REALITY: Ben Bernanke’s Testimony On September 26th, 2008
By Justin Gardner | Related entries in Economy, History, Money
I find it extremely troubling that my fellow bloggers would believe a columnist from Portfolio who only suggests that Congressman Kanjorski’s claims were false without providing any evidence or checking what the players actually said.
You know the players…like one of the guys who actually saw what was going on from the inside of the Fed.
Here’s Ben Bernanke’s testimony on September 26th…
While perhaps manageable in itself, Lehman’s default was combined with the unexpectedly rapid collapse of AIG, which together contributed to the development last week of extraordinarily turbulent conditions in global financial markets. These conditions caused equity prices to fall sharply, the cost of short-term credit – where available – to spike upward,and liquidity to dry up in many markets. Losses at a large money market mutual fund sparked extensive withdrawals from a number of such funds.
This is less than two weeks after the situation Kanjorski described in the now famous video.
Also, let’s dig into what the columnist at Portfolio said…
on September 24, Kanjorski held a hearing on Capitol Hill with Treasury secretary Hank Paulson… Kanjorski is clearly fishing here: he’s talking about anonymous newspaper reports and vague “conversations†and anonymous Wall Street “friendsâ€, and basically asking Paulson to confirm his suspicions. Which, naturally, Paulson doesn’t do, because the suspicions weren’t actually true. That said, however, Paulson’s being-polite-to-the-Congressman answer doesn’t explicitly say that Kanjorski’s numbers are false.
So the columnist admits that Paulson didn’t refute Kanjorski’s numbers OR the scenario he laid out.
And yet my fellow bloggers are more than willing to suggest the congressman is lying. Even when the numbers back up the scenario Kanjorski described.
Nice.
Also, do this little thought experiment with me…why would the Bush administration essentially destroy Republican’s chances in the election by trying to push through this massive bailout plan right before the election if it wasn’t needed? Why would Bush say something as seemingly absurd on its face as “I’ve abandoned free-market principles to save the free-market system.”? Does any of that make any sense that any of this happened if a catastrophe wasn’t eminent? Of course it doesn’t.
Folks, whether you want to believe it or not…we were on the edge of collapse. Everything points to that as a matter of fact, not fiction.
This entry was posted on Friday, February 13th, 2009 and is filed under Economy, History, Money. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
February 13th, 2009 at 8:21 pm
Actually your fellow blogger did no such thing. The columnist, Felix Salmon, did indeed provide specific evidence (linked directly from the Federal Reserve) that refuted Kanjorski’s specific claims of a $550 Billion out flow from Money Market funds in two hours. From the column:
He also did check specifically with what the primary “player” (Kanjorkski) said, quoting him telling the same story in two different venues, and giving two different sources for the story. The first time in the Congressional hearing – presumably referencing the now discredited NY Post story – and the second time on CSPAN, when the source was now the Fed Reserve (same source as Salmon’s linked report).
Finally, I never said he lied. I said he “misremembered his source” for this clearly embellished story in the CSPAN version. Which is exactly what he did.
I hope you are less troubled now.
mw – [Your fellow blogger]
February 14th, 2009 at 11:24 pm
Thank you very much, Justin, for correcting & clarifying the previous post by your co-blogger. It’s gotta be tough to keep blogging daily with little feedback from commenters – notice mine is a couple days late. But I just wanted to let you know how much I appreciate you clearing this matter up.
mw, I really, really do not appreciate someone posting info like the previous one that offers figures that do not even come close to proving your point. That rise in bank deposits ~10 days later is easily explained as a bunch of scared investors salvaging what was left of their 401ks from a rapidly tanking stock market & depositing them into newly insured bank accounts until they could figure out what their next step should be. It is the only rational explanation considering the information I have seen. To imply otherwise I believe to be grossly ingenuous. Maybe I am being too harsh, but it certainly, at the very least, was not a well thought out post.
February 15th, 2009 at 3:04 pm
@Bob
I have no idea where you are coming from on this. Kanjorkski’s story is false. It is in the same category as Nancy Pelosi saying we are losing “500 million jobs a month”. The difference is that no one took Pelosi seriously, posting her statement all over the internet as if it was true (well – actually they did post it all over the internet – but only to make fun of her). Both are based on a kernel of truth, but are ridiculous statements – a simple mistake – misspeaking – something misremembered – a wild exaggeration to make a point -whatever. The fact is that the core component of the story that Kanjorski relates about a $550B drawdown in Money Markets is false. It is in direct contradiction to the reports released by the Fed for that week as linked by the reporter I quoted. If you want to believe Kanjorski’s story, you have to believe that the Fed is generating false reports. They can’t both be true.
Here is another link for Crane’s Data found by commenter Victor in the last thread. He makes the same point, quoting hard numbers.
What happened that week was bad enough. It did not need to be embellished by Kanjorski’s irresponsible apocalyptic fantasies. I repeat – Kanjorski’s story, as related on the cspan clip, is false.
February 16th, 2009 at 1:34 pm
Justin, It’s not at all clear to me why you keep conflating the general notion of troubled autumn markets facing an imminent run with the specific contention of this guy who, for whatever reason (misremembering, misspeaking, etc), described a much larger scope that data supports.
The former notion is, well, uncontroversial. The latter is unsupportable. And It really doesn’t diminish the thrust of your point to acknowledge that Kanjorski overstated things, because your point is still supportable on the basis of concern about where we might have been headed without federal stabilization actions.
February 17th, 2009 at 1:39 pm
Ok, My Theory: mw and Justin are THE SAME PERSON!
The First Rule about Donklephant is: You do not talk about Donklephant.
(mw – does it stand for Mystery Writer? Why don’t you have a name? Or at least capitalized initials?)
Seriously, though…
The posts by Alan and Justin fit in with the respectful tone described in the “About Us” section, but the crossfire-style, bickering tone set by mw does not. Regardless of whether he (or she?) has his/her facts straight.
If this were my blog (it IS your blog, justin, isn’t it?) I would have a talk about tone with my co-bloggers
February 18th, 2009 at 2:51 pm
@Frank
“mystery writer”… I kinda like that. But alas, no. I do have a name and those are indeed my initials. My name used to be pretty easy to find, as it ws in a list of authors in the sidebar. Not sure what happened to that list, you’ll have to ask Justin.
Since you asked, the initials are a holdover from when I started my blog almost three years ago. At the time I was thinking I may want to maintain some anonymity – a notion long since abandoned. Since then I have established an identity in several commenting systems and blogs using the initials, so I continue to use it.
As regards the rest, you are going to have to step up your game. It is indeed Justin’s blog and I am just a guest here. During the “troopergate” debates, a mob of commenters complete with torches and pitchforks were demanding that Justin deliver my head on a stake. As you can see, it was ineffective. I have no explanation for it myself.