Uh oh, that’s where the state pension fund is.
“You’re thinking of this place all wrong. As if I had the money back in a safe. The money’s not here. Your money’s in Joe’s house...right next to yours. And in the Kennedy house, and Mrs. Macklin’s house, and a hundred others. Why, you’re lending them the money to build, and then, they’re going to pay it back to you as best they can. Now what are you going to do? Foreclose on them?...Now wait...now listen...now listen to me. I beg of you not to do this thing. If Potter gets hold of this Building and Loan there’ll never be another decent house built in this town. He’s already got charge of the bank. He’s got the bus line. He’s got the department stores. And now he’s after us. Why? Well, it’s very simple. Because we’re cutting in on his business, that’s why. And because he wants to keep you living in his slums and paying the kind of rent he decides. Joe, you lived in one of those Potter houses, didn’t you? Well, have you forgotten? Have you forgotten what he charged you for that broken-down shack? Here, Ed. You know, you remember last year when things weren’t going so well, and you couldn’t make your payments? You didn’t lose your house, did you? Do you think Potter would have let you keep it? Can’t you understand what’s happening here? Don’t you see what’s happening? Potter isn’t selling. Potter’s buying! And why? Because we’re panicky and he’s not. That’s why. He’s picking up some bargains. Now, we can get through this thing all right. We’ve got to stick together, though. We’ve got to have faith in each other. “
This was an institutional MM Fund and did not take deposits from individuals. The minimum deposit was 10 million dollars. It turns out the fund had zero exposure to Lehman or AIG but somehow the word was spread it did. No one lost anyhting here as the fund did not “break the box”. The per share value remains at $1.00 per share.
Correlate this with the announcement by Paulson that any publicly-offered money market fund will be guaranteed. The gov’t entered the market for this service and thus none of the free-market competition can compete.
Putnam sucks and blows... my former company’s 401(k) was managed by them... one of their offerings “New Opportunity” fund was a joke... lost something like 50% of its value in ~2001... I doubt it has ever regained (I haven’t looked)... thankfully my company switched to Fidelity (wished it would have been Vanguard... I’m a big fan of low cost index funds).