we nearly lost the financial system on thursday.

if anyone wonders why the us government just committed another $700 billion that it doesn't have (which is really more like $1 trillion when you add in aig and other bailouts, and that's the best case scenario, assuming everyone goes on paying their mortgages, and nothing else bad happens) it's because they had to. they were staring down into the abyss.

according to the story by michael gray of the new york post, the markets were 500 trades away from total meltdown.

http://www.nypost.com/seven/09212008...

a record $144 billion had been withdrawn from banks, and institutional investor were redeeming another $100 billion from money market funds. from the article:

"While many depositors treat money market accounts as fancy savings accounts, they are different. Banks buy a variety of short-term debt, including commercial paper, with the assets. It is an important distinction because banks use the $1.7 trillion commercial-paper market to fund their credit card operations and car finance companies use it to move autos.

Without commercial paper, "factories would have to shut down, people would lose their jobs and there would be an effect on the real economy," Paul Schott Stevens, of the Investment Company Institute, told the Wall Street Journal. "

when people lose confidence to such an extent that they won't even trust their money to banks and money market funds, a move into physical gold and silver can't be far behind. especially when the government just created another $1 trillion out of thin air.