Economic Armageddon

I just came across a video clip, of what happened that fateful day in September, 2008 when Hank Paulson literally came begging on his knees to Nancy Pelosi to gain support and action from Congress with regards to the first TARP Financial Bailout.

According to TMFSinchurina on his MotleyFool blog:

Now, we have another video (actually available since late January), and one which I encourage every Fool not only to watch but to circulate as they see fit, in which Congressman Paul E. Kanjorski of Pennsylvania reveals some shocking information regarding a bank run which occured right here and indeed brought this country and the entire world economy to within three hours of complete and systemic financial collapse. In this video, Congressman Kanjorski reveals (at about the 2:15 mark) that the move to raise the move to guarantee money market funds up to $250,000 was an emergency measure to stave off a massive run on the banks that removed $550 billion from the system in a matter of just a couple of hours. Treasury then injected $105 billion to no avail, and shut the system down to prevent a panic continuation of this electronic bank run. By "their" [read Treasury's] estimation, had they not shut it down and issued the guarantee, money market withdrawls would have reached $5.5 trillion by two 'o'clock that afternoon!! He then indicates Treasury's assessment that the run not only would have destroyed the U.S. economy immediately, but would have collapsed the world economy within 24 hours.

According to Bloomberg back in Sept. 17, 2008:

Assets in money market funds, considered the safest investments after cash and bank deposits, rose to a record $3.59 trillion this month as stock and commodity markets fell. Investor confidence has been shaken by the subprime-mortgage collapse, the demise of Lehman and Bear Stearns Cos., and the failure of 11 U.S. commercial banks.

Widespread withdrawals from money-market funds would aggravate the global credit crunch because they are major buyers of short-term debt issued by corporations and financial companies. Today, the cost of borrowing in dollars for three months jumped the most since September 1999 as banks hoarded cash. The London interbank offered rate, or Libor, rose 19 basis points to 3.06 percent, the British Bankers' Association said. A basis point is one-hundredth of 1 percent.