The irony of the date on Lawrence Summers Fed withdrawal
There is a certain irony in Larry Summers letter today in that the date is the beginning of the 3 day period 5 years ago when the world went into economic DEFCON 1 readiness. There was an electronic run within the banking system that you and I did not learn about until later. Lehman Brothers were bankrupt and the money system was in panic. No bank could trust any other bank. Money movement froze.
It was literally the banks’ equivalent of you waking up in the morning and learning that your house, your investments and your savings were worth zero, and further you still owed people money for things you believed last night that you owned. We were a hair trigger from anarchy.
But the central banks dove in and Quantitative Easing was born.
The irony continues later this month when the Fed comes out with its latest pronouncement and the world is watching for direction on ‘tapering’ of QE.