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This Is The Government: Your Legal Right To Redeem Your Money Market Account Has Been Denied - The Sequel

Tyler Durden's picture




 

Two years ago, in January 2010, Zero Hedge wrote "This Is The Government: Your Legal Right To Redeem Your Money Market Account Has Been Denied" which became one of our most read stories of the year. The reason? Perhaps something to do with an implicit attempt at capital controls by the government on one of the primary forms of cash aggregation available: $2.7 trillion in US money market funds. The proximal catalyst back then were new proposed regulations seeking to pull one of these three core pillars (these being no volatility, instantaneous liquidity, and redeemability) from the foundation of the entire money market industry, by changing the primary assumptions of the key Money Market Rule 2a-7. A key proposal would give money market fund managers the option to "suspend redemptions to allow for the orderly liquidation of fund assets." In other words: an attempt to prevent money market runs (the same thing that crushed Lehman when the Reserve Fund broke the buck). This idea, which previously had been implicitly backed by the all important Group of 30 which is basically the shadow central planners of the world (don't believe us? check out the roster of current members), did not get too far, and was quickly forgotten. Until today, when the New York Fed decided to bring it back from the dead by publishing "The Minimum Balance At Risk: A Proposal to Mitigate the Systemic Risks Posed by Money Market FUnds". Now it is well known that any attempt to prevent a bank runs achieves nothing but merely accelerating just that (as Europe recently learned). But this coming from central planners - who never can accurately predict a rational response - is not surprising. What is surprising is that this proposal is reincarnated now. The question becomes: why now? What does the Fed know about market liquidity conditions that it does not want to share, and more importantly, is the Fed seeing a rapid deterioration in liquidity conditions in the future, that may and/or will prompt retail investors to pull their money in another Lehman-like bank run repeat?

Here is how the Fed frames the problem in the abstract:

This paper introduces a proposal for money market fund (MMF) reform that could mitigate systemic risks arising from these funds by protecting shareholders, such as retail investors, who do not redeem quickly from distressed funds. Our proposal would require that a small fraction of each MMF investor’s recent balances, called the “minimum balance at risk” (MBR), be demarcated to absorb losses if the fund is liquidated. Most regular transactions in the fund would be unaffected, but redemptions of the MBR would be delayed for thirty days. A key feature of the proposal is that large redemptions would subordinate a portion of an investor’s MBR, creating a disincentive to redeem if the fund is likely to have losses. In normal times, when the risk of MMF losses is remote, subordination would have little effect on incentives. We use empirical evidence, including new data on MMF losses from the U.S. Treasury and the Securities and Exchange Commission, to calibrate an MBR rule that would reduce the vulnerability of MMFs to runs and protect investors who do not redeem quickly in crises.

And further:

This paper proposes another approach to mitigating the vulnerability of MMFs to runs by introducing a “minimum balance at risk” (MBR) that could provide a disincentive to run from a troubled money fund. The MBR would be a small fraction (for example, 5 percent) of each shareholder’s recent balances that could be redeemed only with a delay. The delay would ensure that redeeming investors remain partially invested in the fund long enough (we suggest 30 days) to share in any imminent portfolio losses or costs of their redemptions. However, as long as an investor’s balance exceeds her MBR, the rule would have no effect on her transactions, and no portion of any redemption would be delayed if her remaining shares exceed her minimum balance.

 

The motivation for an MBR is to diminish the benefits of redeeming MMF shares quickly when a fund is in trouble and to reduce the potential costs that others’ redemptions impose on non?redeeming shareholders. Thus, the MBR would be an effective deterrent to runs because, in the event that an MMF breaks the buck (and only in such an event), the MBR would ensure a fairer allocation of losses among investors.

 

Importantly, an MBR rule also could be structured to create a disincentive for shareholders to redeem shares in a troubled MMF, and we show that such a disincentive is necessary for an MBR rule to be effective in slowing or stopping runs. In particular, we suggest a rule that would subordinate a portion of a redeeming shareholders’ MBR, so that the redeemer’s MBR absorbs losses before those of non?redeemers. Because the risk of losses in an MMF is usually remote, such a mechanism would have very little impact on redemption incentives in normal circumstances. However, if losses became more likely, the expected cost of redemptions would increase. Investors would still have the option to redeem, but they would face a choice between redeeming to preserve liquidity and staying in the fund to protect principal. Creating a disincentive for redemptions when a fund is under strain is critical in protecting MMFs from runs, since shareholders otherwise face powerful incentives to redeem in order to simultaneously preserve liquidity and avoid losses.

Basically, according to the Fed, the minimum balance would make the financial system more fair, reduce systemic risk and protect smaller investors who can be left with losses if larger investors in their fund withdraw cash first. The proposal would require a "small fraction" of each fund investor's recent balances to be segregated into a sinking fund to absorb losses if the fund is liquidated. Subsequently redemptions of these minimum balances at risk would be delayed for 30 days, "creating a disincentive to redeem if the fund is likely to have losses." In other words: socialized losses. Where have we seen this before?

But the real definition of what the Fed is suggesting is: capital controls. Once this proposal is implemented, the Fed, or some other regulator, will effectively have full control over how much money market cash is withdrawable from the system at any given moment. At $2.7 trillion in total, one can see why the Fed is suddenly concerned about this critical liquidity and capital buffer.

The problem is that just as we said over two years ago, a brute force attempt to preserve a liquidity buffer is guaranteed to fail, as MMF participants will simply quietly pull their money out at the convenience when they can, not when they have to. Europe had to learn this the hard way - only after Draghi cut the deposit rates to 0% did virtually every European money market fund become irrelevant overnight, resulting in a massive pull of cash from the MMF industry. However, instead of going into equities as the Group of 30 and other central planners had hoped, the hundreds of billions of euros merely shifted into already negative nominal rate fixed income instruments. And who can blame them: money market capital does not seek return on capital but return of capital, to borrow Bill Gross' favorite line.

Another clue as to why the Fed is once again suddenly interested in money markets comes from an article we wrote back in September 2009: "Rumored Source Of Reverse Repo Liquidity: Not Bank Reserves But Money Market Funds" in which we said that, "the Chairman is rumored to be considering money market funds as a liquidity source. Reuters points out that the Fed would thus have recourse to around $4-500 billion, and maybe more, of the $3.5 trillion sloshing in "money on the sidelines", roughly the same amount as MMs had just before the Lehman implosion."

In a nutshell, money market funds (much more on this below), have always been one of the most hated liquidity intermediaries by the central planners: they don't go into stocks, they don't go into bonds, they just sit there, collecting no interest, but more importantly, are inert, and can not be incorporated into the rehypothecation architecture of shadow banking.

And perhaps that is precisely why the Fed is pulling the scab off an old sore. Recall that for the past year, our primary contention has been that the core reason for all developed world problems is the gradual disappearance of good collateral and money good assets.

Even if the MMF cash were to shift, preemptively, into bonds, or any other "safe" investments, the assets backing the cash can them enter the traditional-shadow liquidity system and buy time: the only real goal at this point. In the process, the cash itself would be "securitized" and provide at least a year or so in additional breathing room for a system that has essentially run out of good liquidity, and in Europe, out of any collateral.

Expect more and more efforts to disgorge the $2.7 triliion in money market funds as the world gets closer and closer to D-Day. And what happens with MMF, will then progress to all other real asset classes as the government truly spreads out its capital controls wings.

* * *

For a more nuanced read through of the implications of money market redemption denials, we suggest rereading our analysis of precisely this topic from January 2010. Just keep in mind: in the interim we have had two and a half years of ZIRP and NIRP based asset depletion, which means that the marginal requirement to get MMF cash "back" into the system is now higher than ever.

This Is The Government: Your Legal Right To Redeem Your Money Market Account Has Been Denied

When Henry Paulson publishes his long-awaited memoirs, the one section that will be of most interest to readers, will be the former Goldmanite and Secretary of the Treasury's recollection of what, in his opinion, was the most unpredictable and dire consequence of letting Lehman fail (letting his former employer become the number one undisputed Fixed Income trading entity in the world was quite predictable... plus we doubt it will be a major topic of discussion in Hank's book). We would venture to guess that the Reserve money market fund breaking the buck will be at the very top of the list, as the ensuing "run on the electronic bank" was precisely the 21st century equivalent of what happened to banks in physical form, during the early days of the Geat Depression. Had the lack of confidence in the system persisted for a few more hours, the entire financial world would have likely collapsed, as was so vividly recalled by Rep. Paul Kanjorski, once a barrage of electronic cash withdrawal requests depleted this primary spoke of the entire shadow economy. Ironically, money market funds are supposed to be the stalwart of safety and security among the plethora of global investment alternatives: one need only to look at their returns to see what the presumed composition of their investments is. A case in point, Fidelity's $137 billion Cash Reserves fund has a return of 0.61% YTD, truly nothing to write home about, and a return that would have been easily beaten putting one's money in Treasury Bonds. This is not surprising, as the primary purpose of money markets is to provide virtually instantaneous access to a portfolio of practically risk-free investment alternatives: a typical investor in a money market seeks minute investment risk, no volatility, and instantaneous liquidity, or redeemability. These are the three pillars upon which the entire $3.3 trillion money market industry is based.

Yet new regulations proposed by the administration, and specifically by the ever-incompetent Securities and Exchange Commission, seek to pull one of these three core pillars from the foundation of the entire money market industry, by changing the primary assumptions of the key Money Market Rule 2a-7. A key proposal in the overhaul of money market regulation suggests that money market fund managers will have the option to "suspend redemptions to allow for the orderly liquidation of fund assets." You read that right: this does not refer to the charter of procyclical, leveraged, risk-ridden, transsexual (allegedly) portfolio manager-infested hedge funds like SAC, Citadel, Glenview or even Bridgewater (which in light of ADIA's latest batch of problems, may well be wishing this was in fact the case), but the heart of heretofore assumed safest and most liquid of investment options: Money Market funds, which account for nearly 40% of all investment company assets. The next time there is a market crash, and you try to withdraw what you thought was "absolutely" safe money, a back office person will get back to you saying, "Sorry - your money is now frozen. Bank runs have become illegal." This is precisely the regulation now proposed by the administration. In essence, the entire US capital market is now a hedge fund, where even presumably the safest investment tranche can be locked out from within your control when the ubiquitous "extraordinary circumstances" arise. The second the game of constant offer-lifting ends, and money markets are exposed for the ponzi investment proxies they are, courtesy of their massive holdings of Treasury Bills, Reverse Repos, Commercial Paper, Agency Paper, CD, finance company MTNs and, of course, other money markets, and you decide to take your money out, well - sorry, you are out of luck. It's the law.

A brief primer on money markets

A very succinct explanation of what money markets are was provided by none other than SEC's Luis Aguilar on June 24, 2009, when he was presenting the case for making even the possibility of money market runs a thing of the past. To wit:

 

Money market funds were founded nearly 40 years ago. And, as is well known, one of the hallmarks of money market funds is their ability to maintain a stable net asset value — typically at a dollar per share. In the time they have been around, money market funds have grown enormously — from $180 billion in 1983 (when Rule 2a-7 was first adopted), to $1.4 trillion at the end of 1998, to approximately $3.8 trillion at the end of 2008, just ten years later. The Release in front of us sets forth a number of informative statistics but a few that are of particular interest are the following: today, money market funds account for approximately 39% of all investment company assets; about 80% of all U.S. companies use money market funds in managing their cash balances; and about 20% of the cash balances of all U.S. households are held in money market funds. Clearly, money market funds have become part of the fabric by which families, and companies manage their
financial affairs.

When the Reserve fund broke the buck, and it seemed like an all-out rout of money markets was inevitable, the result would have been a virtual elimination of capital access by everyone: from households to companies. This reverberated for months, as the also presumably extremely safe Commercial Paper market was the next to freeze up, side by side with all traditional forms of credit. Only after the Fed stepped in an guaranteed money markets, and turned on the liquidity stabilization first, then quantitative easing spigot second, did things go back to some sort of new normal. However, it is only a matter of time before the patchwork of band aids holding the dam together is once again exposed, and a new, stronger and, well, "improved" run on the electronic bank materializes. It is precisely this contingency that the SEC and the administration are preparing for by "empowering money market fund boards of directors to suspend redemptions in extraordinary circumstances to protect the interests of fund shareholders."

A little more on money markets:

Money market funds seek to limit exposure to losses due to credit, market, and liquidity risks. Money market funds, in the United States, are regulated by the Securities and Exchange Commission's (SEC) Investment Company Act of 1940. Rule 2a-7 of the act restricts investments in money market funds by quality, maturity and diversity. Under this act, a money fund mainly buys the highest rated debt, which matures in under 13 months. The portfolio must maintain a weighted average maturity (WAM) of 90 days or less and not invest more than 5% in any one issuer, except for government securities and repurchase agreements.

Ironically, the proposed change to Rule 2a-7 seeks to make dramatic changes to the composition of MMs: from 90 days, the WAM would get shortened to 60 days. And this is occurring at a time when the government is desperately seeking to find ways of extending maturities and durations of short-term debt instruments: by reverse rolling the $3.2 trillion industry, the impetus will be precisely the reverse of what should be happening, as more ultra-short maturity instruments are horded up, leaving a dead zone in the 60-90 day maturity window. Some other proposed changes to 2a-7 include "prohibiting the funds from investing in Second Tier securities, as defined in Rule 2a-7. Eligible securities would be redefined as securities receiving only the highest, rather than the highest two, short-term debt ratings from a requisite nationally recognized securities rating  organization. Further, money market funds would be permitted to acquire long-term unrated securities only if they have received long-term ratings in the highest two, rather than the highest three, ratings categories." In other words, let's make them so safe, that when the time comes, nobody will have access to them. Brilliant.

The utility of money market funds has long been questioned by such systemically-embedded financial luminaries as Paul Volcker (more on this in a minute). After all, what are money markets if merely an easy, and 401(k)-eligible option to not invest in equity or bonds, but in "paper" which is cash in all but name (maybe not so much after the proposed Rule change passes). And as money markets account for a huge portion of the $11 trillion of mutual fund assets as of November (per ICI, whose opinion, incidentally, was instrumental in shaping future money market policy), $3.3 trillion to be precise, and second only to stock funds at $4.8 trillion, one can see why an administration, hell bent on recreating a stock-price bubble, would do all it can to make money markets extremely unattractive. In fact, the current administration has been on a roll on this regard: i) keeping money market rates at record lows, ii) removing money market fund guarantees and iii) and even allowing reverse repos to use money markets as sources of liquidity (because we all know that the collateral behind the banks shadow banking arrangement with the Fed are literally crap; as we have noted before, we will continue claiming this until the Fed disproves us by opening up their books for full inspection. Until then, yes, the Fed has lent out hundreds of billions against bankrupt company equity, as we have pointed out in the past).  Money Markets are the easiest recourse that idiotic class of Americans known as "savers" has to give the big bank oligarchs, the Fed and the bubble-inflating Administration the middle finger. As you will recall, recently Arianna Huffington has been soliciting all Americans do just that: to move their money out of the tentacles of the TBTFs. In essence, the money market optionality is precisely the equivalent of moving physical money from TBTFs to community banks in the "shadow economy." Because where there is $3.3 trillion out of $11, there could easily be $11 trillion out of $11, which would destroy the whole concept of Fed-spearheaded asset-price inflation, and would destroy overnight the TBTFs, as equities would once again find their fair value. It is no surprise then, that the current financial system, and its political cronies loathe the concept of Money Markets, and have done all they could to make them as unattractive as possible. Below is a chart of the Net Assets held by all US money market funds and the number of money market mutual funds since January 2008:

Obviously, attempts to push capital out of MMs have succeeded: after peaking at $3.9 trillion, currently money markets hold a two year low of $3.27 trillion. Furthermore, the number of actual money market fund operations has been substantially hit: from 2,078 in the days after the Lehman implosion, this is now down to 1,828, a 12% reduction. At this rate soon there won't be all that many money market funds to chose from. While the AUM reduction is explicable through the previously mentioned three factors, the actual reduction in number of funds is on the surface not quite a straightforward, and will likely be the topic a future Zero Hedge post. Although, the impetus of managing money when one can return at most 0.6% annually, and charge fees on this "return" may be missing - the answer may be far simpler than we think. Why run a money market, when the Fed will be happy to issue you a bank charter, and you can collect much more, risk free, courtesy of the vertical yield curve.

Yet what is strange is that even with all the adverse consequences of holding cash in Money Markets, the total AUM of this "safest" investment option is still substantial, at nearly $3.3 trillion as of December 30, a big decline yes, but a decline that should have been much greater considering even the president since March 3 has been beckoning his daily viewership to invest in cheap stocks courtesy of low "profit and earning ratios" (that, and the specter of President's Working Group on Financial Markets). Could this action, whereby investors will no longer have access to money that historically has been sacrosanct and reachable and disposable on a moment's notice, be the last nail in the coffin of money markets? We believe so, however, we are not sure if it will attain the desired effect. With an aging baby boomer population, which would rather burn their money than invest in the stock market again and relive the roller-coaster days of late 2008 and early 2009, the plan may well backfire, and result in even more money leaving the shadow system and entering such tangible objects as deposit accounts (at community banks, of course), mattresses and socks. And speaking of the President's Working Group...

The Group of Thirty

When discussing the shadow economy, it is only fitting to discuss the shadow decision-makers. In this regard, the Group of 30, is to the traditional economic decision-making process as the President's Working Group is to capital markets. Taken from the website, the self-description reads innocently enough:

The Group of Thirty, established in 1978, is a private, nonprofit, international body composed of very senior representatives of the private and public sectors and academia. It aims to deepen understanding of international economic and financial issues, to explore the international repercussions of decisions taken in the public and private sectors, and to examine the choices available to market practitioners and policymakers. The Group's members meet in plenary sessions twice a year with select guests to discuss important economic, financial and policy developments. They reach out to a wider audience in seminars and symposia.  Of most importance to our membership and supporters is the annual International Banking Seminar.

Sounds like any old D.C.-based think tank... until one looks at the roster of members:

  • Paul A. Volcker, Chairman of the Board of Trustees, Group of Thirty, Former Chairman, Board of Governors of the Federal Reserve System
  • Jacob A. Frenkel, Chairman, Group of Thirty, Vice Chairman, American International Group, Former Governor, Bank of Israel
  • Jean-Claude Trichet, President, European Central Bank, Former Governor, Banque de France
  • Zhou Xiaochuan, Governor, People’s Bank of China, Former President, China Construction Bank, Former Asst. Minister of Foreign Trade
  • Yutaka Yamaguchi, Former Deputy Governor, Bank of Japan, Former Chairman, Euro Currency Standing Commission
  • William McDonough, Vice Chairman and Special Advisor to the Chairman, Merrill Lynch, Former Chairman, Public Company Accounting Oversight Board, Former President, Federal Reserve Bank of New York
  • Richard A. Debs, Advisory Director, Morgan Stanley, Former President, Morgan Stanley International, Former COO, Federal Reserve Bank of New York
  • Abdulatif Al-Hamad, Chairman, Arab Fund for Economic and Social Development, Former Minister of Finance and Minister of Planning, Kuwait
  • William R. Rhodes, Senior Vice Chairman, Citigroup, Chairman, President and CEO, Citicorp and Citibank
  • Ernest Stern, Partner and Senior Advisor, The Rohatyn Group, Former Managing Director, JPMorgan Chase, Former Managing Director, World Bank
  • Jaime Caruana, Financial Counsellor, International Monetary Fund, Former Governor, Banco de España, Former Chairman, Basel Committee on Banking Supervision
  • E. Gerald Corrigan, Managing Director, Goldman Sachs Group, Inc., Former President, Federal Reserve Bank of New York
  • Andrew D. Crockett, President, JPMorgan Chase International, Former General Manager, Bank for International Settlements
  • Guillermo de la Dehesa Romero, Director and Member of the Executive Committee, Grupo Santander, Former Deputy Managing Director, Banco de España, Former Secretary of State, Ministry of Economy and Finance, Spain
  • Mario Draghi, Governor, Banca d’Italia, Chairman, Financial Stability Forum, Member of the Governing and General Councils, European Central Bank, Former Vice Chairman and Managing Director, Goldman Sachs International
  • Martin Feldstein, Professor of Economics, Harvard University, President Emeritus, National Bureau of Economic Research, Former Chairman, Council of Economic Advisers
  • Roger W. Ferguson, Jr., Chief Executive, TIAA-CREF, Former Chairman, Swiss Re America Holding Corporation, Former Vice Chairman, Board of Governors of the Federal Reserve System
  • Stanley Fischer, Governor, Bank of Israel, Former First Managing Director, International Monetary Fund
  • Philipp Hildebrand, Vice Chairman of the Governing Board, Swiss National Bank, Former Partner, Moore Capital Management
  • Paul Krugman, Professor of Economics, Woodrow Wilson School, Princeton University, Former Member, Council of Economic Advisors
  • Kenneth Rogoff, Thomas D. Cabot Professor of Public Policy and Economics, Harvard University, Former Chief Economist and Director of Research, IMF

and, of course:

  • Timothy F. Geithner, President and Chief Executive Officer, Federal Reserve Bank of New York, Former U.S. Undersecretary of Treasury for International Affairs
  • Lawrence Summers, Charles W. Eliot University Professor, Harvard University, Former President, Harvard University, Former U.S. Secretary of the Treasury

and many more. Given the choice of being a fly on the wall at a G7 meeting or that of the "Group of 30", we would be very curious to see who would pick the former over the latter. These are the people, whose "reports" and groupthink determines the financial fate of the world: their vested interest in perpetuating the status quo is second to none. Which is why we read with great interest a recent paper from the Group of 30: Financial Reform, A Framework for Financial Stability, released on January 15, 2009, deep in the heart of the crisis. While the paper has enough insight for many, non-related posts (we are already working on several), we will focus on the policy recommendations presented for money market funds.

Money Market Mutual Funds and Supervision


Recommendation 3:

 

a. Money market mutual funds wishing to continue to offer bank-like services, such as transaction account services, withdrawals on demand at par, and assurances of maintaining a stable net asset value (NAV) at par should be required to reorganize as special-purpose banks, with appropriate prudential regulation and supervision, government insurance, and access to central bank lender-of-last-resort facilities.

 

b. Those institutions remaining as money market mutual funds should only offer a conservative investment option with modest upside potential at relatively low risk. The vehicles should be clearly differentiated from federally insured instruments offered by banks, such as money market deposit funds, with no explicit or implicit assurances to investors that funds can be withdrawn on demand at a stable NAV. Money market mutual funds should not be permitted to use amortized cost pricing, with the implication that they carry a fluctuating NAV rather than one that is pegged at US$1.00 per share.

The phrasing of "with no explicit or implicit assurances to investors that funds can be withdrawn on demand at a stable NAV" should be sufficient to whiten the hairs of every proponent of money markets as a "safe" investment alternative. Yet what the SEC has done, is to take the Group of 30 recommendation, and take it to the next level: not only will funds not have explicit assurance of any kind vis-a-vis funding, but in fact, the redemption of said funds would be legally barred upon "extraordinary circumstances."

Rule 22e-3

From the SEC:

Proposed rule 22e–3(a) would permit a money market fund to suspend redemptions if: (i) The fund’s current price per share, calculated pursuant to rule 2a–7(c), is less than the fund’s stable net asset value per share; (ii) its board of directors, including a majority of directors who are not interested  persons, approves the liquidation of the fund; and (iii) the fund, prior to suspending redemptions, notifies the Commission of its decision to liquidate and suspend redemptions, by electronic mail directed to the attention of our Director of the Division of Investment Management or the Director’s designee. These proposed conditions are intended to ensure that any suspension of redemptions will be consistent with the underlying policies of section 22(e). We understand that suspending redemptions may impose hardships on investors who rely on their ability to redeem shares. Accordingly, our proposal is limited to permitting suspension of this statutory protection only in extraordinary circumstances. Thus, the proposed conditions, which are similar to those of the temporary rule, are designed to limit the availability of the rule to circumstances that present a significant risk of a run on the fund. Moreover, the exemption would require action of the fund board (including the independent directors), which would be acting in its capacity as a fiduciary. The proposed rule contains an additional provision that would permit us to take steps to protect investors. Specifically, the proposed rule would permit us to rescind or modify the relief provided by the rule (and thus require the fund to resume honoring redemptions) if, for example, a liquidating fund has not devised, or is not properly executing, a plan of liquidation that protects fund shareholders. Under this provision, the Commission may modify the relief ‘‘after appropriate notice and opportunity for hearing,’’ in accordance with section 40 of the Act.

Lots of keywords there: "fiduciary", "impose hardships" but most notably "permit us to take steps to protect investors." Uh, SEC, no thanks. We can protect ourselves. Your protection so far has resulted in the Madoff scandal, the BofA fiasco, billions in insider trading profits and not one guilty person, who did not manage to escape unscathed with merely a wrist slap in the form of some pathetic fine. With all due respect, SEC, any proposal that involves you acting to "protect" us should be immediately banned and any further discussion ended.

Especially in this case: what the SEC is proposing is simple - the entire market structure has been converted to a hedge fund. When investors hear the word "suspend redemptions" they envisioned a battered, pro-cyclical, leveraged, permabullish hedge fund, that suddenly "found itself" down 30, 40, 50 or more percent, and to avoid instantaneous liquidation, had to bar redemptions. Forgive us, but is the SEC confirming that the entire market is now one big casino, one big government subsidized hedge fund, where as long as things go up, all is good, but the second things take a leg down, just like any ponzi, nobody will be allowed to pull their money? Maybe Madoff should have created the same redemption suspension: his fund would still be alive and thriving, now that the government has become the biggest ponzi conductor of all time. And nobody would have been the wiser. But instead, the Securities and Exchange Commission, in discussions with the Group of 30, Barney Frank, and any other conflicted individuals who only care about protecting their own money for one more year, has decided, in its infinite wisdom, to make money markets a complete scam. And this is the gist of regulatory reform in America.

Conclusion

At this point it is without doubt that even the government understands that when things turn sour, and they will, the run on the bank will be unavoidable: their solution - prevent money from being dispensed, when that moment comes. The thing about crises, be they liquidity, solvency, or plain-vanilla, is that "price discovery" occurs all at once, and at the very same time. And all too often, investors "discover" they were lied to, as the emperor, in any fiat system, always has no clothes. Just like in September 2008, when the banks were forced to look at each-others' balance sheet and realize that there are no real assets on the left backing up the liabilities on the right, so the moment of enlightenment occurs are the most importune time: just ask Hank Paulson. Had he known his action of beefing up Goldman's FICC trading axes would have resulted in the "Ice-Nine'ing" (to borrow a Mark Pittman term) of money markets, who knows- maybe Lehman would have still been alive. Perhaps risking the cash access of 20% of US households and 80% of companies was not worth the few extra zeroes in Goldman's EPS. But we will never know. What we will know, is that now i) the government is all too aware that the market has become one huge ponzi, and that all investment vehicles, even the safest ones, are subject to bank runs, and ii) that said bank runs, will occur. It is only a matter of time. And just as the president told everyone directly to buy the market on March 3, so the SEC, the Group of 30, and Barney Frank are telling us all, much less directly, to get the hell out of Dodge. Alternatively, the game of "last fool in", holding the burning hot potato, can continue indefinitely, until such time as the marginal utility of each and every dollar printed by Ben Bernanke is zero.

 

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Thu, 07/19/2012 - 19:26 | 2634170 Racer
Racer's picture

If MFG and others have stolen money from accounts held in their 'safe' keeping and not brought to trial and money not returned to the rightful owner, you should NOT trust ANY bankster to hold any more money than the bare minimum in your account to pay bills ....if you insist on having a bank account!

STARVE THE BEAST AND KILL IT

Thu, 07/19/2012 - 22:01 | 2634604 disabledvet
disabledvet's picture

Are you arguing that one should not be able to borrow against your 401k as well?

Fri, 07/20/2012 - 00:10 | 2634857 disabledvet
disabledvet's picture

it is quite popular in these here parts to think "banks work for governments" and vice versa. are you all sure about this however? some do of course...

Thu, 07/19/2012 - 19:28 | 2634178 EvlTheCat
EvlTheCat's picture

All ready out.  Love to all you fine folks on ZH.  Even the trolls.

Thu, 07/19/2012 - 19:55 | 2634289 Goldilocks
Goldilocks's picture

Men are haunted by the vastness of eternity.
And so we ask ourselves...
...will our actions echo across the centuries?
Will strangers hear our names long after we're gone...
...and wonder who we were...
...how bravely we fought...
...how fiercely we loved?

Thu, 07/19/2012 - 20:55 | 2634438 francis_sawyer
francis_sawyer's picture

Hard to believe someone would downvote Herodotus...

Thu, 07/19/2012 - 21:36 | 2634552 EvlTheCat
EvlTheCat's picture

Must have been the same dumb bastard who up voted MomoTrader..

Thu, 07/19/2012 - 21:55 | 2634589 Goldilocks
Goldilocks's picture

"...lots of love,"

~//~

Clarke & Dawe
http://www.youtube.com/user/ClarkeAndDawe

Clarke and Dawe - Comfortably Through to the next Round
http://www.youtube.com/watch?v=QecC0hrS9RM (2:40)

Clarke and Dawe - All Birds are Cats.
http://www.youtube.com/watch?v=eIl1VuGTk3g (2:12)

Thu, 07/19/2012 - 22:21 | 2634659 EvlTheCat
EvlTheCat's picture

ROFL *tears in his eyes* *wets his trowsers* 

Thanks for the laugh Goldilocks!

Thu, 07/19/2012 - 19:30 | 2634181 buzzsaw99
buzzsaw99's picture

When the fed raised rates I was getting 5% risk free. Those were happy days. Two years later that MM fund was closed due to zirp. Thanks for nothing to the bernank. :extends flipper finger:

Thu, 07/19/2012 - 19:32 | 2634191 RobotTrader
RobotTrader's picture

Even more reason for investors to dump their money market funds and flee to either Uncle Gorilla Notes or to invest in XOM, AAPL, or IBM stock.

 

No wonder bonds have been on a tear, as Uncle Gorilla (aka U.S. Government) is always "good" on his promises.

And no wonder stocks are skying, XOM, KO, PG, IBM have better credit ratings than Uncle Gorilla himself, with huge cash hoards to boot.

Thu, 07/19/2012 - 19:37 | 2634209 Quisat_Sadarak
Quisat_Sadarak's picture

I thought you were going to say get into AAPL and NFLX.

Thu, 07/19/2012 - 19:43 | 2634239 zero19451945
zero19451945's picture

It always changes doesn't it?

He scratches the momos off the list after they blow up and picks another ticker. LOL

Thu, 07/19/2012 - 19:41 | 2634229 kito
kito's picture

robo reminds me of the little kid standing behind his daddy, mocking the group of bigger kids.....and then one day, at the most inopportune time, daddy isnt there for him.................

Thu, 07/19/2012 - 21:21 | 2634507 HungrySeagull
HungrySeagull's picture

Daddy is tired of the walks in the neighborhood.

Large kids are simple brutes.

Now when you get old enough to be a large kid, the little kids were nothing more than a annoyance.

Thu, 07/19/2012 - 19:45 | 2634247 resurger
resurger's picture

man fuck you seriously, you are fucking corny and lame

Thu, 07/19/2012 - 20:02 | 2634308 Ignorance is bliss
Ignorance is bliss's picture

Are you a Gov't person paid to post? How much do they pay?

Thu, 07/19/2012 - 21:12 | 2634476 holdbuysell
holdbuysell's picture

You've only gone deeper into the Matrix. Think about it.

Thu, 07/19/2012 - 19:35 | 2634202 1C3-N1N3
1C3-N1N3's picture

the "Ice-Nine'ing" (to borrow a Mark Pittman term) of money markets

 

I didn't do that! Someone else did it for me, I swear!

Thu, 07/19/2012 - 19:37 | 2634206 pain_and_soros
pain_and_soros's picture

Nice digging...

Working Group on Financial Markets (i.e., the PPT) consists of:

all your cash belong to us...

 

Thu, 07/19/2012 - 19:36 | 2634208 LeisureSmith
LeisureSmith's picture

My tired eyes is not up for this comprehensive article....anyone care to make a summary for the lazy and tired? or else i must capiulate and bid you adieu....or read it tomorrowzzz

Thu, 07/19/2012 - 19:39 | 2634218 pain_and_soros
pain_and_soros's picture

Get all of your cash out of MMF ASAP, or you will lose it (and by physical gold with it)

 

Thu, 07/19/2012 - 19:44 | 2634242 Quisat_Sadarak
Quisat_Sadarak's picture

Gold looks sparkly in goldschlager... but unfortunately it has little essential nutritional value. How much gold would you trade for your limited cache of emergency food? And there was nowhere else to replenish your food supplies?

Thu, 07/19/2012 - 19:39 | 2634220 Quisat_Sadarak
Quisat_Sadarak's picture

Summary: We are all screwed. Money Market funds are no longer safe. Hope you have a warm hole to live in, and some seeds stored for your crisis garden. Look me up when the fog of collapse clears.

Thu, 07/19/2012 - 20:05 | 2634320 LeisureSmith
LeisureSmith's picture

Danke.

Warm hole: check

Seeds: check

My precious: check

My lucky waiting pants: check.

Off topic, but here is a good who's who article about the Syrian opposition by Charlie Skelton for anyone interested. http://www.guardian.co.uk/commentisfree/2012/jul/12/syrian-opposition-do...

And now for something completly different....sleep.

Thu, 07/19/2012 - 19:42 | 2634230 buzzsaw99
buzzsaw99's picture

Time to go to the mattresses.

Thu, 07/19/2012 - 19:47 | 2634259 Ineverslice
Ineverslice's picture

We hit Bruno Tataglia at 5 this morning...

Now who was it that approached you, Barzinni or Tataglia?

Thu, 07/19/2012 - 19:53 | 2634273 buzzsaw99
buzzsaw99's picture

Sonny: You're telling me Tataglia's gonna guarantee our investment?

Thu, 07/19/2012 - 20:02 | 2634309 Tippoo Sultan
Tippoo Sultan's picture

"Bene, Don Corleone. I need a man who has powerful friends. I need a million dollars in cash. I need, Don Corleone, all of those politicians that you carry around in your pocket, like so many nickels and dimes."

Thu, 07/19/2012 - 21:11 | 2634332 Ineverslice
Ineverslice's picture

I agreed to meet you, they told me u were a serious man....but I must say no to you,

...this MM business, is a little bit dangerous.

Thu, 07/19/2012 - 21:22 | 2634513 HungrySeagull
HungrySeagull's picture

Say to yourself:

Fuck Paper, Buy Gold and Silver.

TAKE delivery of the shiny coins.

Get cotton gloves.

Thu, 07/19/2012 - 23:43 | 2634807 Quisat_Sadarak
Quisat_Sadarak's picture

Ok... I don't get the cotton gloves?
So you can fondle your stash of coins without getting goo on them?

Thu, 07/19/2012 - 19:38 | 2634216 kito
kito's picture

always remember, your money in their account is their money...............

Thu, 07/19/2012 - 19:40 | 2634221 SilverTree
SilverTree's picture

Its MY money and I want it NOW!

Thu, 07/19/2012 - 19:41 | 2634228 resurger
resurger's picture

(Insert Here) now belongs to us!!!

Thu, 07/19/2012 - 19:42 | 2634233 fatlibertarian
fatlibertarian's picture

As the country deteriorates, the people who created this mess will attempt to outlaw the result of their policies through capital controls, executive orders and laws. It's important to note the role that money plays in a society that's weakening or collapsing. Every American alive today has never had a situation where they fear they won't be able to buy food next week. None of us know, or truly understand the kind of tyrannical moves the state will take to ensure it's survival, let alone how individuals start killing and fighting. Hopefully we don't have a dangerous collapse, but I don't see how we can't. Most likely the collapse will be papered over with debt and tyranny in a way that we can't respond like is necessary.  Then government will feel the need to become more brutal and tyrannical in response as the cycle grows. The President, in a time of economic collapse, will seek to take control over major industry in order to "deliver food and shelter to the needy". Some states will resist and the federal government will send in troops and it'll quickly devolve into a civil war. It might be best for states to try to cecede right now, before a collapse. Vote themselves out of the Union. OF course this has it's side-effects but it's better to do it now, rather than in a time of crises. Because progressives use crises as a means to achieve their tyrannical controls.

Or, perhaps none of this will happen.

Thu, 07/19/2012 - 20:01 | 2634300 pain_and_soros
pain_and_soros's picture

Every American alive today has never had a situation where they fear they won't be able to buy food next week. None of us know, or truly understand the kind of tyrannical moves the state will take to ensure it's survival, let alone how individuals start killing and fighting. Hopefully we don't have a dangerous collapse, but I don't see how we can't.

Agree

Most likely the collapse will be papered over with debt and tyranny in a way that we can't respond like is necessary.

Presidential powers will increase (never let a crisis go to waste) & he will rule by decree...the citizenry will become impoverished overnight when the bank runs start & they lose their assets when the financial instituions are threatened with collapse and are only "resuced" by hyperinflationary money printing...which by the time you get your hands on "your" money, it will be worthless...

get ready to go on food stamps to get your meagre ration of food to survive (perhaps Obamacare will sell it as a means to address obesity in America)...and get ready for a rationing of gasoline that will put the lineups at the gas station of the 73 & 79 oil embargos to shame...

Expect martial law to be imposed to curb chaos & violence running amuk in most larger cities, tho they'll probably only be able to protect food & gas distribution - for any other security, you are on your own...

Some states will resist and the federal government will send in troops and it'll quickly devolve into a civil war. It might be best for states to try to cecede right now, before a collapse. Vote themselves out of the Union. OF course this has it's side-effects but it's better to do it now, rather than in a time of crises.

Too late for voting to cecede...the collapse, when it happens will be sudden & a surprise to 99% as to its severity...the FedGovt will move into any power vacuum...tho I think some states (more rurual in nature) will do better than others...

Or, perhaps none of this will happen.

I think that is mere wishful thinking

 

Fri, 07/20/2012 - 00:30 | 2634877 post turtle saver
post turtle saver's picture

I voted you up merely for spelling "martial law" correctly.

Fri, 07/20/2012 - 08:18 | 2635315 _underscore
_underscore's picture

..and when it comes, the change from marshall law to martial law will be as quick as changing the spelling.

Thu, 07/19/2012 - 20:04 | 2634303 XitSam
XitSam's picture

Hmm, a variation on Cloward-Piven strategy where financial collapse takes the place of rioters in the streets (although that would happen too.)

Edit: I've recently been watching Amerika, hadn't seen it before. http://www.youtube.com/playlist?list=PL6B42A52B2363A16C 

Thu, 07/19/2012 - 22:33 | 2634692 Withdrawn Sanction
Withdrawn Sanction's picture

Then government will feel the need to become more brutal and tyrannical in response as the cycle grows. The President, in a time of economic collapse, will seek to take control over major industry in order to "deliver food and shelter to the needy".

No doubt, the tyrants would LIKE to do that, but soldiers and cops dont work for free.  When the payments and clearing systems lock up as they would in the scenarios described and as they did briefly in 2008, that means the thugs and enforcers aren't getting paid either. Besides, they're outnumbered at least 10 to 1....and they know it.  That's why they're floating these last ditch tactical ideas

Thu, 07/19/2012 - 19:43 | 2634236 Hannibal
Hannibal's picture

Cash out folks, if you dont hold you dont own it! Buy silver!

Thu, 07/19/2012 - 19:50 | 2634244 Fail2Deliver
Fail2Deliver's picture
And this is why I write in every post to every negative story about Greece, Libor, Europe, Iran,,,etc the following: "This is obviously BULLISH for the ES" You see, the market can NOT fall. There can NOT be another panic like 2008. The banks have made NO changes to their behavior. THE BANKS DO NOT HAVE THE CASH TO PAY OUT LIQUIDATED ACCOUNTS!!! Bank or market runs will NOT be allowed. The markets must remain above 12,500. Watch that level. QE Infinity if the market challenges that level. This is obviously bullish for the ES, obviously.
Thu, 07/19/2012 - 21:13 | 2634472 surf0766
surf0766's picture

They tell everyone what they will do just forces the run earlier.

Thu, 07/19/2012 - 19:45 | 2634251 buzzsaw99
buzzsaw99's picture

That is one of the nice things about gold.

http://www.youtube.com/watch?v=NyEE0qpfeig

Thu, 07/19/2012 - 19:46 | 2634255 XitSam
XitSam's picture

I've got a bad feeling about this. https://www.youtube.com/watch?v=Drkh0YLF8rI

Thu, 07/19/2012 - 22:56 | 2634730 TheFourthStooge-ing
Thu, 07/19/2012 - 19:50 | 2634267 Beam Me Up Scotty
Beam Me Up Scotty's picture

Coffee cans and matresses bitchez!!

Thu, 07/19/2012 - 19:51 | 2634268 Beam Me Up Scotty
Beam Me Up Scotty's picture

Coffee cans and matresses bitchez!!

Thu, 07/19/2012 - 21:20 | 2634272 Mercury
Mercury's picture

The list of risks you're taking on for that ~0% return just keeps getting longer.

Those proposals mentioned in ZH's previous privious piece from two years ago passed a couple weeks later by the way.

Right now (as of January, 2010) a fund can suspend redemptions if it fears its NAV will drop below $1.

Suspension of Redemptions: The new rules permit a money market fund's board of directors to suspend redemptions if the fund is about to break the buck and decides to liquidate the fund (currently the board must request an order from the SEC to suspend redemptions). In the event of a threatened run on the fund, this allows for an orderly liquidation of the portfolio. The fund is now required to notify the Commission prior to relying on this rule.

How confident are you that you can sell the stocks/bonds/ETFs in your brokerage account and wire/mail the $$ out right away at settlement before the sale proceeds are automatically swept into a mm fund...which could lock up the funds indefinitely right here?

Hey, your link isn't working.  Here's the paper: http://www.newyorkfed.org/research/staff_reports/sr564.pdf

Thu, 07/19/2012 - 19:52 | 2634276 Racer
Racer's picture
Joe Biden: ‘We Have to Go Spend Money to Keep From Going Bankrupt’

Hmmm, I think the "going bankrupt" time is now here!

Thu, 07/19/2012 - 19:55 | 2634286 Getting Old Sucks
Getting Old Sucks's picture

Sounds like the rule makers have a death wish.  Who wouldn't cash out now?

Thu, 07/19/2012 - 20:02 | 2634311 Downtoolong
Downtoolong's picture

Remember that old AIG slogan, “It’s your money”? We should have known when they went under and our money became their money which subsequently became Goldman’s money that similar things were to come. Now the question is how much more of our money will become Wall Street’s money before the Fed starts printing again and it all becomes funny money.

Thu, 07/19/2012 - 23:00 | 2634738 TheFourthStooge-ing
TheFourthStooge-ing's picture

.

Remember that old AIG slogan, “It’s your money”?

That slogan has been rehypothecated into "'twas your money".

Thu, 07/19/2012 - 20:17 | 2634312 The Fonz...befo...
The Fonz...before shark jump's picture

First this then a 3 day banking week will be imposed..to slow the outflow then
Website issues, technical problems will have problem accessing your account etc etc they will pull every stunt to keep your money...

Then a 2 day banking week then you will have to show prroof your
Previous years taxes are paid via the IRS which will be slow in giving out such documentation tetc etc

All this assuming your govt issued ration cards are properly stamped and up to date...

The socialists paradise awaits....

Fri, 07/20/2012 - 01:55 | 2634960 slackrabbit
slackrabbit's picture

100% agree.

I have been surprised how quiet the press has been over europe the last 2 weeks. 

Suddenly its all gone dead...never a good sign

 

BTW: Watched Running Man on TV last night. In all seriousness, not as funny now; had the wife and I looking at each other. Just a little too accurate on the MSM BS and a little too real. When you watch the Japanese reality shows you know they will be over here soon....remember when they used to show their TV shows on the news and it was like  WTF?

 

 

Thu, 07/19/2012 - 20:26 | 2634313 battlestargalactica
battlestargalactica's picture

Holy Sh$t, Batman... Seriously.

I closed such accounts last summer- all of them. Then a terrible storm came while I was rescuing dolphins from six-pack rings and massaging baby seas turtles and giving otters mouth to mouth resuscitation... Unfortunately, my selflessness resulted in a total loss of said pulled assets (that been converted in 'barbaric relics'; what was left after bankster looting) ending up on the bottom of the radioactive tuna infested seas. Sad, I know. Live and learn.

The bankster curtain has been pulled back and the now visible Nosferatu is bursting into flames under the light of the sun. Certainly, you too can smell the stench...

They will kill us all, destroy anything or anyone in their way, commit any and all atrocities, ruin any civilation, put every muppet through a sausage-grinder feet first, and hold a gun to the head of any 'elected' stooge that they bought and paid for to ensure they are protected and we, us, the taxpayers, will once again be bled until dry.

Just as a reminder: Spanish banks have seized deposits and will not give out cash, only bank stock for what was in customer accounts. This was a beta. Go-Live is coming.

It's getting REAL, now. Things will move faster, not in weeks but days. Place your bets on the Olympics. On the Gulf. Popcorn aint gonna be enough to sustain you, either.

 

Thu, 07/19/2012 - 20:07 | 2634324 kill switch
kill switch's picture

OT

What's left of Amerika

 

http://www.youtube.com/watch?v=X6ymVaq3Fqk

Thu, 07/19/2012 - 20:15 | 2634341 OldFordTruck
OldFordTruck's picture

Fuk N A!  Is the shit going to actuallly hit the fan this time or just more can kickin?  let's get it on!

Thu, 07/19/2012 - 20:17 | 2634344 Fecklesslackey
Fecklesslackey's picture

I think the FED is doing a bang up job in managing my money ... isn't that what a 'money market' is ... a market where my money is managed ala http://www.zerohedge.com/news/wtf-skynet-chart-du-jour

Thu, 07/19/2012 - 20:19 | 2634347 Fecklesslackey
Fecklesslackey's picture

Will all those money market withdrawls go in to physical gold?

Thu, 07/19/2012 - 20:21 | 2634350 holdbuysell
holdbuysell's picture

So, if a panic ensues and people liquidate stocks, those proceeds go into money markets, which will be, to an extent, unredeemable for a period of time.

Seems to me if you're in the market and need your money back just to buy food and other tangible necessities (in a high/hyper inflation environment), you're screwed.

Am I getting this right?

Thu, 07/19/2012 - 20:24 | 2634356 californiagirl
californiagirl's picture

Many money market accounts are held in people's 401(k) plans.  Such a rule would probably cause many to shift their money out of the MMkt and move it into GICs or mutual funds.  Unfortunately, most 401(k) plans don't have a "Cash" or other "safe" choice.  I think this rule is partially designed to get that corporate retirement money back into circulation in mutual funds and other common 401(k) choices so that it can be front-run (fleeced) by Wall Steet.  Many people I know have parked a large portion, if not all, of their 401(k) into a MMK.  Some 401(k) plans even stopped offering MMkt options.  I am aware of one semiconductor company that has done just that a couple of years ago.  A friend who works there was very upset and showed me the documents.

Thu, 07/19/2012 - 20:26 | 2634364 Michelle
Michelle's picture

"What is surprising is that this proposal is reincarnated now. The question becomes: why now? What does the Fed know about market liquidity conditions that it does not want to share, and more importantly, is the Fed seeing a rapid deterioration in liquidity conditions in the future..."

Aren't we giving the Fed a bit too much credit with having forsight? Their history demonstrates reactive behavior, not proactive. Nice attempt though at trying to give the boneheads the benefit of the doubt.

Thu, 07/19/2012 - 21:28 | 2634525 Dr. Engali
Dr. Engali's picture

They are always fighting the last battle. Or at least that's what they would like you to think. It's all just taking us closer to a world currency.

Thu, 07/19/2012 - 20:26 | 2634366 Dermasolarapate...
Dermasolarapaterraphatrima's picture

My money was frozen in The Reserve Money Market Fund for months. Never again will I touch a MMF.  Anyone who puts their money there desrves what they get.

Period.

 

 

Thu, 07/19/2012 - 20:27 | 2634370 indio007
indio007's picture

Ever consider they are intentionally trying to tank the economy by removing cash.

It's harder and harder to cash a check. My girl was asked for ID to cash a $20 check on the bank it's drawn on.Despite the fact she knew the teller personally. The teller needed a manager override to cash it.

 

They are trying to remove all means of commerce.

Fri, 07/20/2012 - 01:02 | 2634906 Cthonic
Cthonic's picture

Under Reg CC they have to cash that check.  What you have to watch out for is dealing with two banks who report to different fed districts.  Had a cashier's check drawn on one TBTF and deposited it in person at another TBTF (both have branches in the same town) and only $5k of it was made available the next day, the remainder of the funds had what amounted to a ridiculous ten day hold.

Fri, 07/20/2012 - 02:24 | 2634979 HungrySeagull
HungrySeagull's picture

It gets worse...

Try to move money in excess of 2600 per day.

I transfer thousands into several accounts. Wait a day.

Then move each of those money into one big account at another bank and by pass the 2600 limit.

I suspect I will be opening more accounts as time goes by when the Banks tighten money limits.

Thu, 07/19/2012 - 20:35 | 2634391 Yen Cross
Yen Cross's picture

 Whats next/  Personal; IRA loans classified as defaults, on your own money?  Or better yet, " toll roads" to your Bank!

 This shit makes me laugh! The commodity ccys are bending over as we speak. Have fun tomorrow folks, )( robotard)<>

  Make sure you get your "calls" in, whilst you can afford them!

Thu, 07/19/2012 - 20:43 | 2634409 fonzannoon
fonzannoon's picture

Hey Yen I found this interesting. I know a woman who got laid off. She had a 401(k). She has a small loan out against it. They had her paying it back monthly. She wanted to move a portion to an IRA to use the money to live off of. The provider (I won't say) said either she keeps the full balance with the provider or she moves the whole balance, triggering th eloan to default and hav eall the funds taxable with a penalty. Thats where it's at. This woman needed a few bucks and if she takes it they take a bat to her head.

Thu, 07/19/2012 - 20:56 | 2634442 Yen Cross
Yen Cross's picture

 Nursing home tactics / fonzannoon      Who is the underwriter?

Thu, 07/19/2012 - 21:21 | 2634509 fonzannoon
fonzannoon's picture

follow the green line

Thu, 07/19/2012 - 21:46 | 2634569 Yen Cross
Yen Cross's picture

fonzannoon, You are a fantastic poster. I followed the " trend/green line".  It's refreshing to have people like yourself posting on Z/H. 

    I trade with clarification, and at least 3 signals. Your friend crossed the first 2 , when He/She didn't disclose the second trustee!

 Nor did she discuss secondary collateral.

 

 

Thu, 07/19/2012 - 21:52 | 2634587 fonzannoon
fonzannoon's picture

Right back at you man

Thu, 07/19/2012 - 21:18 | 2634499 Unbezahlbar
Unbezahlbar's picture
Defaults on 401(k) loans reach $37 billion a year

 

Americans are borrowing huge amounts of money from their 401(k) retirement plans -- and then having big trouble paying off their debt, according to a new study.

Defaults on 401(k) loans have totaled as much as $37 billion a year in recent years, far higher than previously estimated, according to the analysis Monday by two researchers.

The default rate was estimated to be 17.4% in the 12 months through May. That's down slightly from the 19.8% peak in mid-2010, but up dramatically from 9.7% in mid-2008 prior to the global financial crisis.

The study shines a spotlight on the severe financial duress that many Americans are suffering in the troubled U.S. economy.

 

http://www.latimes.com/business/la-fi-mo-401k-defaults-20120716,0,542675...

 

 

Thu, 07/19/2012 - 21:35 | 2634547 Yen Cross
Yen Cross's picture

  > Green Line... You friend took out a second on her ( retirement act.) and wants to re-amortize a portion of it, without the consent of the original " under writer".

  Am ii wrong?

Thu, 07/19/2012 - 21:47 | 2634570 fonzannoon
fonzannoon's picture

Yeah without getting into it I guess what I am saying is you go to cash out and a guy with a gun jabs you in the ribs and "encourages" you to sit back down.

Thu, 07/19/2012 - 22:17 | 2634650 Yen Cross
Yen Cross's picture

 I would never argue with you  fonzannoon. I love ya like Slewie!

  It amazes me that there are still some balls, unconnected in agood way left on Z/H! I miss " Snow Ball" and some others!

They have their own " POST".\     She is obligated to fullfill the first note.  Once fulfilled she can appropriate the " P/L".

Fri, 07/20/2012 - 08:34 | 2635376 WmMcK
WmMcK's picture

Pay the tax, pay the penalty; whatever is left is > 0.

Thu, 07/19/2012 - 20:35 | 2634392 q99x2
q99x2's picture

Time to replace your Osama bin Laden dart boards with your choice of CLICK HERE.

As long as the FED can't lock me out of my mattress I'll be ok.

Thu, 07/19/2012 - 20:37 | 2634397 Seasmoke
Seasmoke's picture

one of these weekends in the near future is when EVERYTHING changes .....it will happen on a weekend, that i am sure of

Thu, 07/19/2012 - 21:04 | 2634461 Yen Cross
Yen Cross's picture

 You're a sleep at the helm " Sea Smoke" . Just last Sunday the markets gapped! It's lack of liquidity you are looking for!

 

Thu, 07/19/2012 - 21:19 | 2634504 surf0766
surf0766's picture

Yen please explain.

Thu, 07/19/2012 - 21:31 | 2634533 Yen Cross
Yen Cross's picture

  Gaps in the Markets are liquidity based. Weekends tend to be " Sacrosanct" <>

Fri, 07/20/2012 - 00:35 | 2634882 post turtle saver
post turtle saver's picture

Yeah... it's like the gangsta "Sunday morning truce".

Fri, 07/20/2012 - 01:01 | 2634908 Yen Cross
Yen Cross's picture

 Con fused? All i see is a large gap in F/X! Perhaps I should make a phone call? ASS Clown?

Fri, 07/20/2012 - 02:55 | 2634992 post turtle saver
post turtle saver's picture

There's a gap alright... between your ears.

Thu, 07/19/2012 - 20:38 | 2634399 magpie
magpie's picture

Of course, only classical methods to counter capital flight and hyperinflation, nothing to see here.

Thu, 07/19/2012 - 20:41 | 2634403 Excursionist
Excursionist's picture

I didn't realize the Most Interesting Man in the World is a member of the Group of Thirty...  Check out the mug shot of Guillermo de la Dehesa Romero on the group's Web site.

He doesn't always ass rape ignorant populations with his pontifications, but when he does, he uses his neighbor Krugman's KY Jelly...

Thu, 07/19/2012 - 20:41 | 2634405 ziggy59
ziggy59's picture

It sounds like, and I may be wrong here, that someone is about to pull the pump plug....

The DJ has announced last song...

Last ones to grab a seat, well, are going to need a lot of KY.

That's not Kentucky

Fri, 07/20/2012 - 01:04 | 2634909 Yen Cross
Yen Cross's picture

 I would dive with you any day!

           Your understanding of so called wealth, is questionable!

Thu, 07/19/2012 - 20:44 | 2634413 GrinandBearit
GrinandBearit's picture

I did it years ago.  

If you didn't do it already...

Get the money the fuck out of there NOW !

Thu, 07/19/2012 - 20:49 | 2634421 Unprepared
Unprepared's picture

Group Treasury / Funding back office of financial institutions are up to a hard shakeup.

 

The conversations lately are: "Do our systems support 0 and negative rates? We need to test that."

Thu, 07/19/2012 - 20:51 | 2634425 TahoeBilly2012
TahoeBilly2012's picture

WtF is Jim Rickards getting at? He is a likable goldbug, but he just seems to upbeat about everything working out in the end. Max Keiser didn't call him out on his globalist view one bit, but the guy just drives me crazy. He seems to know what he is talking about-goes on to talk about lower wages, a Europe which intefrates and eventually thrives. The guy just drives me nuts with his "we get through this" attitude.

Thu, 07/19/2012 - 21:14 | 2634486 Everybodys All ...
Everybodys All American's picture

Jim Rickards does not see the bigger picture. Currency wars? When he said he thought the Euro would survive over the pound I just turned it off. He may sound like a smart guy but I'm hear to tell you he is wrong on that one.

Get through it if you own gold and if your country owns gold. That is hardly encouraging.

Fri, 07/20/2012 - 01:38 | 2634936 slackrabbit
slackrabbit's picture

Agree, but I thought Max was as surprised as I was.

Jim normally has a fairly balanced view, then he suddenly dropped a CNBC moment.

Hence Keiser just changing the subject away from wishful thinking in Europe to gold

Thu, 07/19/2012 - 20:52 | 2634430 gookempucky
gookempucky's picture

 Our proposal would require that a small fraction of each MMF investor’s recent balances, called the “minimum balance at risk” (MBR), be demarcated to absorb losses if the fund is liquidated. Most regular transactions in the fund would be unaffected, but redemptions of the MBR would be delayed for thirty days.

Looks like legalized rehypothecation plan--only not all of your money ,just a little at a time and if there is any left you may withdraw funds with the correct paperwork.

TALK ABOUT VAPORIZEddddd

Thu, 07/19/2012 - 21:21 | 2634512 gookempucky
gookempucky's picture

All pieces of the THE PLAN are connected---shall we wait for them to push the code blue button.

http://publicintelligence.net/u-s-domestic-contingency-purchasing/

Thu, 07/19/2012 - 20:56 | 2634444 max2205
max2205's picture

If they did that kiss everything good bye. Never happen

Thu, 07/19/2012 - 20:59 | 2634448 notadouche
notadouche's picture

When the majority of the populace feel they have nothing to lose, that will be the true beginning of the end of the status quo.  We are still quite a ways from that and the elites are pulling out all the stops to ensure that feeling of despair stays in the minority though that minority grows daily.  Of course the more the government can convince the folks to accept and rely on the government teat the more the truly desparate will feel the need to not risk what little the government doles out their way.   So in reality how long will it take for the populace to get fed up enough to take to the streets?

Thu, 07/19/2012 - 21:07 | 2634467 Seasmoke
Seasmoke's picture

i think alot of people underestimate that there are alot of pissed off white people with alot of pent up anger......that is a game changer, imo

Thu, 07/19/2012 - 22:03 | 2634617 dolph9
dolph9's picture

I have to agree, unfortunately.  The Jews overplayed their hand and they know it.  In their quest to destroy whitey they bankrupted the country and thereby are destroying themselves.

Thu, 07/19/2012 - 21:07 | 2634469 Yen Cross
Yen Cross's picture

 I projected " Civil War" 2030. That was before I truly understood the " exponentiality" of the internet!

   Go shoot some hoops kid! Better yet go Sky Diving!

Thu, 07/19/2012 - 21:12 | 2634478 earleflorida
earleflorida's picture

" A Procrustean bed... whence every rose has its thorn's sewn into a nililistic atrophic movement --- Amerika's progenitor transformation into a faustian-bargain basement state of implicit entrophy ---

May Satans' belial have mercy on our... 'In God we Trust' agnostic souls in the land of 'No Hell'? 

Thu, 07/19/2012 - 21:14 | 2634488 Atomizer
Atomizer's picture

If at first you don't succeed try try again..

 

2 March 2009

(Extract from pages 68-69 of BIS Quarterly Review, March 2009)

 

Money market funds (MMFs) are collective investment schemes that invest in short-term high credit quality debt instruments and provide considerable funding in the overnight and term money markets. In the United States, MMFs are referred to as mutual funds whereas in other countries they are called investment funds. MMFs were introduced in the 1970s in the United States as an alternative to bank

deposits to circumvent regulatory caps on bank interest rates. At end-2008, MMFs managed more than $5 trillion in assets globally. The United States has the largest market for MMFs, with assets under management at end-2008 amounting to $3.8 trillion, of which $2.5 trillion accounted for by institutional investor funds and the remainder retail funds. In Europe, assets under management amounted to $1.3 trillion and more than half of this was denominated in US dollars. The dollar-denominated funds are often managed from offices located in the United States.

 

US MMFs are categorised on the basis of their investment objectives and the type of investors in the fund. For example, prime MMFs invest predominantly in non-government paper as opposed to government funds. If government MMFs are restricted to investing only in US Treasuries, they are referred to as Treasury funds. Depending on whether the funds are marketed to institutional or retail investors, these MMFs may be further classified into institutional prime funds or retail prime funds. Some MMFs invest in tax-exempt US municipal securities, which provide the basis for another categorisation of MMFs as taxable and tax-free funds.

 

MMFs operate under different regulatory regimes in the United States and Europe. The Securities and Exchange Commission regulates the credit quality, issuer concentration and maturity of assets that US MMFs can hold in their portfolios under Rule 2a-7. Under this rule, MMFs are not permitted to hold more than 5% of investments in second tier (A2-P2) paper, or to hold more than a 5% exposure to any single issuer (other than the government and agencies). Weighted average maturity of the portfolio is also restricted to 90 days or fewer. MMFs in Europe, which are dominated by institutional investor funds, are authorised under the Undertakings for Collective Investments in Transferable Securities (UCITS) Directive. The UCITS Directive allows a fund to be sold throughout the European Union subject to regulation by its home country regulator. Dollar funds domiciled in Europe generally adopt voluntarily the code of practice published by the Institutional Money Market Funds Association (IMMFA) for their investment guidelines. These guidelines are in spirit very similar to the investment restrictions under Rule 2a-7, and the weighted average maturity of portfolio holdings is even capped at a more restrictive 60 days. This is a noteworthy case of an offshore financial market adopting an onshore regulation. Many MMFs are rated by credit rating agencies, which may in turn impose additional investment restrictions.

 

All US and a majority of European MMFs are structured to maintain a stable net asset value (NAV) of $1 (or $10), and portfolio holdings are accounted for under amortised cost to compute NAV. Funds charge fees between 25 and 50 basis points of the NAV, and monthly dividends are paid to shareholders that reflect the average accrual income on the fund investments net of fee. As investments in MMFs can be withdrawn on the same day, these funds need to maintain a strong liquidity position to meet potential investor redemptions. Unlike bank deposits, however, investments in MMFs do not carry an official guarantee, nor are they insured or guaranteed by the fund's sponsor. 1

 

While amortised cost provides the basis for computation of dividend payments, fund sponsors are required by regulation to also compute a shadow price for the portfolio holdings. Shadow price is the current NAV per share of the fund calculated using available market prices. Applicable regulations require that the shadow price does not materially deviate from $1. Under Rule 2a-7, this deviation is limited to 50 basis points. For Dublin-domiciled funds regulated by the Irish Financial Services Authority, the deviation limit is 30 basis points. In circumstances where the shadow price falls below this limit, fund managers are required to take corrective action. An inability to do this would result in the fund "breaking the buck", that is, valuing shares at less than $1.

 

The reason why MMFs did not "break the buck" in 30 years, with one exception in 1994, is that fund sponsors have provided financial support when the market value of a share threatened to fall substantially below $1. While there is no legal obligation to provide support, fund sponsors have done so to preserve their business franchise. Available evidence on parental support suggests that around 145 funds received sponsor support up until July 2007. Since then, about one third of the top 100 US MMFs have received financial support from management companies through various means (Crane Data Archives (2008)). Such support has also been extended recently by US sponsors to European-domiciled funds, which were subject to runs in September 2008. Recognising the importance of the ability and willingness of a fund sponsor to support its fund, credit agencies factor these into their fund rating decisions (Moody's (2008)). Fitch (2009) gives new emphasis to its evaluation of support and its interaction with concentration and liquidity.

 

Support can take various forms. The fund sponsor can purchase the security that has experienced a credit event from the fund at par or can provide the fund with an A1-P1 letter of credit or guarantee covering the par amount of the security. A blanket guarantee of the NAV could lead to the consolidation of the MMF into the sponsor's balance sheet, but support for individual securities has thus far been interpreted as not requiring such consolidation (SEC (2008)).

 

Considering that MMFs invest in short-term and high credit quality securities and are structured to provide principal protection, inflows into these funds usually rise during periods of heightened investor risk aversion (Graph A, left-hand panel). During the current financial market crisis, MMFs have been important beneficiaries, with assets under management rising by more than 20% in 2008. In fact, end-2008 holdings in MMFs exceeded those in equity mutual funds in the United States for the first time in the last 15 years. As net inflows into MMFs have grown rapidly since 2007, competition between funds to gain market share has increased. This competition has been further intensified by the growth in money fund portals, which offer institutional investors and corporate treasuries not only a wider range of funds to invest in, but also greater flexibility in switching among them.

 

As investors in short-term debt, MMFs are important providers of liquidity to financial intermediaries through purchases of certificates of deposit (CDs) and commercial paper (CP) issued by banks, and through repo transactions. For example, MMFs held nearly 40% of the outstanding volume of CP in the first half of 2008. Consequently, when MMFs shift away from these assets into safer ones, funding liquidity for financial institutions can be affected. The shifts in the asset composition and maturity, however, tend to be influenced by credit market conditions, market liquidity and level of interest rates. Interpreting falling interest rates as periods of weaker credit market conditions, aggregate portfolio holdings of MMFs have shifted to low-risk assets in such periods (Graph A, centre and right-hand panels). To maintain yield in a falling interest rate environment, the shift to safer assets is usually accompanied by maturity extension.

 

http://www.bis.org/publ/qtrpdf/r_qt0903z.htm

Thu, 07/19/2012 - 21:26 | 2634519 Yen Cross
Yen Cross's picture

 Atomizer we respect your business " ACUMEN".    Let's keep it easy for the kids please?

Thu, 07/19/2012 - 21:48 | 2634576 Atomizer
Atomizer's picture

Hope your doing well. Just preparing my next tidbit to expose the other side of BIS shareholders. Tyler will need to revisit a 2011 posting he did a while back..

Thu, 07/19/2012 - 21:59 | 2634593 Yen Cross
Yen Cross's picture

  BIS is passe'.   There is this " doomsday" banking circle that has dibs on "swap OIS" I'm interested in.

  I forgot the name of the bank. /sarc  Look for ward to seeing you in London on Sunday.

     I have a piece of research regarding " GM" that  tYLER PROBABLY DOSEN'T WANT TO DEAL WITH!?

  It involves transfer of "corperate direct investments" being sold to CHINA! " via pension compensation!

    Tyler you need some work on those after hour, " algo's" <>

Thu, 07/19/2012 - 22:34 | 2634695 Jena
Jena's picture

Thanks YC.  I know that a lot of us here are like me -- doing our best to catch up in a very complex world.  

Not necessarily my natural aptitude, you know?

Fri, 07/20/2012 - 01:50 | 2634709 Yen Cross
Yen Cross's picture

                    Jena that was a nice comment.

Fri, 07/20/2012 - 13:00 | 2636691 Jena
Jena's picture

I do enjoy finance, YC but I don't know if I'd spot an outside close if I saw one.  On that one, the interweb and investopedia is not my friend.

Thu, 07/19/2012 - 21:18 | 2634498 Peter Pan
Peter Pan's picture

Today they propose to keep 5% of your money market account. Tomorrow it will be 5% of your bank account, your 401k, your precious metals, your home etc etc. It won't be done to guard against a bank run but to compensate the government, the police, etc if you should happen to do something really bad. Something like seurity or a good behaiour bond.

Thu, 07/19/2012 - 22:13 | 2634529 holdbuysell
holdbuysell's picture

Tyler, please check this link...it doesn't get to the report that it's supposed to:

http://www.zerohedge.com/news/www.newyorkfed.org/research/staff_reports/...

 

Edit: My oversight, for those that want the report, just go to the base link: www.newyorkfed.org/research/staff_reports/sr564.pdf

Thu, 07/19/2012 - 21:32 | 2634536 GlomarHabu
GlomarHabu's picture

O/T but it's a great line .... columnist writing on the LIBOR larceny.

" rigging LIBOR is a little like rigging magnetic north "  yeah .

Thu, 07/19/2012 - 21:33 | 2634541 Everybodys All ...
Everybodys All American's picture

 Could it be that Morgan Stanley may be in trouble? If you look at the numbers they reported today you will note a huge problem in revenue and their investment bank business model. Remember they were down graded two notches and I believe may be in much bigger trouble than anyone suspects right now. Unwinding positions to come up with the liquidity they needed probably has not been easy. Would it be a surprise if counter party banks begin to pull lending with them? I believe if there is a money market issue that more than likely the problem will have come from an investment bank initially just as it did in 08.

 

Thu, 07/19/2012 - 21:40 | 2634560 Pancho Villa
Pancho Villa's picture

Scary! If the worry is simply that a sudden spike in short term interest rates coupled with a sudden surge in MMF withdrawals could cause MMF's to "break the buck", then why not just allow the Fed to purchase these short-term instruments and credit the MMF with Bernanke bucks? The Fed would get its money back in a short period of time. That would solve the problem without scaring MMF investors.

Unless the Fed is envisioning a situation where the short-term instruments held by the MMF's would not be repaid, or would be unilaterally converted to longer term instruments by issuers (e.g. the US Treasury)...

In any case, it seems that they are planning for a fairly dire emergency. Note to self: promptly convert all MMF money to PMs.

 

Thu, 07/19/2012 - 21:48 | 2634572 Jumbotron
Jumbotron's picture

Another fine piece Tyler.

Damn...just simply.....damn.

Thu, 07/19/2012 - 21:59 | 2634599 shovelhead
shovelhead's picture

Castro is gonna shit himself dead when all the boats from Florida show up looking for asylum.

 

Thu, 07/19/2012 - 22:12 | 2634636 dolph9
dolph9's picture

I am begging everybody here to realize one simple fact:

If something (such as cash or an investment) is not yours to do with what you want RIGHT NOW, it isn't yours at all.

That's why you need physical cash, a basic checking account, and things which you can use/liquidate/sell easily without penalty.  And even then, you have barely scratched the surface of safety.

Thu, 07/19/2012 - 22:20 | 2634657 holdbuysell
holdbuysell's picture

From the report by the FRBNY staff:

"Key words: money market funds, runs, redemption restrictions, systemic risk"

Mmmk.

Thu, 07/19/2012 - 23:39 | 2634661 californiagirl
californiagirl's picture

So, if a TBTF insider-trading bank gets insider info and yanks its money out of a MMF before the market closes, but his transaction does not break the buck, he gets all his money?  And when the bad news hits the rest of the public post-market-closing and creates a panic/run the next day, breaking the buck, those folks are SOL?  Not being a Wall Streeter, is pulling your money out of an MMF based on insider info the same violation as trading stocks based on insider info?  Just curious.

Thu, 07/19/2012 - 22:29 | 2634682 world_debt_slave
world_debt_slave's picture

I'm liquadating while i can, leaving Cali early next week, get to my lower tax state and get the rest out.

Thu, 07/19/2012 - 22:30 | 2634686 Awakened Sheeple
Awakened Sheeple's picture

One of the best articles I've read in a while.. Thank you

Thu, 07/19/2012 - 22:32 | 2634689 ZeroAvatar
ZeroAvatar's picture

Just today, we received our annual bill for our RV from (Insurance Co. Here).  $158 for the full year.  Easy to pay all at once, which we always do.  TODAY, however, there was a big long breakdown, and a note, something about thanks for going to automatic withdrawal, and the figures.

 

It was like, $14.95 for 12 monthly installments, EACH with an ADDITIONAL $4.00 'monthly service fee'.  I just about hit the roof.  We never asked for this.  I told the wife to contact our 'Insurance Guy' and have HIM straighten it out.  That's what we pay him for.

 

SHOW me some signed authorization letter?  Please?   GGGGGGRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRR!

Fri, 07/20/2012 - 07:40 | 2635206 WillyGroper
WillyGroper's picture

Travelers has tried that on me at least 3 times. No end to their thieving creativity via nickle & diming you.

Thu, 07/19/2012 - 22:32 | 2634691 reader2010
reader2010's picture

everthing you have belong to US!

Thu, 07/19/2012 - 22:57 | 2634732 vachon
vachon's picture

ZH, I'm not going to go as far out with your hypothesis as you are.  During a "living will" event, if/when a TBTF bank goes down, for, say Even Bigger Whaleage losses, I don't think it's imprudent to impose a few days capital controls for the sake of every other bank IF IF IF every other bank is starting to experience a run.

Planning for a crisis isn't the same as telegraphng an imminent one.

 

 

 

Thu, 07/19/2012 - 23:01 | 2634742 Atomizer
Atomizer's picture

Yeehaw!!

Deliverance - Banjo Duel

 

While most of yo' country bumpkins is still figurin'  out whut th' hell BIS is.. Let me tell yo' a li'l sto'y on how they is gittin' paid an' th' noo branch they created, cuss it all t' tarnation. Be fine lemmin's an' research mah info'mashun. Don't let them folks in Warshin'ton DC git yo' down, as enny fool kin plainly see. A peeny arned is a penny saved, cuss it all t' tarnation. This hyar fiddlesticks about havin' t'getcher govahment dole in Mexico is sumpin else.

 

We’ll kick the can down the road by setting up another bank charter shell game to drive in revenues we stole from the pensioners’.

OECD (Green Investment Bank) GIB -----> Click Here <--------

http://www.bis.gov.uk/policies/business-sectors/green-economy/gib

 

BIS Shareholder: We are tired of this shit, the IMF keeps paying us in this new gold backed SDR funny money. I try to go to Wallmart to cash my cheque for a Wallmart debit card. No can do!!

Ladies and Gentlemen,

It is my pleasure to submit to you the 82nd Annual Report of the Bank for

International Settlements for the financial year which ended on 31 March 2012.

The net profit for the year amounted to SDR 758.9 million, compared with

SDR 816.0 million for the preceding year. Details of the results for the

financial year 2011/12 may be found on pages 129–32 of this Report under “Net

profit and its distribution”.

The Board of Directors proposes, in application of Article 51 of the Bank’s

Statutes, that the present General Meeting pay a dividend of SDR 305 per

share, with the four new shareholders receiving a pro rata share of the

dividend. This dividend would total SDR 168.4 million, payable in any

constituent currency of the SDR, or in Swiss francs.

The Board further recommends that SDR 29.5 million be transferred to

the general reserve fund, SDR 6.0 million to the special dividend reserve fund

and the remainder – amounting to SDR 555.0 million – to the free reserve fund.

If these proposals are approved, the Bank’s dividend for the financial year

2011/12 will be payable to shareholders on 29 June 2012.

 

As the shareholders of BIS investment, if we don’t see a return on our investment soon.. We’re going to hedge and start blowing shit up. We want our promised investment portfolio projections as stated in our contract.

 

Whhhaaaaaaaaaaaaaaa, whhhaaaaaaaaaaaaaaaaaaaa

 

/ROFL

Thu, 07/19/2012 - 23:25 | 2634773 Chump
Chump's picture

The banjo has come a long way since Earl breathed life back into it.

http://www.youtube.com/watch?v=U8e4brXmMa0

http://www.youtube.com/watch?v=4sYgllgF7lc

 

Thu, 07/19/2012 - 23:47 | 2634817 Yen Cross
Yen Cross's picture

 I'll back ya up! Any day Mr. Earl Jones!

Fri, 07/20/2012 - 11:30 | 2636282 Chump
Chump's picture

I'm working on backup myself.  Definitely harder than learning lead breaks.  But...who is Earl Jones?

http://www.youtube.com/watch?v=0FgpQyk5ibw&feature=player_detailpage#t=43s

Thu, 07/19/2012 - 23:05 | 2634747 Lucius Corneliu...
Lucius Cornelius Sulla's picture

Who in their right mind would keep their savings in an insolvent hedge fund (TBTF bank) that pays you next to nothing?  I say the kleptocrats are monitoring a slow, bleeding run on the bank as people wise up and switch to putting their money somewhere safe ... like their mattress.

Fri, 07/20/2012 - 00:02 | 2634845 gnomon
gnomon's picture

Just wait until George's and Ben's pictures on the fiats are declared persona non grata.  And there flies out of the printing press a technicolor Oscummer, the only legal currency in the land, (the land of the oppressed and the home of the busted).

Force can negate any peaceful end around.  A counterforce will be needed.

It would be a travesty of History for us to roll over and play dead.  And it will not happen.

Fri, 07/20/2012 - 06:04 | 2635117 toomanyfakecons...
toomanyfakeconservatives's picture

For real dude! A lot of fear-mongering keyboard jockeys around here like to pretend that tens of millions of pissed off gun owners, patriots, veterans, active-duty military, federal marshalls, and millions of others who took the oath to defend the Constitution are irrelevant and powerless. The pimple on the ass of mankind known as the cabal, the illegitimate U.S. federal government, the Old World Order, whatever you like to call it, is about to be popped. Fiat money is about to go the way of the dinosaur. Obama, Brenanke, and thousands of other top traitors are gonna be in chains and orange jumpsuits before the end of the year... http://tinyurl.com/cd5cyjo/

Thu, 07/19/2012 - 23:38 | 2634784 Cthonic
Cthonic's picture

MMFs shoulda died in 2008.  Why the technocrats are looking to keep them somewhat viable, while at the same time pushing zirp and nirp, is beyond me.  Maybe they're not ready for them to disappear yet, all while having twin threats like the death of the petrodollar and the implosion of europe staring them in the face.  In any event, there seems to be a push to regulate as a bank, anything carrying out bank-like functions.  And banks could not pay interest on demand deposits before Frank Dodd.

Thu, 07/19/2012 - 23:37 | 2634796 jonjon831983
jonjon831983's picture

There was an article a few weeks ago... talking about possibility of having MM's float from the $1 because there have been increases in the number of price interventions by the managing MM fund managers.

 

Can't recall where I put the link though...

Thu, 07/19/2012 - 23:48 | 2634819 Yen Cross
Yen Cross's picture

   WHERE in the Hell is " Slewie"?

Thu, 07/19/2012 - 23:59 | 2634840 Poor Grogman
Poor Grogman's picture

 

Rat poison in an out of date PIE from ghanzhou did him in I'm reckoning.

 

Fri, 07/20/2012 - 00:15 | 2634864 Yen Cross
Yen Cross's picture

 I was think-ing Fatherhood!   Court Jester! Keep going Cave Man!

Fri, 07/20/2012 - 21:15 | 2638172 VallejoVillain
VallejoVillain's picture

Rat Trap

Thu, 07/19/2012 - 23:53 | 2634829 Atomizer
Atomizer's picture

[By Any Means Necessary] for cartel investors. Remember this highlighted phrase.

 

As for the BIS shareholders who wants to blow shit up under a new terrorist threat: Démodé 

We will check your books on where the special interest money flowed into. Winks 

It is your character

Deep in your nature

Take one example

Sample and hold

Romance and replace

The lack in yourself

It is your nature

It is your nature

We see you climbing

Improving the effort

Wearing my suit

It is your character

There is a limit

Over your shoulder

Everyone loves you

Until they know you

Perfume aerosols

May champion the strangers

Nick

Standing around

All the right people

Crawling

Tennis on Tuesday

The ladder is long

It is your nature

You've gotta suntan

Football on Sunday

Society boy

On social security

It is your nature

Tennis on Tuesday

Sipping champagne

Football on Sunday

Home on the train

It is your nature

Girl from Totteridge Park

Said you were nice

So was my suit

The ladder is long

http://www.youtube.com/watch?v=8VHIRTWcc3g

Fri, 07/20/2012 - 00:11 | 2634859 Yen Cross
Yen Cross's picture

 endless "Kockamamie" Bull Shit Tyler!

Fri, 07/20/2012 - 01:25 | 2634929 slackrabbit
slackrabbit's picture

Bank Holiday?

Fri, 07/20/2012 - 01:26 | 2634930 Yen Cross
Yen Cross's picture

 Tyler i like  " sorty of ya"

  Alll/ i ( ZERO) of you!

Fri, 07/20/2012 - 01:29 | 2634931 Marty Rothbard
Marty Rothbard's picture

The interest rate on MM is so low these days, I believe it is time to empty them out, and deposit the funds in the first national bank of Serta.  In mattress we trust.

 

Fri, 07/20/2012 - 06:14 | 2635113 toomanyfakecons...
toomanyfakeconservatives's picture

Well... if you believe the fear-bot keyboard jockeys, the Obama administration and Homeland Insecurity has the power and influence to physically raid those 300 million homes and mattresses with shock troops, boots on the ground, and the popular support they DON'T have.

Raiding zeroes on a computer screen is one thing. Actually raiding hundreds of millions of American homes of their mattresses, possessions, and will to resist, violently if necessary, is quite another thing.

Get real people! The MASS ARRESTS are coming and the only individuals going to the FEMA camps are them... not us! http://tinyurl.com/cd5cyjo/

Fri, 07/20/2012 - 01:49 | 2634949 yogibear
yogibear's picture

The Jon Corzine complex... We need money so we have some sitting the accounts, so we take it.

What's yours is mine. 

Fri, 07/20/2012 - 01:51 | 2634954 wcvarones
wcvarones's picture

You'd have to have shit for brains to put money in a money market.

Zero yield, with credit risk, and now liquidity risk.

 

Buy T-bills or CDs instead!

 

SEC tries to fix unfixable money markets

Do NOT follow this link or you will be banned from the site!