collapsed.
"Now we talked at that time about what would happen if that happened. It would have been the end of our economic system and our political system as we know it. And that's why when they made the point we've got to do things quickly, we did."
Townhall's Diana West goes on to say that these are staggering revelations. Given their sudden appearance out of the blue, you have to wonder, first, could they possibly be true? If so, why weren't we the people told about this $550 billion electronic run on the banks? The Google archive has retained some news about the money market run, but it was seriously downplayed in this article from Boston.com:
The panic sweeping the world's financial system hit Boston stalwarts Putnam Investments and State Street Corp., yesterday while the mutual fund industry struggled with billions of dollars in withdrawals from money market funds by investors worried about losing their cash.
The article describes the frenzy of withdrawals, but describes the amounts much differently than Kanjorski.
"There's a crisis of confidence in the system," said Putnam chief executive Robert Reynolds.
On Wednesday, investors pulled nearly $90 billion out of money market mutual funds -among the largest single-day withdrawals - and as much as was pulled out during the entire preceding week. Analysts said most of the withdrawals were from corporations and other institutions. The sellers are trying to replace those money market fund holdings with even safer securities such as US Treasury bills, even though they are now paying interest rates as low as 0.071 percent.
While often treated like bank accounts, money market mutual funds are investment vehicles, and therefore can lose money. They also do not have the $100,000 per account FDIC insurance coverage provided to savings, checking, and so-called money market demand accounts available at banks. In addition to paying interest, money market funds attempt to keep their share prices steady at $1, so the value of the deposits remains intact.
Because of the run on money market mutual funds, the Bush administration is now proposing to provide them with FDIC-like insurance protection, The Wall Street Journal reported.
Kanjorski goes on to describe how the Fed and the Treasury dealt with this run by implementing just such an FDIC-like protection on that very day, September 15, when Paulson came to discuss the tremendous drawdown with members of Congress because they realized that was the only way to "stem the tide".
The key in Kanjorski's interview is the "electric run on the banks" to the tune of $500 Billion within an hour. If they hadn't taken action, by 2 pm that afternoon, $5.5 Trillion would have left the banks and the entire global economy would have completely collapsed. The implications of that are truly staggering.
On October 20, nearly a month later, Daniel Gross at Newsweek wrote an article called The Anatomy of Fear in which he described a panic-worthy act by James Cramer, CNBC star, ex-hedge-fund manager, mascot of the 1990s tech boom and the recent bull market, fond of saying "There's always a bull market somewhere". On October 6, 3 weeks after the run on money market accounts, Cramer admitted to the "Today" show's Ann Curry that "somewhere" was now nowhere to be found. "Whatever money you may need for the next five years, please take it out of the stock market right now, this week," he pleaded. "I do not believe that you should risk those assets in the stock markets."
We could understand Cramer's comments precipitating a run on all sorts of investements, but what exactly drove the tremendous volume of electronic transfers on September 15? I could find no documented news the week of September 15 that would prompt such a run, with the possible exception of the Lehman Brothers failure. But why the run on money market funds and not CD's, stocks, bonds or mutual funds? Rush Limbaugh discussed his theories on February 10, 2009, including the fact that Kanjorski is a Pelosi loyalist. Rush said:
It's amazing this was said on C-SPAN on Thursday, January 27th, and nobody picked up on it. We got it from a website called LiveLeak. They were rummaging through things, and they found this. Now, let's assume for a second here that elements of this are true. Let's assume that there was a $550 billion run, electronic run on the banks and money market accounts in one to two hours. The question is who was doing this? Who was withdrawing all this money? And the next question is why? That's where my mind starts exploding, and this is dangerous to have these explosions going this way. Could it have been George Soros? Could it have been a consortium of countries -- Russia, China, Venezuela -- countries that are eager to have Barack Obama elected because they know that will make it easier for them to continue their own foreign policies in the world? In the meantime, five-and-a-half billion dollars in one to two hours, that can probably be confirmed. The five-and-a-half trillion is speculation based on the rate at which money was coming out. We could check that the Fed stopped the trading windows, they closed the window. We do know they were pumping money into the system left and right. And remember when the Federal Reserve loaned elements, $2 trillion and we weren't told who got the money? And we still haven't been told who got the money.
No wonder Barack Obama says "You can't just listen to Rush Limbaugh and get things done." Obviously Barack Obama and Nancy Pelosi don't listen to Rush Limbaugh, and they've quite possibly managed to get some astonishing things done.
I've begun to see a meme this week proposing the President's policies are fascist rather than socialist. In 1935, Mussolini wrote the following in The Doctrine of Fascism. Compare and contrast his policies to our current Administration's:
The Fascist conception of the State is all-embracing; outside of it no human or spiritual values can exist, much less have value. Thus understood, Fascism is totalitarian, and the Fascist State--a synthesis and a unit inclusive of all values--interprets, develops, and potentiates the whole life of a people. (p. 14)
The Fascist State lays claim to rule in the economic field no less than in others; it makes its action felt throughout the length and breadth of the country by means of its corporate, social, and educational institutions, and all the political, economic, and spiritual forces of the nation, organised in their respective associations, circulate within the State. (p. 41)
In 1935 Mussolini wrote the following in Fascism: Doctrine and Institutions:
The Corporate State and its Organization (p. 133)
The corporate State considers that private enterprise in the sphere of production is the most effective and usefu [sic] [typo-should be: useful] instrument in the interest of the nation. In view of the fact that private organisation of production is a function of national concern, the organiser of the enterprise is responsible to the State for the direction given to production.
State intervention in economic production arises only when private initiative is lacking or insufficient, or when the political interests of the State are involved. This intervention may take the form of control, assistance or direct management. (pp. 135-136)
Last but not least, here's Paul Kanjorski's interview with C-SPAN on January 26, 2008:
Paul Kanjorski (D-inc): 41 (42) Lou Barletta (R): 45 (47)
Normally, we wouldn't discuss internal polls, but it is all we have, and, as the left-leaning Swing State Project notes, it is all that we have:
although the numbers are probably best served with a grain of salt, it's sort of telling that we haven't seen rival numbers from Kanjorski or the DCCC. In fact, Kanjorski's response to the poll doesn't exactly inspire confidence:
A Kanjorski campaign spokesman declined to comment on the poll.
That's the exact same response that Kanjorski's camp gave in June. Weak, sir.
Earlier this week, I sat down with Lou Barletta, the mayor of Hazelton, PA -- just named PA's Mayor of the Year -- and the GOP nominee for Congress in PA-11 against Paul Kanjorski, an old-school, corrupt, machine Democrat. I know a little bit about the region, as my mom spends a bunch of time with her cousin who lives just outside of the district. At the end of June, I spent the better part of the day at the Anthracite Museum, where I learned about the coal mining industry that used to be the economic core of the district.
About 15 seconds into talking to Barletta, I thought "wow. This guy has something special." I am very cynical about politicians, especially Congressmen. They don't have to be very charismatic or, often, smart. Barletta is both. And I was disinclined to like him because I disagree with his hard-core immigration position, which could well put him over the top in this race.
Throughout the conversation, I learned more and more about the district, Barletta, and Kanjorski. I think that we can win this seat with this guy, even in this environment. His campaign released a poll that shows him up 47-42, which the DCCC believes enough to put up ads against him.
But there is a very deep thing going on here that might be the best reason of all. If you want to send a message that playing along with Barack Obama and Nancy Pelosi is no way to represent god-fearing, hard-working, working-class values, then give Lou Barletta some money. Barletta may offer a concrete model of how to win in a district like gave Hillary Clinton 75% of the Democratic primary vote.
I am going to write a lot more on Barletta. I think that he is a model for how we can continue to cut into Democratic districts in Ohio, Pennsylvania, and Michigan. But in the mean time, give Lou Barletta some money.
