How close our financial system came to collapse on September 18th, 2008.

[ChrisFromNJ]

http://www.liveleak.com/view?i=ca2_1234032281

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The Treasury taking quick action to guarentee money market funds on losses up to $50 billion arguably saved our financial system from a devastating collapse that day.

No wonder Paulson looked like a wreck that day.

[Swing low, sweet chariot. Comin' for to carry me home.]

http://www.liveleak.com/view?i=ca2_1234032281

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The Treasury taking quick action to guarentee money market funds on losses up to $50 billion arguably saved our financial system from a devastating collapse that day.

No wonder Paulson looked like a wreck that day.

yep, they "broke the buck"...we were a couple of days away from not being able to withdraw money from ATM's.

[Sam Spade]

This rumor has been thrown out numerous times in numerous media outlets, but I've found it to not hold much water.  I do suspect that Paulson used it as a fear threat for TARP passage.

Here's why:

Kanjorski says that the bank run happened in an hour and a half.  He also says that if they had not shut down the money market system that day, there would have been a $5.5 trillion removal by the afternoon.  This type of a run would have taken the entire global system down in 24 hours by blowing up the commercial paper market.

Well, first off, they didn't shut down the money market system - rather, they made the promise to backstop it.   Oops.

Moreover, the announcement in and of itself would have had zero effect if the bank run had not already run its course. You simply can't extrapolate one run across 24 hours to get the result you want, statistically, as Kanjorski wants to.  Heck, it took nearly two weeks to get the backstop in front of Congress for a vote anyway.  The system would have collapsed weeks before if the run was what Kanjorski claimed.

[Swing low, sweet chariot. Comin' for to carry me home.]

This rumor has been thrown out numerous times in numerous media outlets, but I've found it to not hold much water.  I do suspect that Paulson used it as a fear threat for TARP passage.

you've got the whole thing backwards...they broke the buck at 97 cents...which means people in money market funds could only get 97 cents back for every dollar...which is why there was a run on money market accounts...and since money markets fund corporate paper, the economy came to a screeching halt...which is why Paulson went to Congress.

there was no conspiracy among media outlets.

[King]

They should've just let it collapse.  Bread lines are fun.

[J. J.]

I think when the history of 2008 is written, Paulson will look like a hero, largely for preventing that.