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more links »"Short View: Money market mystery"
The Financial Times writes in "Short View: Money market mystery" that, "The most recent figures from the Federal Reserve show that in November, the amount of money held in US money market funds exceeded the amount in equity funds, for the first time in 15 years." FT continues, "The assets of equity funds had almost halved from $6,900bn in late 2007 to $3,600bn. Meanwhile, money market funds' assets rose to $3,700bn, double their level of three years earlier. According to Citigroup, retail money funds now account for more than 14 per cent of the total market capitalisation of the US stock market, far above the long-term average of 8 per cent." See also, S&P's release "Ratings Withdrawn On Eight Reserve Management Funds."
"Money Market Fund Insurance" Gets an 'A'
Time Gives "Money Market Fund Insurance" an 'A' Grade in its most recent issue. The brief says, "The Plan: After a well-known fund lost money in mid-September, assets in money-market funds dropped by $400 billion in two weeks. Money funds help provide loans for the day-to-day operations of large companies. So with investors fleeing these funds, many companies would have had to pay more for short-term loans or not gotten them at all. The government agreed to insure the $3.5 trillion that investors had in money funds in mid-September against losses. The Result: The move quickly reversed the run on money funds. What's more, it hasn't cost the government a penny. In fact, it has actually made money for the government. Nearly every money-market-fund provider signed up for the insurance, which has generated some $750 million in premiums paid to the government since the program started." "It could be seen as the most successful government program to date," Time quotes Peter Crane, who tracks the money-market industry.
San Francisco Fed's Yellen Cites "Improved Liquidity in the Money Markets"
Janet L. Yellen, President and CEO of the Federal Reserve Bank of San Francisco gave a speech yesterday citing "Improved Liquidity in the Money Markets". Yellen says, "To preview my answers, I will argue that the suite of programs that the Fed has already announced or put in place are an appropriate and creative response to alleviate strains from the ongoing credit crunch. The evidence suggests to me that they have improved liquidity in the money markets and lowered the cost of private credit. Going forward, asset purchases and lending programs could be expanded and extended to additional sectors impacted by the credit crunch." See also Bloomberg's "Fed Must Have 'Exit Strategy' for Loan Programs, Yellen Says".