It’s Official, SEC approves freezing of Money Market Funds

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  • Wed, Jan 27, 2010 - 10:31pm

    #11
    Peak Prosperity Admin

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    Re: It’s Official, SEC approves freezing of Money Market …

IMO it’s troubling, but like memorrison I don’t see this as really making a difference in the grand scheme of things.  TPTB would pull this stunt with or without the new rule if they felt it was in their own interest.  “It’s easier to ask forgiveness rather than permission” seems to be the order of the day in all facets of government and finance, so they’d just go ahead and do it and perform damage-control and attempt to justify their actions later.  All this does is make it a tad more convenient for them.  There is no practical difference in having an official right that would be ignored vs. not having that right in the first place.

But what I do read from this is that if they bothered to put such a rule in place (when they probably could get away with freezing funds anyway), it means the likelihood of such a future action being necessary (from their perspective at least) is considerably higher than normal.  I’m going to have to talk with my parents and make sure they don’t have too much cash sitting in money markets.

– Nickbert

  • Thu, Jan 28, 2010 - 12:17am

    #12
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    Re: It’s Official, SEC approves freezing of Money Market …

This is bad. Beyond bad.

Being absolutely realistic and honest with the assessment: 

  1. Financial institutions are using mark to fantasy accounting, thanks to Congress and the FASB. Without this mark to fantasy accounting they are and would be noticeably insolvent.
  2. Many institutions are hiding late mortgages, I’ve heard reports where people upside down in FL are over 12 months without any service of debt and in their house with only one NOD.
  3. Many institutions have more off balance derivatives than equity. JPMC 1.7 t in assets and 88 t in derivatives. 
  4. We have a 1.6 quadrillion shadow banking (derivative market) with at least 200 trillion in banks on US soil. When this goes, there isn’t going to be a bailout or savior of any shape or form. This is massive.

There is much more.

But with just 1-4 we could face systemic risk never seen before. The FDIC is insolvent. These institutions could fold. If the equities start tanking many will move funds into MM accounts backed by bonds. We are talking entire life savings here. Not letting them withdraw is criminal. It is stupidity. 

The SEC is the biggest bunch of morons on the face of the planet. If they need something to do they should go regulate naked short selling and take classes from guys like Markopolus. 

  • Thu, Jan 28, 2010 - 02:46pm

    #13
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    Re: It’s Official, SEC approves freezing of Money Market …

[quote=Davos]

This is bad. Beyond bad.. 

The SEC is the biggest bunch of morons on the face of the planet. If they need something to do they should go regulate naked short selling and take classes from guys like Markopolus. 

[/quote]

I don’t think they are morons.  I think they know exactly what they are doing.  They are protecting the system — not the consumer/saver.  I think they are criminals not morons.

  • Thu, Jan 28, 2010 - 02:57pm

    #14
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    Re: It’s Official, SEC approves freezing of Money Market …

[quote=docmims]

[quote=Davos]

This is bad. Beyond bad.. 

The SEC is the biggest bunch of morons on the face of the planet. If they need something to do they should go regulate naked short selling and take classes from guys like Markopolus. 

[/quote]

I don’t think they are morons.  I think they know exactly what they are doing.  They are protecting the system — not the consumer/saver.  I think they are criminals not morons.

[/quote]I see your point: Mine is they are a parasite that is killing the host – they too will starve off. Einstein that isn’t. Wink

  • Thu, Jan 28, 2010 - 03:11pm

    #15
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    Re: It’s Official, SEC approves freezing of Money Market …

I am totally with you on this Davos. This needs to somehow get out the the masses. This is our money not theirs. So now they are basically saying that we do not have a right to our own money or the right to decide what we do with it. I am calling all Americans to get the word out about what the SEC is doing. There will some very surprised people out there when this goes down. I am going to start by sending something into the editorial section. Do you mind if I use your write up above?

  • Thu, Jan 28, 2010 - 03:27pm

    #16
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    Re: It’s Official, SEC approves freezing of Money Market …

[quote=isjrb029]

I am totally with you on this Davos. This needs to somehow get out the the masses. This is our money not theirs. So now they are basically saying that we do not have a right to our own money or the right to decide what we do with it. I am calling all Americans to get the word out about what the SEC is doing. There will some very surprised people out there when this goes down. I am going to start by sending something into the editorial section. Do you mind if I use your write up above?

[/quote]Hello IsJrb- feel free. Just to clarify the “we” in we don’t have a right to our own money – I took mine. This is a time of insanity. I don’t believe any sane decisions will be made during this juncture. 

  • Thu, Jan 28, 2010 - 03:44pm

    #17
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    Re: It’s Official, SEC approves freezing of Money Market …

Davos I have been sitting on this decision. I pulled out in 08 to MM the night GW came on the tube with his eyes wide open. It scared the crap out of me. Then took a 20K loan out from it. I am in the same situation as others and would have to quit my job to get my money. Decisions decisions what  to do? Thanks for all you contribute and everybody else on this site.

  • Thu, Jan 28, 2010 - 03:55pm

    #18
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    Re: It’s Official, SEC approves freezing of Money Market …

Anybody have any knowledge of what kind of assets might be pushed into MM funds? Have read the Fed is anxious to find new sources of capital, and then there are all these toxic assets floating around?

  • Thu, Jan 28, 2010 - 10:42pm

    #19
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    Re: It’s Official, SEC approves freezing of Money Market …

I agree that the SEC must see the likely hood of another “run” on money market funds is probable so they voted on this action.  In reality, when TSHTF, money markets are subject to losing money like any other investment. Like Davos laid out –  People will flock to get out of the equity markets and go to MMFs which are invested in various debt instruments that will likely start to default.  People will start to lose money in MMF funds and the panic will really start.  The only safe place is treasury money market mutual funds or FDIC insured account they earn nothing right now, but unless our government defaults on the treasury bonds or the FDIC coverage those funds should not lose much.  IF and when the government defaults, the only thing I think will do well is physical assets like gold and silver.  In the mean time I am in the deflation camp.  I think gold and silver are going to drop like rocks, so people are going to jump out of those assets and move to money market funds…… the same people who bought it at 1,100 to 1,200….  This will get ugly, just when and how is it all going to play out… interesting times we live in!

 

 

  • Fri, Jan 29, 2010 - 01:47am

    #20
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    Re: It’s Official, SEC approves freezing of Money Market …

 

Please help me

If thing are so unusual why woukd gold drop in value ?

Luc

 

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