U.S. within three hours of an economic collapse

I found this YouTube video on both Daily Kos, and Bonddad, and even I'm surprised this country was to an economic, and financial, collapse. This is a C-Span video, where Rep. Paul Kanjorski, Dem. PA-11, explains that, during the financial crisis of mid-September, 2008, investors pulled out $550 billion from U.S. money market accounts in the U.S., forcing a near run on the U.S. banking industry. Here is what Kanjorski said, at around the 2 minute mark, in this January, 2008 YouTube video:



And here is the transcript of the exchange:

I was there when the secretary and the chairman of the Federal Reserve came those days and talked to members of Congress about what was going on... Here's the facts. We don't even talk about these things.

On Thursday [September 15, 2008], at about 11 o'clock in the morning, the Federal Reserve noticed a tremendous drawdown of money market accounts in the United States to a tune of $550 billion being drawn out in a matter of an hour or two.

The Treasury opened up its window to help. They pumped $105 billion into 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 and there. And that's what actually happened.

If they had not done that their estimation was that by two o'clock that afternoon, $5.5 trillion would have been drawn out of the money market system of the United States, would have collapsed the entire economy of the United States, and within 24 hours the world economy would have collapsed.

Now we talked at that time about what would have happened if that happened. It would have been the end of our economic system and our political system as we know it.

There is not much more to say, except that the events leading up to that fateful September day was not good. And while the run on the banks was stopped with the liquidity injection, the underlying problems of the housing and subprime mortgage collapse, the gambling on collateralized debt obligations (CDOs) based on the values of the subprime mortgages, and the huge losses the financial industries have due to the speculation, are still with us today. Unless something is done to repair, and reform, the problems in the housing and financial industries, and jump-start the frozen credit markets, we may end up seeing another serious run in the U.S. financial markets.

Only the next time, the government may not be able to stave off the crisis.