Thursday, September 18, 2008

Who is withdrawing their money-market funds?

Joe Biden made the remark yesterday that if people making more than $250,000 were true patriots, they wouldn't mind paying more taxes to support their country.

It would be interesting to see who are the true patriots in this economic meltdown. In this frantic climate there is probably no way to conduct the research, but it would interesting to see if there is some correlation between political party/ideology and whether you leave your money market funds alone or withdraw them for a safer investment.

The Washington Post analysis:

"Regulators and the banking industry are increasingly concerned about customer withdrawals from money-market funds. Crane Data, which tracks the industry, said total deposits in money-market funds fell Wednesday by at least $79 billion, or about 2.6 percent. Financial executives have told government officials in recent conversations that the rising pace of withdrawals is the equivalent of a bank run and that if it continues, it will drain a massive and critical source of funding.

Money-market funds are particularly important because they buy short-term debt, which is used by financial companies and other corporations to finance day-to-day activities."

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