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Reserve Money Market Fund Collapse
Posted by rightcommentary • 9/16/08 • Subscribe to this Discussion [RSS] • Report This Topic
Topics: collapse, lehman, money market
As some of you may have read, The Reserve's primary fund collapsed today... in response to having to write off about 800 million in Lehman bonds...
www.rightcommentary.com/2008/09/16/reserve-money-market-fund-collapses-as-l...
I noticed in all the reporting - no one actually said:
a) What this fund is... (they just presume everyone knows about the obscure functioning of the markets I guess)
and
b) Does this mean your money market fund is toast.
... well I answered those questions....
Please digg it if you like it. I think it's a good short piece... 
... and this ain't far from over... AIG's probably going to be averted... but I'd pay very close attention to WaMu and Wachovia... both seem to be under severe "perception" strain... and in the case of WaMu - they're likely to be under real financial pressure given their exposure to Option-Arm's and other loans that seem in the heavy default category...
... wow what a mess... I didn't think it would get this bad.. I really thought buying out the GSE's was going to stop the hemmoraging...
User Comments
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My Momma once said - "You can't put a bandaid on someone who's missing a head and expect them to be okay." I fear this is a hemmorage with a bandaid. -
Well - you an EXPECT them to be okay...
... but that doesn't mean they will be.
Ultimately - I do feel we're about 70 percent there... in short... we've vaporized now close to 800B in assets... I can't imagine it topping a trillion... but who knows. -
You sure are the bearer of bad tidings. This is the first I heard of this one. I've been too busy eating my nails down to the elbow over this fast fall of the dominos. First Bear, Stearns, then Fannie & Freddie. Then Lehman. Now A.I.G (probably the most dangerous yet because of its huge activity in so many countries around the world, steeped in derivitives, which could start pulling down hedge funds right along with it.) Now, I thought Washington Mutual would be the next domino to fall, and plunge into this looming black hole.
I like your extensive analysis, but don't quite follow--all the way--your alarm bell about money market funds. Would you advocate reverting such a cash position into Bank CDs in accounts of under $100,000 each for safety? Would this be preferable? -
Well I'm not giving financial advice in the column...
What I wanted to point out was... when you read this story... don't think your money market savings account is toast... it may not be (most likely won't be) as most people don't have their money in money market overnight sweeps... however, some people who put their money in market sweeps with brokerages might be affected....
I think if you are affected - you know it... by now...
Plus - I just finished writing on the AIG issue... Uncle Sam now owns an insurance company. I say next - let's buy six flags... We'll need an amusement park...
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