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How The World Almost Came To An End At 2PM On September 18
- pj 18y agoWe can swim that far!! Lay on your back. Kick with your feet. Swim... Breathe, it keeps your chest elevated and your nose out of the water. Boats are coming if we need them, we'll make it.
- gaika 18y agoGreat Britain was very close to complete banking collapse on October 10th too. http://www.dailymail.co.uk/news/article-1127278/Revealed-Day-banks-just-hours-collapse.html http://www.dailymail.co.uk/news/article-1127278/Revealed-Day...
- nazgulnarsil 18y agothis story is bullshit linkbait guys. can we please stop upvoting apocalyptic crap? when the economy rebounds the apocalypse bloggers will go back to milking other sources like mayan calendars.
- rrival 18y agohttp://ftalphaville.ft.com/blog/2009/02/10/52272/within-24-hours-the-world-economy-would-have-collapsed/?source=rss http://ftalphaville.ft.com/blog/2009/02/10/52272/within-24-h...
- nazgulnarsil 18y agoi saw the c-span video which is what everyone is referencing.
- jdnier 18y agoHoly freaking cow! I've not heard anyone explain/disclose the details of what actually happened before. Cheers to Representative Kanjorski for disclosing the details. The government shouldn't keep secrets.
- ryanwaggoner 18y agoNoble sentiment, but if people knew this was going on at the time, it would have likely exacerbated the situation.
- swombat 18y agoIndeed... this is worse than shouting "Fire!" in a crowded theatre. In fact, it's like shouting "Deadly stampede!" - if that makes any sense...
- jdnier 18y agoI'll only point out that this happened last September. It's the first I've heard about the details. It's not shouting "fire", it's waiting four months to explain why there's a burnt-out hole in the ground where the theater used to be.
- swombat 18y agoI was replying to "The government shouldn't keep secrets". That's wrong - it should keep the secret, until most people are out of the theater.
- jdnier 18y agoBut as I said, its four months later. Government shouldn't keep secrets from it's citizens in general. You're the one who introduced the hysterical shouting of "fire." The Bush administration increased the level of secret keeping massively and look what we've gotten for it. Don't you think what happened in September should inform the decisions being made this week about the continuing bailout? Four months is way too long for this to be kept quiet. I'm glad a US representative is talking about it now but wish it had come out three months ago. Fortunately, we have a new administration now and they've already begun the change: http://www.propublica.org/article/obama-begins-rollback-of-bush-era-secrecy http://www.propublica.org/article/obama-begins-rollback-of-b...
- earl 18y agoSigh... this is why you can never trust a Republican. Putting people who don't want government to work in charge of making government work has lead pretty directly to the financial disaster in which we find ourselves. The Democrats are no angels, but it was a Republican president and a Republican congress and a Republican chair of the Fed and a republican head of the SEC and a Republican head of the CFTC and on and on that fiddled for the last 8 years.
- pbrown 18y agoThis post was down-modded so far I shouldn't even respond, but I'm going to anyway. While you seem to blame Republicans for every thing that ails you, keep in mind that the "loosened regulations" on mortgage lending which is what caused this problem in the first place were initiated by a Democrat, Barney Frank, at the urging of a Democrat, Bill Clinton. Now go put your head back in the sand.
- swombat 18y agoBoth of those posts are being downmodded because this is not the place to have a "democrats versus republicans" debate. Keep that stuff on reddit, thank you.
- pbrown 18y agoFair enough. I apologize. No more political comments from me.
- quantumhobbit 18y agoThis is why I love HN. Don't ever change.
- gruseom 18y agos/World/Current Form of the Economy/
- tlrobinson 18y agoThe World [as we know it]
- swombat 18y agoClose enough for the millions that would die in the resulting unrest.
- nihilocrat 18y agoThe current recession is edging on the side of depression, and I don't see any small-scale riots going on. How do you figure millions would die from "unrest"? Most people in the developed world are too complacent to really get angry and kill each other, and killing a million people is a surprisingly tough job to do without the assistance of nuclear weapons or national war machines. Maybe I'm just misunderstanding the gravity of a collpase, but I don't remember reading about people spontaneously murdering each other and looting after Black Friday in 1929.
- bprater 18y agoI think we are still piling feathers on the camel's back. Americans are also very unused to rioting, in general. It isn't part of their consciousness yet. And I think it's ineffective to compare this to 1929. It certainly won't be exactly the same. It could be better, or it could be much worse.
- deleted 18y ago[deleted]
- pavel_lishin 18y agoIf the economy collapsed tomorrow, where would you get your food? Would you starve to death first, or attempt to murder your next door neighbor, who lives alone, to feed your family? Would he kill you first?
- ryanwaggoner 18y agoCan someone explain this to a non-finance / non-macroeconomics type? Was it foreigners who were pulling money out? Was it people in the US? If they pull $5.5 trillion in cash out, where would it have gone? Just don't understand why everything would have collapsed.
- revelude 18y agoAs market conditions changed so fast in those days and weeks, folks in the industry probably needed to cash out of previous investments, in order to invest their money in less risky markets. Most likely, the very systems and theories that built the house of cards also decided to gather up their deck before someone else toppled it first. Note: I'm no economist, nor expert, but neither are you (or anyone, anymore).
- josefresco 18y agoIf you read the comments, someone said that it was mid-level people, like money market managers who were pulling the initial money out. I can't speak for the entire 5.5 trillion.
- dreish 18y agoA better question is: Where would it have come from? Most of the assets backing money market funds are short-term obligations to repay from a broadly diversified range of borrowers, usually corporate or municipal, with a small amount of cash to facilitate transactions. The terms of those loans to companies and local governments don't allow the bank to just demand the money ahead of schedule. The assumption is that when one particular fund experiences a high volume of withdrawals, it will be able to sell its commercial-paper assets to other banks, or as a last resort, borrow from the Fed to cover the withdrawals. The extraordinary event here was that there was such a massive panic across the entire country, not even the Fed would have been able to keep up. Incidentally, what touched off this panic was when two money market funds "broke the buck" on the same day; that is, instead of paying their investors an interest dividend, they announced that their investors' deposits had shrunk (by a small amount) from the day before. Depositors thought the financial crisis was about to consume money market accounts, panicked, and moved their cash from non-FDIC-insured MM accounts into regular checking accounts.
- jackchristopher 18y agoThank goodness we have computers to track this stuff. I wonder how long it took to see the sell-offs before the subsequent collapse in the 30s? EDIT: I didn't mean to imply that we're near a depression. I was think about how technology helped us. Thanks makaimc.
- makaimc 18y agoI just read about this over the weekend in John Kenneth Galbraith's book The Great Crash. The ticker tape machines were about 3 hours behind in most parts of the country and that caused a massive sell-off as people tried to get out of the market even though they did not know the current value of their stocks.
- rrival 18y agoHave you found anything similar that talks about Japan in the early 90s or argentina's collapses? I'm trying to find good parallel examples,
- jah 18y agoCan anyone explain why this activity wasn't reflected in the stock market? The DOW had a +400 point gain on Sept 18th.
- pj 18y agoThe money was coming out of money market accounts. If the DOW went Up 400 pts, perhaps the money was going /from/ money markets and /to/ the market.
- jah 18y agoIf true it certainly highlights the paranoia of the day. Keep in mind, the DOW lost approximately 800 points in the three days preceding Sept 18th. Were investors in such fear of a banking collapse that they chose to divert funds from "secure" money markets to the insanely volatile stock market?
- jaaron 18y agoThe DOW is a horrible measurement of what's going on in the economy. Don't use it.
- jmtame 18y agoi'd be curious what pg has to say about all of this. does he take the gary vaynerchuck approach and say "put your head down and crush it, it's going to be fine tomorrow" or does he think it should become part of a startup founder's thought process? i personally am interested in economics and banking (i enjoy reading the conspiracy theories too), but after a while i wonder why i worry about it. the more i worry about that, the less i get to focus on a startup.
- palish 18y agoIt would be foolish to worry about an apocalypse when you're not sure it's going to happen. Instead, worry about why your users have to click three times instead of two.
- michaelneale 18y agoI guess there are always apocalypses (apocalypti ?) hanging around. Killer bees, asteroids, sudden catastrophic climate change, killer cosmic rays from a supernova, some freak of physics, accidental nuclear war (or deliberate), some big volcano and so on... Of course the real danger for a personal apocalyse: getting in your car and driving. We live with it every day. No big deal.
- raghus 18y agoOn Sep 26, President Bush said "We got a big problem" http://blog.mint.com/blog/wp-content/uploads/2008/11/visualguidecrisis2.jpg http://blog.mint.com/blog/wp-content/uploads/2008/11/visualg...
- weegee 18y agoAuntie Em! Auntie Em! Where are you Auntie Em!
- Jakob 18y agoI like this comment: ”Great. We have a system that cant be saved and cant fail.”
- tptacek 18y agoIsn't this article just saying, "if the Fed had chosen not to fulfill one of its basic duties to act as a circuit breaker in the event of a banking panic, there would have been a calamitous banking panic?"
- jwb119 18y agoi think its saying "we came closer than we ever have to the Fed not being able to fulfill one of its basic duties"
- tptacek 18y agoI guess I'm asking, where is the evidence that the Fed was close to not being able to fulfill its duties? The story reads to me --- and what do I know? of course --- as "The Fed saw a problem, tried Plan A, and when that failed, used Plan B to solve it".
- jwb119 18y agoyeah i hear what you are saying.. my takeaway from a quick read was that it was a timing thing, as in if someone didn't move when they did we would have had a problem..
- jwb119 18y agocall me a cynic, but has anyone actually verified that what this guy says is correct.. i worked on a trading floor at a major US bank and i have a degree in economics. its sometimes mind boggling to see the lack of knowledge of some of these senators. to put it in a tech perspective, remember back to the "series of tubes.."
- jd 18y agoGoogled around - these are my findings. 1. The Fed publishes -several- press releases every day. They report on the most mundane issues (meeting times, etc) up to their financial decisions. So this event must have been mentioned in a press release. 2. The best match I found was this one: (http://www.federalreserve.gov/newsevents/press/monetary/20080918a.htm http://www.federalreserve.gov/newsevents/press/monetary/2008...). If it is about the same event, they described the crisis as "elevated pressure in U.S. dollar short-term funding markets." Response: $180 billion dollar increase in swap lines by the Fed. This press release was posted on Sept 18th this year, the date of the supposed catastrophe. 3. I couldn't find a single reputable news source or agency that even hinted at a possible catastrophe. For your amusement, Google "federal reserve 550 billion" and watch the Ron Paul references fly by. Considering the lack of supporting evidence I think it's safe to say the world wasn't about to end on Sept 18th this year.
- mynameishere 18y agoWere you seriously looking for the word "catastrophe" in federal reserve press releases? Try to keep in mind that the DJIA can collapse if the fed chairman has the hiccups--so, they tend to wrap everything in "fedspeak" http://www.youtube.com/watch?v=0liegrixknA http://www.youtube.com/watch?v=0liegrixknA ...what really happened was that the fed gave FDIC-style assurances to the money markets, which are not regulated in the manner of FDIC-insured commercial banks. That sounds boring as hell, I know.
- jd 18y agoOf course I wasn't searching for "catastrophe". I've read the book. It's better than the youtube clip.
- Mistone 18y agoahh snap, so close, we'll get'em next time.