US ends money market guarantee program

US authorities Friday ended a program to guarantee money market funds begun last year to stem a run on deposits that could have destabilized the financial sector during the market turmoil.

The Treasury said it had no losses under the program and had earned 1.2 billion dollars in fees.

The program was established last September in the wake of the collapse of investment giant Lehman Brothers and a government rescue of insurance giant AIG. It was launched for three months initially and extended for a full year.

"As the risk of catastrophic failure of the financial system has receded, the need for some of the emergency programs put in place during the most acute phase of the crisis has receded as well," Treasury Secretary Timothy Geithner said in a statement.

"The guarantee program for money market funds served its purpose of adding stability to the money market mutual fund industry during market disruptions last fall and ultimately delivered a healthy return to taxpayers."

rawstory.com...

I'm curious to know what will happen now that there is no guarantees for the money market. If there are new troubles in that area, what will they do?

I am sure they know what is coming just like the insiders selling off like stocks are going out of style.

money.cnn.com...

This is the exact reason that I just don't know what to do when it comes to saving money for my future/retirement.

I don't want to open an IRA because so many people lost so much.

I thought about a money market account but wondered about the security of it. Now, thanks to this article, I know it's not that safe either.

I guess I can do a CD but that doesn't yield anywhere near as much as I would like.

And obviously, just saving money in a savings account ain't gonna get me anywhere either.

I'm so perplexed!

Originally posted by nunya13
This is the exact reason that I just don't know what to do when it comes to saving money for my future/retirement.

I don't want to open an IRA because so many people lost so much.

I thought about a money market account but wondered about the security of it. Now, thanks to this article, I know it's not that safe either.

I guess I can do a CD but that doesn't yield anywhere near as much as I would like.

And obviously, just saving money in a savings account ain't gonna get me anywhere either.

I'm so perplexed!

You could buy food. It might come in handy.

[edit on 18-9-2009 by liveandletlive]

reply to post by liveandletlive


So I should buy food to support me through retirement? Okay...

What about:

Housing
Health care
Transportation
Etc...

reply to post by nunya13


I hear Obama has you covered on all that. Isnt that what the government is for?

reply to post by liveandletlive


I may be misunderstanding what you're implying but being as how you've been hostile with me before on certain subjects, I would assume that you are being so callously sarcastic towards me because you, for some unknown reason, assume I support Obama.

I don't. I'm trying to be serious here. I am genuinely concerned that I do not seem to have any viable options to put money into a type of account that will have a reasonable rate of return on interest to take care of MYSELF when I go into retirement.

I do not depend on the government, ANY government, to do it for me so I don't want to live off of social security/welfare/medicaid when I am older.

reply to post by nunya13


There are two possible outcomes of this economic crisis. Inflation or deflation. Or both, that would make three I guess...

One thing to think about, there is no real mechanism for inflation in this country. You can't have a rapid increase in prices and asset values if you don't have a corresponding raise in wages (in most other western countries, wages are adjusted to inflation automatically). So inflation is not very likely.

Deflation is far more likely as you see unemployment keep rising and credit contracting over the next few years. In a deflationary environment you don't want to own any assets and the trick will be to preserve your money, not worry about low interest rates. Treasury Bonds are probably your best bet over the next few years.

Originally posted by nunya13

What about:

Housing
Health care
Transportation
Etc...

a sturdy tent
a first aid kit
good, comfortable hiking boots
... the retirement package of the "New" America!

reply to post by mythatsabigprobe


Ah, treasury bonds. I always forget about those. Municipal bonds too right?

Thank you for your SERIOUS reply and not patronizing me.

Anyway, I'm worried about the lift on the guarantee program. It doesn't really send the right message when the government says they aren't going to guarantee your money anymore.

Could it be that they know it's still too risky, perhaps even more so and don't want to have to pay out on these money market accounts knowing they are going to crash?

BTW, economics is a foreign language to me.

I have taken lately to investing in lead, copper, and brass.

I watched my grandfather's retirement funds decimated by two stock market declines, with the first being after 9/11 and the second being this latest fiasco. My father's retirement funds lost SIXTY PERCENT of their value last September-October. He was eight years from retirement.

I learn from the mistakes of my elders. Half of my retirement goes to mutual funds/employer stocks, the other half goes towards physical gold and silver. I don't buy gold and silver to protect myself from an economic collapse. I buy gold and silver to protect myself against these little "downturns."

I buy the aforementioned lead and brass to prepare for the worst of the worst.

reply to post by warrenb


Scary stuff there...those money market accounts are the
interest bearing funds that most big spenders play with
all day long. They hook up the frequent flyer numbers, and points
programs...tsk tsk tsk...

Watch out...here is why: This is from today...

Federal Deposit Insurance Corp. Chairman Sheila Bair said Friday her agency may tap its $500 billion credit line with the U.S. Treasury to replenish its deposit insurance fund, though she appeared cautious about doing so.

"We are carefully considering all options" including borrowing from the Treasury, Ms. Bair said Friday after a speech in Washington.

FDIC Considers Borrowing From Treasury to Shore Up Deposit Insurance

www.abovetopsecret.com...

[edit on 18-9-2009 by burntheships]

reply to post by nunya13


Buy only the house you need
set aside 30-50 grand for health emergencies
buy a legendary w124 Mercedes-Benz for 1-2 grand (it's more reliable than a Lexus)
buy gold when it's cheap and bury it

Banks are not that safe. When Argentina defaulted in 2000s depositors' cash was reduced by 75%. All of them and there was nothing anyone could do.

reply to post by nunya13


I'm no economics expert either, BUT the metals listed are a great idea actually!
IF things get progressively worse, obviously non-perishables and luxury items such as alcohol and cigarettes would be worth alot.

No, I am not joking.

Originally posted by mythatsabigprobe
reply to post by nunya13

 

One thing to think about, there is no real mechanism for inflation in this country. You can't have a rapid increase in prices and asset values if you don't have a corresponding raise in wages (in most other western countries, wages are adjusted to inflation automatically). So inflation is not very likely.

There is a mechanism if Americans become priced out of it while the rest of the world scrambles for something else (euros, gold, etc). For example, if Americans continue to lose jobs and are unable to pay for goods and/or service their debt, why would china buy more bonds? They'd rather buy hard assets with their currency and debt-based investments, such as US Treasuries, so what do they do? They use their US debt to buy hard assets from American businesses. So you'd get a tidal wave of US debt coming back to America (inflation) backed by very little due to rising unemployment.

I'm not saying this would happen. Only proposing a scenario.

[edit on 19-9-2009 by radio_for_peace]