After Lehman Brothers declared bankruptcy on September 14, 2008, credit markets froze up. On Tuesday, the 16th, the nation's oldest money-market mutual fund, Reserve Primary Fund, announced that its exposure to Lehman's debt caused its share value to "break the buck," i.e., its share price dropped to 97 cents. This led to massive redemptions of money market funds. To stop the run on the money funds, on Friday the 19th the Treasury announced temporary guarantees of money market accounts similar to the guarantees that the F.D.I.C. provides on bank accounts.
After playing a clip of Congressman Paul Kanjorski (D-Penn.) describing the situation that faced the markets on that Thursday, Christian talk host Sandy Rios offered the following cogent analysis (it's at about the 32 min mark):
Why haven’t we heard about that?
To repeat what he just said: $550 billion were withdrawn electronically from our system, our American system, within one to two hours and if they had allowed it to continue it would have gone up to $5.5 trillion electronically withdrawn.
Who’s doing this? Who’s doing this on that day? And if you go back in time, what was happening? That was right after Sarah Palin, right after Guy (her cohost) and I were at the convention and Sarah Palin was being introduced. Everybody...the polls were showing that people just loved her and John McCain was gaining momentum because of her and suddenly the financial collapse.
You think that’s an accident?
I have to tell you again that George Soros, its documented, was attributed with wrecking the economies of two different countries. Now I don’t know if—I’m not saying that George Soros did this. How would I know? How would I know? But he’s a billionaire who is a leftist who’s been funding the worst kinds of things in this country for the last I don’t know how many years, ten that I know of. So somebody like George Soros . . . . Who’s doing this? Who orchestrated this? Who orchestrated something so dastardly that the entire economy would have been destroyed on that day? Why would they do that? Because its destruction that they seek and that’s at the heart of why we’re in this trouble.
Have you heard this story?So there you have it. It wasn't subprime mortgages. It wasn't the collapse of the housing bubble. It wasn't the collapse of Bear Stearns, Countrywide, Washington Mutual, or Indy Mac. It wasn't the need to rescue Fannie Mae, Freddie Mace and AIG. It wasn't the Lehman bankruptcy. It wasn't the fact that real people were feeling rational insecurity about the safety of money market funds.
It was George Soros or some other evil liberal billionaire who was more than willing to take down the economy of the whole world just to thwart Sarah Palin.
I tried to call Rios' show today to let her know that I was aware of this story. I had not heard the exact figures that Rep. Kanjorski quoted for money fund outflows, but I trade the stock market for a living and I knew what the scale of problem was. There was nothing scarier in what the Congressman said than in how things felt that Thursday. I believe that was the day that short-term treasury bills traded at negative interest rates. That means that people were so desperate for a safe place to put their money that they were willing to give up $101 just to be sure of getting $100 a month down the road.
Unfortunately, Rios isn't taking calls today because she is talking to a guest about Abraham Lincoln. What I think I find most amusing is that Rios frequently complains about liberals who automatically blamed Bush for everything that went wrong over the last eight years. I will admit that I blame Bush for many thing, but I am confident that I can present reasons for blaming him for each and every thing that I blame him for that are infinitely more rational than Rios' liberal billionaire conspiracy theory.