This is scary, scary stuff--please read and watch and listen

I have been utterly confused since last fall about what caused the sudden bi-partisan uniting behind the President George W. Bush's bailout plan. He was awfully unpopular, so how did he galvanize both parties to act so quickly?

Now some scary information is coming out, especially in a video interview with a Democratic congressman who tried explain in a January interview what Paulson et. al. told them about an electronic run on the banks on Sept. 18 that nearly collapsed not only the U.S. economy but the world's.

via Politico:

Currently burning up the tubes: Rep. Paul Kanjorski's description, late last month, of how close to the brink the global economy came on September 18. That was the day, recall, when Congressional leaders emerged stunned from a meeting with Henry Paulson, and gave him broad authority to spend $700 billion.

Part of what he said:

On Thursday at 11:00 a.m. the Federal Reserve noticed a tremendous draw-down of money market accounts in the U.S., to the tune of $550 billion was being drawn out in the matter of an hour or two. The Treasury opened up its window to help and pumped a $105 billion 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.

If they had not done that, their estimation is that by 2:00 p.m. that afternoon, $5.5 trillion would have been drawn out of the money market system of the U.S., would have collapsed the entire economy of the U.S., 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.

Caps Fool writes:

Fools who read my blogs regularly know I have been fascinated by what may have been included within the dire warnings issued to members of Congress by Paulson and Bernanke behind closed doors on Thursday, September 18, 2008. As the debates lingered on over the week that followed, several members voiced their sense of shock over the severity of the warnings, while refusing to divulge the details to a public that deserves to know. Representative Sherman later revealed that members were warned that Martial Law would result if the $700 bailout plan was not passed, and Iguadland10 posted another video ascribing that particular warning to Paulson. The New York Times quoted Senator Dodd as jumping in when Charles Schumer described the meeting as 'somber': “Somber doesn’t begin to justify the words,” he said. “We have never heard language like this.” Also from NYT: Although Mr. Schumer, Mr. Dodd and other participants declined to repeat precisely what they were told by Mr. Bernanke and Mr. Paulson, they said the two men described the financial system as effectively bound in a knot that was being pulled tighter and tighter by the day.

More recently, the shocking revelation from across the pond, reported by The Times and then by Bloomberg, that a massive run on the banks in the UK back in October brought that entire nation's financial system to within three hours of a complete and utter collapse. By the time this was reported in late January, we already knew Britain's financial system was indeed on the edge of bankruptcy, but still it seemed the common assumption among Americans was that such events could / would never take place here. For whatever reason, that appears to rermain the prevailing assumption, despite the fact that the U.S. has the scariest balance sheet of all.

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.

HillBuzz has a theory. Check it out. Then Google the Cloward Priven strategy.

The thing is, what is America thinking in borrowing more and more money as if that would stave off the potential for another run on the banks by say a suddenly hostile China or Saudi Arabia?

Great essay by Gary Graham at Big Hollywood on the whole spending package rush. Read it all. Here's an excerpt to whet your appetite:

What the hell is the rush!??? I’m missing the soup lines. I look but I don’t see throngs of homeless people trying to warm themselves by the oil drum fire. I have not had to swat the flies off of a little starving child once in the past month. I must have missed the food riots in Los Angeles as starving hordes prowl the streets looting Vons and Ralphs stores. And have you been on the freeway lately? I would think that if the ‘crisis’ was as bad as our President says it is, the 405 would resemble a ghost town. But there I am, jammed in, trying to shuttle my butt over the hill to L.A. in the same old rush hour slog. Okay, I’ll admit that the banking and financial markets are in monstrous disarray. And that yes, it could probably be considered a crisis. But … the end of the world type of crisis? The we-are-screwed-so-let’s-throw-capitalism-out-and-become-a-socialist-nation type of crisis? Uh … not in my movie.

But we are told we have to go a trillion dollars into debt or the world is going to end, and we have to borrow it immediately! (Even though it will be two years before the money would even start to get spent.) And where do we borrow it? From China!! Am I the only one left who sees this as an absurdly stupid recipe for disaster?? Two words: Tiananmen Square. I was there two years before the tanks rolled over the peaceful protesters, and I can tell you … things haven’t changed in the ‘People’s Paradise’ all that much since. Oh, you saw the Olympics on TV and they all look so advanced and peace-loving and civilized? The people, yes. The totalitarian Communist regime, nada. So sure … let’s reduce our dependency on foreign oil, but increase our dependency on a Chinese Communist oligarchy??

This is insanity on such a grand scale … that no one can really believe it. So we refuse to. History is replete with examples of world events so startling that the populace was literally frozen with surprise, and stunned to inaction. Students in 1989 Beijing faced a wall of AK-47 rounds. The Soviet tanks rolled through the summer streets of Prague. The Jews were ejected from their homes and herded into Nazi camps. The twin towers tumbled in Manhattan.

And now … with the derisive laughter from my Leftist friends still echoing in my ears … my accusations of Obama being a ‘socialist’ have just been confirmed by … Newsweek magazine. For once we are in accord.

Tyrants and despots can only come to power through the pretense of crisis. Otherwise the people would not stand for it. It’s How to Boil a Frog, 101. If we are convinced of a crisis, we can also be convinced that ‘emergency measures’ are in order. Sweeping executive powers must be invoked. Individual liberties must be compromised and ‘temporarily’ suspended. Dissension must be stifled and freedom of speech deferred; the media - newspapers, television, and radio must be managed, dominated, and/or censured. Individual business must be manipulated and controlled. Personal property stops having any meaning whatsoever. The State dominates. Only the State provides. The State becomes everything. So comrades… Socialism starting to sound better and better?

Maybe we should walk out of the showroom.

Yup.