Thursday, Oct 23, 2008
Fed bails out Hedge Funds
Financial Times: Fed offers $540bn liquidity to money market funds
The US Federal Reserve on Tuesday said it would finance up to $540bn in purchases of short term debt from money market mutual funds, in its latest move to shore up a key pillar of the US financial system.Money market funds have faced severe redemption pressures over the past month as the financial crisis deepened - but have struggled to find any buyers willing to pay the full value for their assets since all these funds are selling at the same time. This has left them wary of investing any cash that they have, making it difficult for companies and banks trying to raise funds in the commercial paper market.
Posted by charlie brooker @ 09:53 AM (190 views) Add Comment
5 Comments
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1. mark wadsworth said...
..."but have struggled to find any buyers willing to pay the full value for their assets"?
They might well struggle to get FACE value, because bank bonds are not worth FACE value any more, they are worth rather less, let's say 90c in the $1. Which is why the best way to sort out the banks at nil cost to the taxpayer is to replace each $1 of bonds with new bonds with a face value AND market value of 90c plus new shares with a face value of 10c
It's called a debt-for-equity swap, and is the the good old fashioned way of sorting this out.
2. timmy t said...
Pretty much a billion dollars for every point the Dow dropped - money well spent!
3. V Stor said...
Its obvious, the Fed are engineering a slow stockmarket crash.
Stocks will head much lower from current levels..
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