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Monday, September 22, 2008

King Paulson: Money Markets and Unintended Consequences

Hahahaha! King Paulson fucked up already (or again).

This is awful. Just awful. Read the post from Mike Morgan carefully. Talk about unintended consequences. Ask yourself this: Why would ANYBODY keep more than a few token bucks in the bank if you could earn MORE and be insured for MORE in money market funds?

This should suck liquidity straight out of the banks that need it most faster than a ninja gone apeshit.

via Mike Morgan Behind Enemy Lines:

Move Money to Money Market Now: “Before I explain the title of this blog piece, let me note that we will be holding a general conference call on Monday morning that will be open to everyone - clients and non-clients. Everyone will have the opportunity to ask as many questions as you like. At the conclusion of the general (open) conference call, I will hold a private call for my General Clients and Trading Clients to discuss more spefic trading for the day. For the open call, here is the registration link to obtain an access code -

It looks like King Henry really goofed, but we can take immediate advantage of this one.

The other day I spent a lot of time trying to figure out what to do with our cash. King Henry answered that question today. I recommend everyone move your cash from your bank accounts to higher paying money market accounts. Now that Paulson has declared the FDIC will insure all money markets, why not earn 2-3 times more interest. In fact, I never keep any money in the local bank. All of my funds are in money markets, as I have checking and credit cards tied in. Moreover, this is tied to my trading accounts as well.

Just wait until this really sinks in. If enough people realize how much better their money is with the money markets, the banks will fail from the flood of withdrawals moving to money markets. In any event, if you were worried about the $100,000 limit at banks, Paulson has declared he (we) will insure money markets for 10 times more than we are prepared to insure banks. You can keep up to one million in a money market with FDIC insurance.

Most likely tomorrow he will be offering insurance on our pets and he will be covering all losses in Vegas so the casino operators can surge higher. I heard tonight that he will also be guaranteeing the weather and personal happiness.

Seriously though . . . you are only insured for $100,000 at your bank, but now you are insured for one million in your money markets. Move your money.”


Anonymous said...

Pretty sure that it's only money that was there BEFORE September 19. If you were already wealthy, you're stoked, if not, you're still screwed.

Jake said...

Anonymous is correct. This should prevent the "run on money markets" we saw the past few days, but won't help these funds add additional assets (less of the concern).

Anonymous said...


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