Lunchtime Links 5-25
Question of the day: Why is there still nearly $3 trillion parked in money market mutual funds? They yield nothing, they aren’t FDIC guaranteed, they CAN break the buck, and they’re less liquid than bank accounts. Thinking back to autumn ’08, when credit markets start to seize up, cold hard cash stuffed in your mattress looks more appealing. You can withdraw cash from a bank account, not so a money market fund. Not that I’m recommending that, it’s just that if you’re not getting any benefit by holding the money market fund, why bother? (401k money may be stuck, but others aren’t…)
Does Buffett deserve his outsider’s rep? (NY Mag, ht Ed Harrison) This blog’s view is no, of course. Good piece, though it misses many of the other public policy issues Buffett has been on the wrong side of. PPIP, the stress test, the bank levy. Also, his bank holdings survived thanks to TLGP.
Case-Shiller: house prices “weakening” (CR) Mortgage rates may be plumbing their lows, thanks to flight-to-safety buying of Treasuries, and that may cause demand to pick up a bit. But so much was pulled forward by the expiration of the homebuyer’s tax credit on May 1st, you gotta think prices are headed back down. Especially considering that there are 7.3 million homes that are in foreclosure or delinquent. That’s a lot of shadow inventory.
InterOil smashed again after lame press release (BizInsider) IOC has been a favorite short for hedgies for a long time. Looks like it’s finally working out for them.
Four Spanish savings banks make initial merger pact (NYT) This came after the Bank of Spain took control of CajaSur. Marc Chandler at Brown Brothers Harriman offers this thought today: “The European debt crisis is not simply a Greek phenomenon. Spain is the focus now. Spain (sovereign and private) owes foreign investors roughly $1.1 trillion. In comparison, Greece’s external debt is closer to $236 bln.”
Germany eyes wider short-selling ban (Graham/Aloisi, Reuters) Populism that will fail to stabilize markets. If Europeans truly want to squeeze the shorts, they should announce dramatic budget cuts that solve their underlying solvency problem.
LIBOR reverse cliff-diving (Reuters)
Hubble finds a star eating a planet (NASA) This is an artist’s rendering, not a pic from space. Still, pretty cool.
Useless cat (imgur) Click on image to enlarge.