Why your money market fund might not be as safe as you think

In its last report, my Canadian MMF had 57% of its assets in commercial paper, almost all of which was the so-called asset-backed variety (ABCP). Moreover, most of the issuers were Coventree conduits and others which have had trouble rolling over their paper and further trouble getting other liquidity from their banks.

I was unable to get any answers Monday from my broker when I asked what it currently held.

So, I sold it and will go to T-Bills.

This is no time to reach for yield in the money market. Check your MMF, especially if it's Canadian.

Opaque structured-finance debt seems to be in all sorts of Canadian MMFs, except for ones that can only buy government obligations. Managers have used it to boost the yield. This is the last place I expected to find this sort of risk.

Just when you think the market couldn't shock you anymore......

Most Money Market Funds are perfectly safe,especially the more conservative funds investing in Treasury Bills. However, the one's you do have to be concerned about are those put out by banks and credit unions seeking higher yields from short-term commercial paper. Who would have guessed commercial paper was "funny paper"? Welcome to Bush and Bernanke's great depression.

Just another reason to want isolationistic policies

While Mr. Cohan's comments about how money market funds are not as necessarily safe as people might imagine, I question the practicality of his advice in checking their holdings. I've never heard of a money market fund that issues daily reports of holdings. Every report I've ever gotten from the money market fund I use (Vanguard) is always showing past history.

It's the beginning of the end for the good ol' U S of A.
Get as much cash as you can get your hands on and hide it under your mattress! It's gonna be a rout.

It will not matter how much cash you stash under your bed. Read the Patriot Act. The government has prepared for the collapse of the economy but, like Enron, they will tell you everything is fine up to the actual end. When it happens (not IF) they will issue scrip like they did in WW2 occupied countries and if you think it's bad now, stick around. It all is due to GREED and trying to make billions NOW instead of looking long term. One day there will be a Chinese Flag over the White House and President Feng-ShiZhen will adresss the nation to let us know that we have a NEW BEGINNING and a bright future. We have no one to blame but ourselves.

Missing in all this is blame for those greedy bankers who started it: those who pushed subprime mortgages to people who should NEVER have gotten one in the first place. It was like a gigantic ponzi scheme. Buy a house for nothing down, hope the price escalates big time, then sell it and grab the cash. Except the concept DOES NOT WORK in a down housing market, or when blue collar workers with only COLA wage increases suddenly face a mortgage payment that has doubled after 2 years. When I bought my house, we needed to produce a 20% down payment to qualify for a mortgage. It was a miserable several years of scrimping before my husband and I could manage it. But manage it we did. Sorry, but everyone is NOT entitled to home ownership. Pushing this fantasy has helped to destabalize the worlds most stable economy. Requiring a standard downpayment would also take the speculators out of the housing market who have made their own nasty contribution to the problem. It would be nice if only the greedy slobs in this situation got hurt, but the waves of instability have the potential to hurt many innocent people. Its disgusting. I think we need much stronger regulation by the government of the home loan market. The country will pull out of this situation, but not before many are hurt.

I agree that we are to blame for this mess. We dont watch what is happening to the money we have and we dont care to take part in governing ourselves. This is going to be quite a downturn before it is over. I hope that the chinese flag wont be over the White House but at this moment who can tell.

i for one welcome our Chinese overlords

=^]

Hey, "Joe" and the rest of you ChickenLittle's - has the sky fallen yet? It's now the 25th and the Chinese flag isn't flying over the US Capitol yet..hmmm. I haven't seen hoardes of folks filing out of banks with bags full of cash to stuff in their mattress'..LOL. I just wonder, how is it you live your life in a state of constant depression and sense of defeat? Let's see..the U.S. Gross National Product is about 12 trillion a year - hmmm..a handful of mortgage lenders are in trouble - but being bailed out by private banks - and some idiot homeowners are being foreclosed on. Wow..lets all wring our hands and get out our signs to carry about the end of the world is near...LOL