Panic in U.S. money markets!

PANIC IN U.S. MONEY MARKETS! (by Martin Weiss and Mike Larson)
8/20/2007 6:00:00 PM



Martin and Mike here with an urgent afternoon update.

Despite the Fed's biggest cash infusions since 9-11 …

Despite the Fed's surprise discount rate cut on Friday …

And despite its desperate efforts to persuade big banks to borrow the money …

Panic Is Now Hitting
U.S. Money Markets!

We are witnessing the most dramatic — and potentially most consequential — panic rush to safety in modern history.

We can't tell you exactly what set off today's new fire. No one knows yet.

But we can clearly see the smoke. It's all over the money markets!

Here's what's happening:

Some of the world's largest and most "professional" investors, so cozy in their complacency just days ago, are dumping short-term loans (commercial paper) like hot potatoes, especially those backed by mortgages.

And with virtually no one willing to buy them, the rates that borrowers have to pay on these loans have gone through the roof.

Meanwhile, investors are so utterly desperate for a safe haven, and so anxious to throw more money into short-term Treasury bills, they've caused one of the greatest plunges in T-bill rates of all time …

The 1-month T-bill rate has plunged from 4.52% last Tuesday to as low as 1.25% today. That's not a typo! It was actually down by more than THREE full percentage points in just four trading days!


Today alone, the 3-month T-bill rate was down by over one full percentage point before recovering a bit.


The all-critical spread, or difference, between the 1-month T- bill and 30-day commercial paper rates is now as much as THREE times bigger than it was just a few days ago — another confirmation of panic in these markets.
Things are happening so fast, even the nation's leading news organizations are having trouble keeping track.

At noon today, for example, Bloomberg sent out a release saying that today's decline in the 3-month T-bill rate was the biggest since the Crash of '87. Then, a half hour later, they quickly followed up with another release saying that it's actually the biggest decline since they started collecting data in 1983.

We've looked back at our records and we can tell you flatly: In percentage terms, today's decline in Treasury-bill rates is the largest since World War II, another indication of how severe this panic has become.

Here's what all this could mean to you …

First, even investors in the shortest-term debt market are shunning any kind of loans with risk attached to them. They don't want sub-prime paper. They don't even want prime paper. They just want ultimate safety — short-term Treasury bills backed by the full faith and credit of the U.S. government.

Your action: Stick with your stash of safe, conservative investments we've been recommending all along.

Second, if you've got a chunk of your nest egg in one of our favorite short-term Treasury-only money funds, good. It means you already own what nearly everyone else now wants.

But if your fund has an average maturity of just a few days, don't be surprised if your yields start dropping sharply very soon.

One way to help offset that drop: Favor Treasury-only money funds that have a longer average maturity. Examples: MTB U.S. Treasury Money Market Fund (VSTXX) with an average maturity of 45 days and Weiss Treasury Only Money Market Fund (WEOXX) with an average maturity of 51 days.

Third, don't be surprised if the panic in the U.S. money markets soon becomes a panic in the U.S. stock market. Heck, if investors think normally-safe commercial paper is so risky, why should they believe stocks are any less risky?

Your action: Use stock market rallies as an opportunity to unload any stocks you're seeking to get rid of.

Fourth, with the yield on U.S. Treasuries plunging, watch out for another, even more severe plunge in the U.S. dollar, especially against the Japanese yen.

Your action: For protection and oft-dramatic profits, consider buying foreign currencies. Years ago, that would have been very cumbersome. But fortunately, today it's easy as buying almost any security traded on the NYSE or Amex. (See this morning's Money and Markets for details.)

Fifth, brace yourself for more. Today's panic in the money markets is just a sampling of what's possible in the days ahead.

Best wishes,

Martin and Mike

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http://www.moneyandmarkets.com/press.asp?rls_id=899&cat_id=6

On my "mirror" Wells Fargo thread at Jury Roll, Buddha and I are "duke-ing it out". He assures Hope, a real estate agent in Wisconsin... that everything will be fine... the same way he promises Amiawake and Loey (also real estate agents) that all this hoopla and meltdown is a mirage.

Of course he not-so-subtly brags that he has "six homes"... and the implication is that Buddha is too bright to be caught with all the "unwashed"... like you and me.

Old paralegal that I am, this begs the question... if Buddha really was up-to-snuff on whassup... why has he not *already sold* his six homes... before the US housing market crashed?

Anyway, just to let those of you who do not know... and those who do... understand what spiritual and personal thing is going on between Buddha/Taoist Rebel and Wasayo... here is what I wrote to Hope at http://www.juryroll.com:

*********************

Hope,

Buddha is dead wrong. Read this: "PANIC IN U.S. MONEY MARKETS!" by Martin Weiss and Mike Larson at http://www.moneyandmarkets.com/press.asp?rls_id=899&cat_id=6

Weiss and Larson say this today, "We are witnessing the most dramatic ~ and potentially most consequential ~ panic rush to safety in modern history. We can't tell you exactly what set off today's new fire. No one knows yet. But we CAN clearly see the smoke. It's all over the money markets!"

Please realize that buddha is not working and his wife is... in the mortgage department of Wells Fargo Bank. When he did work, he (like his wife) sold subprime and ARM mortages to many hapless and gullible people. Buddha ever-so-subtly hints that he is too bright to be caught along with the "rest of the unwashed" because he owns (count 'em)... six homes.

Through their actions (and those like them)... many were hurt... some irreparably. Buddha has a *vested personal interest*... a *need* to believe that Wells Fargo Bank (in particular) will be just fine. So take his advice with that in mind, please. His advice is colored by the fear he will not admit. My (personal) jibe to him is that he believes lightworkers can fix it by just thinking about it and sending love.

Even if there is some sort of "recovery" putting things off until September or October 2007... *snooze and you lose*. Buddha is advising all his people... real estate agents and the like... that sending out Light will heal everything... and that PASSION and FEELING are the only reality in the universe... and that human beings can make their own reality. They have. Look around. Earth is sure fired up on the grid.

*God will not be mocked.* What buddha and lightworkers of his ilk do is *delete God* and substitute themselves as "little gods" who can re-arrange their reality according to their own lusts and wishes. Not so.

*God will not be mocked.* My spiritual issue here with buddha is this... *righteous anger*... for all those he has wronged, threatened, given "deadlines of circle of fire salvation to", called horrendous names, savaged... all in the name of buddha's Garden brand of "unconditional love".

It's a Saturn in Virgo lesson coming up: *Discernment*. Karma is biting buddha. He ordered deadlines and judgment on others... now he has financial judgment. He misled others, all to their very-soon future sorrow and loss. Always remember this, Hope:

*God will not be mocked*. God does hear the *prayers of the righteous*... and you are one of those. It looks like buddha is not.

Saturn in Virgo... incoming 2 September 2007 until October, 2009: DISCERN. That is what "this thing between buddha and Wasayo" is all about.

Loving... and not deleting... Someone Bigger than us all... not "churchianity"... but definitely this: Another Player is on the Board... in the game of Life.

*Checkmate.* Be Ye Ready. This is karma. This is *retribution*.

My wife Wasayo and Buddha are duke-ing it out at Jury Roll about Wells Fargo and this global financial meltdown... so on Page 2 of her thread, I came up with a pretty good engineering question for Buddha.


You know how it is ~ "enquiring minds want to know".


http://www.juryroll.com/forum/view_topic.php?id=1953&forum_id=2

THE WELLS FARGO BANK QUESTION


Today, August 20th, 2007, has been an interesting day… a landmark day in many ways. News has come and gone of problems with Wells Fargo Bank… and rumors of the Bank of America as well. People could not get cash withdrawals… ATM’s could not be accessed. For many, it was a personal… albeit not (yet) widespread experience of a… run on the banks. This has not happened since the Crash of 1929.


No matter how the Wells Fargo Bank question turns out… even if it is all settled in 24 hours… it cannot be erased from the memory of those who went through it, in an up-close-and-personal way. Will they ever trust banks again? Will they ever again feel that their money is safe? This event, barely mentioned in the mainstream press… has been a watershed… a marker for what may yet come… who knows when.


On a personal scale, there was the “battle” between Buddha/Kincaid/Taoist Rebel and Wasayo. I gave personal information about Buddha just as he let Sandman of Jury Roll look at private email I had sent him during my tenure at Buddhas Garden… and bragged about it in the public shout box at Jury Roll. Buddha revealed private information. I revealed private information… tit-for-tat. What’s good for the goose is good for the gander. I got banned from Oroborusforum for saying what I did about “a Mod there and Kincaid/Buddha”. Truth is truth. Truth is always truth… even if it bites. Here is the Jury Roll thread:


http://www.juryroll.com/forum/view_topic.php?id=1953&forum_id=2


So, only time will tell. Even if this is settled and pasted over… like the PPT (Plunge Protection Team) fixes the US Stock Market… the underlying “cancer” still exits… eating away relentlessly and malignantly at the US banking system, the housing market, the real estate market… and the global economy.


Today was a watershed because although the subprime and prime mortage lenders lacking funds issue has been raised last week… this is the first time there has been a hint of the instability of a major bank… of the hint of panic… and a run on the banks.


Even if the mainstream press “forgets” it or censors it… the hearts and lives of those who lived it… have been forever imprinted with fear and mistrust. The positive side is that people may become more survival-oriented, more inclined to save. Even when the darkest moments are lived through, there is always light at the end of the tunnel. Do I regret today, and this thread? No, I do not. Much was shared, and much learned.


Wasayo