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In 1938, Orson Welles scared the nation with his faux radio report on a Martian invasion of Earth. The 60-minute broadcast (based on the H.G. Wells novel "War of the Worlds") was disguised as a series of news reports documenting the alien invasion. Many listeners tuned in mid-broadcast and became panicked that an invasion was actually underway.
These days people don't seem terribly concerned about invasions from outer space.(Besides, with all those fancy telescopes now, we'd probably see the invaders light years before they touched down in the Nevada desert.) So what would a modern War of the Worlds broadcast sound like? Try this:
Modern Radio Drama, 6:31 a.m. Chicago time
HOST: If you're just tuning in, we have major news to report. At approximately 3 p.m. yesterday, Beijing time, a Chinese defense official announced that the government was suspending the purchase of U.S. Treasury bonds and would consider selling "a significant portion of its bond holdings" to protest the decision by American officials to back Japan in ongoing territorial disputes in the Sea of Japan.
In overnight trading, interest rates on U.S. Treasury bonds skyrocketed to a high of 13 percent, sending Asian stock markets plummeting. Japan's Nikkei index fell 28 percent, before trading was halted 35 minutes before the official close. The European stock markets were unable to open. Officials of the New York Stock Exchange are meeting now to discuss whether the market will open on time.
On the electronic markets, S&P futures contracts have plunged 31 percent, leading Treasury officials to fear that the markets may not be able to handle the massive volume expected if U.S. markets are allowed to open.
The major American commercial and investment banks have asked the Federal Reserve for a "credit lifeline," as all forms of short-term credit, including the money market, have seized up. The Federal Reserve, already stretched to its limits by quantitative easing and other interventions, has not signaled its intentions.
Up and down Wall Street, there are major fears that institutions will collapse without some liquidity lifeline. Moments ago, we spoke with a banking analyst:
WALL STREET ANALYST: Nobody is lending money to anybody, under any circumstances. We're all bankrupt unless somebody can find a way to extend us liquidity by the open of business. The whole system has seized up.
7:10 a.m.
HOST: To update you on the collapse of U.S. Treasury debt, the Chinese government has declared emphatically that the original statement vowing to sell U.S. Treasury bonds was made in error by a low-level defense official. There is, in fact, no change in official Chinese government policy with regard to the purchase of U.S. Treasury debt.
However, this statement appears to be too little, too late. Japan, Dubai, Saudi Arabia, Kuwait and several other governments dumped huge quantities of U.S. Treasury debt after the original, erroneous Chinese statement. We now have on the line a spokesman for the European Central Bank. Sir, can you please explain how a comment by a low-level Chinese defense official could have set off this global financial panic?
CENTRAL BANK SPOKESMAN: The concern over U.S. debt levels had been mounting for some time. This was the spark that set off the blaze. Everybody knew this might happen, which is exactly what made it happen.
HOST: But the Chinese government has disavowed the statement and reaffirmed its confidence in the long-term strength of the U.S. economy.
CENTRAL BANK SPOKESMAN: So what? That's not relevant once the panic selling starts. Investors are trying to dump these assets just because everyone else is trying to dump them. It's the same mentality as a bank run, really -- get what you can while there is still something left to get. But, of course, that behavior merely exacerbates the panic.
HOST: Is it really a panic?
CENTRAL BANK SPOKESMAN: The value of the dollar has fallen 43 percent in two hours. The European stock markets were not able to open. Most of Wall Street will be broke without some injection of credit. How else would you describe it?
7:42 a.m.
HOST: If you are just tuning in, we have suspended our traffic reports and local news to bring you ongoing coverage of the global financial collapse. An unauthorized statement by a low-level Chinese defense official has precipitated a massive selloff of U.S. debt, causing the global financial system to grind to a halt.
For reasons that still are not clear, Republican and Democratic leaders are meeting separately in Washington. President Obama issued a statement blaming the crisis on the Bush administration and greedy Wall Street bankers. He vowed to get America's debt problem under control by "changing the way we do business in Washington." The statement offered no specifics.
Republicans have also vowed to act quickly. After a two-hour meeting convened at 4 a.m. this morning, House Speaker John Boehner released a statement vowing to cut "even more waste, fraud and abuse" and to curtail lending privileges for illegal immigrants at the Library of Congress, a move that is expected to save the federal government $3,100 next year. He reiterated the Republican pledge not to cut Medicare, Social Security or defense.
8:25 a.m.
HOST: We continue our coverage of the global financial meltdown. Many Americans are now even angrier than they were at the midterm elections. Our reporter caught up with a typical voter at a spontaneous protest here in Chicago.
ANGRY CITIZEN: I'm fed up. We need smaller government. Seriously, get the government out of my life. Also, I don't have a job, and my house is in foreclosure. Someone needs to find me a job and save my house.
[SOUND OF CHEERING CROWD IN THE BACKGROUND]
REPORTER: I don't know if you can hear the crowd behind me.
HOST: They seem to be chanting something.
REPORTER: Yes, they are yelling "Smaller government! Find us jobs!"
HOST: There is a palpable anger there.
REPORTER: It's total chaos. A lot of people I've spoken to are furious about the lack of crowd control and police protection at this anti-government rally.
8:31 a.m.
HOST: We have now learned that the New York Stock Exchange did not open. We will keep you apprised of any developments there. Meanwhile, local Chicago officials are urging residents to stock up on rice, canned goods and fresh water. If you go to our web page, we've posted information on how you can feed your family by raising goats and chickens in your backyard, even here in the city.
This isn't happening. If it were, I'd be selling my assets and looting the local grocery store rather than writing a column. But it could happen, very easily. If we've learned anything from the dot.com bust, or the real estate collapse, or the financial crisis, it's that everything is just fine -- until the moment that it's not. When markets lose confidence, things get ugly fast.
The financial meltdown I've described is certainly more likely and far scarier than the Martian invasion that terrified the country in 1938.
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