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’Money market funds meet moral hazard
Cast your minds back to August 2007, when money market funds were experiencing their first major crisis. It was far less sexy than what was to follow in September 2008 — when Reserve Primary notoriously broke the buck and sent money markets into panic — but it was one of the earlier manifestations of the credit crunch.
Repairing the buck
Horses and stable doors spring to mind (inevitably), but the SEC has finally come up with a series of new rules for money market funds in the US in the hope that we do not see a re-run of the Reserve Primary Fund debacle.
Why letting Lehman go did crush the financial markets
For some time now, the folks over at Clusterstock – notably John Carney – have led a challenge to a particularly virulent piece of received wisdom: that the failure of Lehman was necessarily an inflection point that took the severity of the financial crisis to a whole new level.
The Kanjorski meme and the end of the world, redux
It looked on Wednesday last week like Felix Salmon had had the last word on what he earlier dubbed the Kanjorski meme – a little piece of web flotsam alighted upon by a number of blogs, among them FT Alphaville – the gist of which went something like this:
Slow road to recovery
The most obvious and immediate casualty of the Lehman collapse was thefall of Reserve Primary, and with it, the Prime Money Market – Money Market funds investing in commercial paper such as that issued by banks.
Debt pilgrimage…
Here’s an incident that illustrates the supremacy of balance sheet strength in these troubled times rather well. And it’s from a chicken-producer no less.
Yesterday New York-listed Pilgrim’s Pride, which calls itself the largest poultry company in the US,
Blame Lehman?
Felix Salmon at Market Movers frames an “inevitable” question: would financial markets be in their current parlous state if Lehman had been bailed out?
I don’t buy it. Hank Paulson has been working on his RTC II plan for months now,
Revenge of the dull plodding nerds
The money market mutuals.
A note out from Citi’s North America bank team today answers a few questions people might have about money market funds’ exposure to Lehman debt in light of Reserve Primary’s collapse.
Fears grow of run on money market funds
Operators of US money market funds, which manage a record $3,500bn, were on Wednesday rushing to reassure investors while bracing themselves to make further bail-outs of their funds. There were fears of a run on funds following news that one had “broken the buck”.
Wednesday catastrophe: breaking the buck
Now this is rather spectacularly catastrophic. Reserve Primary Fund – a $64.8bn money market mutual – has broken the buck.
Money-market funds are said to break the buck when their net asset value falls below $1 a share.