Ron. Check your money market holding. Vanguard report them for their funds. Prime Money Market is 20% treasury, balance is commerical paper etc.. If nobody wants commercial paper "prime or not" then that could be a problem. Bankers Acceptances 3.1% Certificates of Deposit 54.2% Commercial Paper 22.4% Other 0.3% U.S. Government & Agency 20.0% Yankee/Foreign 0.0% Total 100.0% Aaa 32.8% Aa 66.1% A 1.1% Baa 0.0% Ba 0.0% B 0.0% Not Rated 0.0% Total 100.0%
Massive liquidity issues emerging in Money Market funds.....there is the equivalent of a run on the banks happening in the economy with hugh amounts of cash moving into treasuries. Capital preservation over yeild. http://www.bloomberg.com/apps/news?pid=20601082&sid=aFaB9JDhwpGw&refer=canada National to Buy Back C$2 Billion in Commercial Paper (Update6) By Sean B. Pasternak and Doug Alexander Aug. 20 (Bloomberg) -- National Bank of Canada, the country's sixth-largest bank, agreed to buy back C$2 billion ($1.89 billion) of asset-backed commercial paper from clients after a global credit crunch froze the commercial paper market. The bank said it will purchase commercial paper held in money-market mutual funds managed by National Bank and Altamira, and pooled funds owned by units of the bank, according to a statement today. The Montreal-based bank will pay cash, offering 100 percent of the acquisition cost plus interest. ``They're trying to do the right thing by their clients and basically take that loss, if there is a loss,'' Ohad Lederer, an analyst at Veritas Investment Research in Toronto, said today. ``In the absence of doing this, the money market funds would have experienced much heavier than usual redemptions.''
I wonder if just getting some CD's at my bank is safe? They may be in the same paper but will the bank assure there will be no risk of loss?
Bank deposits are generally insured by the FDIC up to $100k. See link http://www.fdic.gov/ Check with your bank that they have FDIC insurance. However, mutual funds are seen as investments and technically are not covered.
the bottom line is that your money is only as safe as the banks loans. FDIC calls its sticker "a symbol of confidence" & that`s about alll it is,unfortunately. the courts have it covered to protect its banks....they term "deposits" or NOT funds that you/we deliver as a loan to our banke...your balance is therefor an IOU from bank to you. a bank failure simply means that the bank has renegged on it`s promise to pay you back. most of FDIC money comes from other banks...the stronger ones saving the weak ones....all the while charging stronger one higher prems.if enough banks collapsed ,there is no way in hell that everyone can be bailed out.....domino theory at it`s best.
more piker smack from villiage.........US$ devalued...banks collapsing like diminos........"um duh ,no big deal,dow is up 10 points"
I agree, this is definitely a huge opportunity for a trade like this. The problem is, the disparity could last for quite some time given the mess in the fixed income markets. There are futures that should cover this idea very easily, both fed funds and tbill related. Great idea, any other input out there????