Why Your Money-Market Fund Could Be Hit by Greek Default!

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• This article explains how inter-connected the world really is. The man on the street has no idea what is coming. He thinks he is totally safe as all his money are in safe money market funds. What he does not know is that such funds may be exposed to the Eurozone debt market.
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• Some of you may say: our deposits are insured ! But if the entire country goes belly up, where is the government going to get the money to bailout everybody? The answer is: money printing, creating money out of thin air! It means currency debasement! Got gold yet?
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  Why Your Money-Market Fund Could Be Hit by Greek Default!
  By: John Carney Senior Editor, CNBC.com
  Some of the safest, plain-vanilla investment accounts in the U.S. could be  challenged if Greece defaults on its sovereign debt.
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  Forty-four percent of mutual fund assets in the U.S. are invested in the short-term debt of European banks, according to a report from Fitch. A separate report from Moody’s noted that 55 percent of those holdings are in the commercial paper of French banks, such as Societe Generale, BNP Paribas ..  and Credit Agricole. French banks are some of biggest creditors to Greece, with over $53 billion in outstanding loans to the Greek government and private sector.
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  While fund managers have had plenty of warning of the potential of a default in Greece, many would likely still be caught off guard. Many fund managers assume that a bailout will prevent a default by Greece. The bankruptcy of Lehman Brothers similarly caught money-market fund managers off guard, famously causing the Reserve Fund to “break the buck.”
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  The debt of these French banks is still very highly rated and Moody’s says the risk of default on the short-term debt is very low. But the high ratings assume that the probability of a default by Greece is very low.
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  If Greece defaults, it is possible that the market value of the commercial paper of French banks could plummet and the ratings could be downgraded. Money-market funds would likely refuse to fund new issuances of the short term debt, creating a liquidity problem for the French banks.
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  Other European banks would likely face pressure as investors tried to measure their exposure to Greece and those over-exposed to Greece.

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