Europe’s Problems – US Money Funds and Politics

Bruce Krasting: Europe’s Problems – US Money Funds and Politics.

This is an interesting possible side-effect of the Greek sovereign debt crisis.  I was a bit surprised to find that, according to Fitch, 50% of US Money Market assets are exposed to European bank short-term paper.  Having lived through the 2008 financial crisis and watching a few MMF’s “break the buck, ”  it would seem that another Money Market crisis would truly be a confidence killer.  While this blog is not in the business of providing financial advice (the regulators frown on such activity), it might be worth checking to see if your brokerage account has a bank sweep feature that could provide FDIC insurance if the worst-case scenario should come to pass.  We live in a financial world where the tails of the bell-curve are fatter than usual, so it pays to keep an eye on those pesky low-probability/high magnitude events.