An Enormous Hoax! - Money Mkt Busts the Dollar: Major Shoe Has Just Fallen Updated (Bloomberg)

[kpete]

``This is uncharted territory,'' said Peter Crane, president of Crane Data LLC in Westborough, Massachusetts, which tracks money-market funds. ``That's certainly a stunner.''
http://www.bloomberg.com/apps/news?pid=20601087&sid=a5O2y1go1GRU&refer=home

http://www.dailykos.com/storyonly/2008/9/16/182843/496/106/600951

Money Mkt Busts the Dollar: A Major Shoe Has Just Fallen Updated
by mikeypaw
Tue Sep 16, 2008 at 03:56:10 PM PDT

A major shoe in the financial industry has just fallen that may have far reaching impact for every day Americans. The Sacred $1.00 share value for money funds has just been breached. This is being reported by Bloomberg News and has the potential to rile the markets even more than they already are.

....................

Money Market funds are a staple of the financial industry and are the place where most people park their funds when they are looking for a safe return. These funds are routinely considered to be the same as cash. That is to say that you can get to your money at anytime without penalty and without delay.

***********************

Sept. 16 (Bloomberg) -- Reserve Primary Fund, a money-market mutual fund with $64.8 billion in assets as of Aug. 31, fell below $1 a share in net asset value because of losses on debt issued by Lehman Brothers Holdings Inc.

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Unable to Prop Up Fund

Spokeswoman Ming Lee Hatch said she couldn't immediately comment on whether the company planned to secure credit to support the fund or wind it down.

Carl Lantz, an interest-rate strategist in New York at Credit Suisse Securities USA, said the fund's failure ``exacerbates some of the flight-to-quality into Treasuries.''

Crane said Reserve Management probably was unable to prop up the fund before halting redemptions because it lacked the backing of a large institutional owner.

``Reserve just didn't have the deep pockets to buy troubled securities out,'' he said.

Boston-based Evergreen Investment Management Co. said yesterday it had secured support from Wachovia Corp., its parent, to protect three money-market funds from losses linked to debt issued by Lehman. The funds' Lehman holdings totaled $494 million.

more at:
http://www.bloomberg.com/apps/news?pid=20601087&sid=a5O2y1go1GRU&refer=home

UPDATE

An enormous hoax has been perpetrated on global financial markets during the past 10 years. An American economy base on opening containers from China and selling the contents at Wal-Mart, or trading houses back and forth, provides scant profitability. Where the underlying profitability of the American economy was poor, financial engineering managed to transform thin profits into apparently fat ones through the magic of leverage.

more:
http://www.atimes.com/atimes/Global_Economy/JI16Dj08.html

[Whoa_Nelly]

1. Was worried about the coming fallout over two weeks ago

It's worse than I imagined it would be, and I don't think this is the end of the fall...

[Mojambo]

2. Aren't these supposed to be the safe investments?

I know very little about finance, but this seems way troubling.

[tbyg52]

5. They are supposed to be just like bank deposits - except without the FDIC insurance.

I'm sure you get all kinds of warnings about the principal being subject to risk, but few people think of it that way. The possibility of losing principal in a money market account is a big red flag.

[Daemonaquila]

14. There's no such thing

There is no such thing as a safe investment, just varying shades of risky. The only "safe" place to put money, and even that isn't totally safe because the government too could go belly-up theoretically, is <$100k in an FDIC-insured account. People have assumed that these funds are safe because historically they've been great performers, or at least stable.

[Mme. Defarge]

3. Sheesh!

Maybe it's time to invest in a king sized mattress and a gun.

[screembloodymurder]

8. Don't worry your money is safe ...

at least 97% of it ... as long as you don't need it for awhile.

[sicksicksick_N_tired]

4. Well, goshDAMNIT!!! Those greedy mo-fos were given free reign to oppress our economy!!!

OF COURSE THEY TOOK ADVANTAGE!!!!

:grr:

My poor recently widowed Mom!!! I know damn well she's gonna' get a hit she certainly does NOT deserve! And my widowed neighbor will take a hit, too! Sheesh, two of my siblings will probably be impacted even though they are conservative investors!

Meanwhile, the assholes who orchestrated this whole mess have millions upon millions upon millions, even billions in their pockets!!!

:mad:

I want the assholes' money and I want them placed in prison!!!!

[screembloodymurder]

6. What does this sentence mean?

Carl Lantz, an interest-rate strategist in New York at Credit Suisse Securities USA, said the fund's failure exacerbates some of the flight-to-quality into Treasuries.

Is he saying more people will move their money out of money market accounts and into treasuries and that that will cause additional stress on the mma?

[WeDidIt]

7. IF you think this is bad, wait until Washinton Mutual goes under.

They won't be able to prop that one up and it will cause ripples throughout the financial and investment industry.

[screembloodymurder]

10. Tomorrow morning my money is going into Swiss Francs.

This shit is getting scary.

[WeDidIt]

11. Doesn't matter, this is global

Sorry. The tentacles are into everything, including the Swiss banks.

[seemslikeadream]

9. Two major hoaxes

that is

[tpsbmam]

12. Like stocks, you have to know how your money market fund is invested....

Believe me, I suck at this crap, which is why I have a very good certified financial planner handle everything. She did amazingly well by me last year, not quite as well this year (but I'm still ahead over the course of 2 years). One of the things she did many months ago was take everything out of the money market fund I had some money in -- she said it was too heavily invested in areas that were going to be hit by the mortgage & banking crisis. She foresaw all of this and I had none of those kinds of investments EXCEPT for the money market fund that she dumped.

[KakistocracyHater]

13. get rid of the ceo position

completely, take the outrageous amount money they'd have gotten & plow it back into reality-based businesses. Have a board democratically direct & control the businessess & quit with the "winning on paper" but not on Earth, you know that place also called reality.