An attack on our economy: did you know about this?

[Monkeyleg]

I just read this column, and don't know what to make of it. After reading it I thought that certainly the subject would have been raised on APS, but I don't recall seeing any posts.

If this is for real, it's scary stuff. The column is here

[Headless Thompson Gunner]

There were a couple days back in September when there was serious concern that money market funds could break the buck.  I just assumed it was because they had some underlying bad assets that were taking hits.  Anyway, as a consequence of the possible loss in value, people were yanking their money out of money markets.  IIRC, those same few days saw the yield on short term treasuries go negative as people poured their money into those instead.

I don't recall any reason to think it was market manipulation.  I just figured it was herd mentality and the fear that money markets might not be entirely safe (safety being the very reason for their existence). 

Heck, I'm not even sure it's possible to manipulate money market accounts.  You'd have to have a HUGE reach, and a MASSIVE amount of capital, to be able to move those markets.  At least I think you would.  I dunno.

[Headless Thompson Gunner]

AIG, Lehman Bros, and Merril Lynch all went down in mid September, the same time as the supposed money market manipulation.  I wonder if that might be related.

Hmm, mid September was also when they imposed the ban on shorting bank stocks.  There was a lot of talk at the time that big money was going in all short on some of the weaker banks, specifically to move the prices down.  Those reduced prices contributed to their collapses.  That would constitute market manipulation, and that's probably what the President was referring to when he said manipulators would be prosecuted, not any supposed manipulation of money markets. 

That was a nasty coupla days in the markets.  A lot of crazy stuff happened, but it probably wasn't a grand conspiracy by Soros or China or whomever.

[Perd Hapley]

That's exactly how I took it, when I heard about that interview a couple of days ago.  It's funny that some people seem to assume it was an "attack."  I think what he's really getting at, is that this is why Bush and others were telling us that the sky was about to fall. 

[Headless Thompson Gunner]

Ok, so a little research later and I can say with some certainty that it wasn't an attack of any sort.  It was the result of Lehman Bors going bankrupt on Sept 15, which caused a couple of money market funds to break the buck.  That, in turn, spurred a run on money market funds.

Interesting reading here.

[Ryan in Maine]

A lot of crazy stuff happened, but it probably wasn't a grand conspiracy by Soros or China or whomever.

That sentence is crazy. 

[Bogie]

I dunno... If one went into the situation with a couple of trillion dollars and thought of it as an expendable weapon, rather than as an asset...
 

[Headless Thompson Gunner]

That sentence is crazy. 

How do you mean?

[buzz_knox]

Ok, so a little research later and I can say with some certainty that it wasn't an attack of any sort.  It was the result of Lehman Bors going bankrupt on Sept 15, which caused a couple of money market funds to break the buck.  That, in turn, spurred a run on money market funds.

Interesting reading here.

Actually, it was an attack, just not the one you're thinking of.  Lehman went down because Schumer discussed information about a "major institution" was about to go bankrupt (based on information he apparently got in confidence via his position).  People knew that Lehman was the next most likely candidate but thought that it had a plan for pulling things back from the brink.  When Schumer's statement hit the news, Lehman became untouchable.  It went down, the market tanked, and Obama got a new soundbite.

[Ryan in Maine]

How do you mean?

The "power" Soros has.

"Ohhh, it could have been China, maybe India, or Russia. Maybe even Japan... Oh! Or Soros." 

[Gowen]

The "power" Soros has.

"Ohhh, it could have been China, maybe India, or Russia. Maybe even Japan... Oh! Or Soros." 

.


Don't go there Ryan, I was flamed horribly to even suggest that Soros had something to do with the price of oil climbing or falling to influence the election.