MM fund "broke the buck"

Money Market Funds Enter a World of Risk


On Tuesday, the Reserve Primary Fund, a giant money market fund whose parent helped invent that investment, said its customers would lose money. Instead of each share being worth a dollar for every dollar invested, it said its customers’ shares were worth only 97 cents. In Wall Street parlance, it “broke the buck,” a rare occurrence.

So far, it appears that no other money market funds have fallen below a dollar a share. And other money market managers have hastened to reassure investors that their money is safe. But the Primary Fund’s announcement did raise this question: What, in today’s world, is truly safe?

Comment: Remember when these were considered super safe?


  1. JP, these are interesting times. I hope things get ironed out, but some think that it will only get worse. Here are some interesting statements from another website I frequent:

    American investors and politicians laughed at a Fortis Bank prediction in De Telegraaf on June 28, 2008:

    BRUSSELS/AMSTERDAM - Fortis expects a complete collapse of the US financial markets within a few days to weeks. That explains, according to Fortis, the series of interventions of last Thursday to retrieve € 8 billion. "We have been saved just in time. The situation in the US is much worse than we thought", says Fortis chairman Maurice Lippens. Fortis expects bankruptcies amongst 6000 American banks which have a small coverage currently. But also Citigroup, General Motors, there is starting a complete meltdown in the US."

    And here's an interesting conjecture:
    Interbank loans in the global setting are like the oil in your car - remove it and your engine will freeze up within minutes.

    What this means is that there is a panic run on the banks, by other banks. They don't know who will be next to fail, but they won't take chances.

    As citizens figure this out, there will be runs on consumer banks as well. Expect the government to declare a moratorium on withdrawals - like $200-$300 per day.

    JP, if you're still reading this after those long quotes, I just noticed that someone put up a thread at another site (which shall go unnamed) talking about the late Larry Burkett and his predictions of a possible economic crash. It will be interesting to see how much his views are mocked and scorned and how much he's derided as a right-wing conspiracy nut. Personally, I'd like nothing more than to see Burkett proven wrong and that he is a right-wing conspiratorial nut. But honestly, I'm beginning to wonder if he may just have been on to something. It may be weeks, months or years, or never, but I think his predictions have more of a chance of happening as of late than at any other time in recent history.

  2. I saw the Larry Burkett article on Sharper Iron.

    Frankly I'm surprised our financial system has not collapsed yet.


Any anonymous comments with links will be rejected. Please do not comment off-topic