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Tuesday, November 20, 2007

Another "Enhanced" Cash Fund Bites The Dust

GE covered its outside investors at 96 cents, BofA covered theirs, I believe, and Federated Investors is bailing out this fund, but how long can this go on?
Federated Investors Inc., the third- largest manager of money-market accounts in the U.S., bailed out its Enhanced Reserve cash fund as declines in mortgage-backed securities caused the credit markets to seize up.

Federated allowed clients to withdraw their money without losses, spokeswoman Lindsy Kollar said. She wouldn't disclose the size of the fund or the amount or cause of the losses. The Pittsburgh-based company wrote down $4.9 million of its $5 million investment in Enhanced Reserve, a partnership open only to accredited investors, according to a regulatory filing.
According to the article there is about 850 billion in similar funds. The losses are coming from the short-term mortgage backed debt, it seems.

Anyway, this is why I wouldn't recommend selling solid stocks with viable businesses, unless you are going to plunk the money in CDs in banks where it is insured. There's not much safe to invest in these days that's relatively liquid!

Hi MOM,rough times ahead for all,I think i'll plant extra beets and potatoes this week.Have a happy Thanksgiving!
M-o-M, a lot of real estate & housing bubble blogs are starting to sound like Art Bell opening up the phone lines around 3 Ayem. Or Survivalist screeds of the Eighties. The language is becoming Apocalyptic.

Buzzwords like "Total Global Economic Collapse", GOLD! GOLD! GOLD!, "Weimar Republic Hyperinflation", GOLD! GOLD! GOLD!, "Wheelbarrows of Government Fiat Paper", GOLD! GOLD! GOLD! and GOLD! Like they're rubbing their hands and smacking their lips with glee over what's happening.

(Next Step, judging from 20-year-old Survivalist screeds: "When Push Comes to Shove, The Most Plentiful Food Source in Our Cities Will Be HUMAN FLESH! PREPARE TO DO WHAT MUST BE DONE TO *SURVIVE*!")

Then there's the Literally Apocalyptic buzzwords like "Coming One World Currency", "Coming One World Economic System", and "Coming One World fill-in-the-blank", literally one step away from "SIX-SIXTY-SIX! DON'T TAKE THE MARK!"

I can't tell whether I've gone crazy or everyone else has. Whether I'm living inside an episode of South Park or not.

The Headless Unicorn Guy
Well, this is pretty near Armageddon for fixed income markets.

Also, if you bought gold a few years ago you are doing well!

Still, I maintain that there is a real economy outside of the funny money sphere that is going to revive. Getting there will not be easy, though.
Happy Thanksgiving, Tom! I love beets - plant a few for me.
It get's worse. Being the ever trusting soul, I looked into what my bank's "Government Only" had in it's portfolio. 60% of it is in Federal Home Loan Bank floating Rate Notes. I can't find anything about 'Full faith and Credit". Uh, oh.
CF - I think there's a clause in there somewhere that says closing your eyes, standing on one foot and singing "Everything's dandy, sugar and candy...." about 400 times insures you against loss.

No one's ever tested it. At this point our esteemed s_n_t_rs are going to be able to raise vast amounts of funds for their reelection from investors, wouldn't you agree?
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