Seems like all the rules of the game have changed.. All norms have changed..
The Reserve Primary Fund had $62.6 billion in assets as of last week and it one of the largest money-market funds. However they owned some Lehman toxic paper.. and the cardinal rule of parity to the US Dollar net asset value crashed... Now for every dollar... it is only worth .97 cents. All that loss to low interest rate...one can easily be shocked....

I am sure all know by now the Auction Rate Security Debacle as well... this was suppose to be a short term slightly higher yield than most other short term deposits... The only problem...is this also BLEW UP... and so many investors can not redeem their money... I am sure the story will continue...and possibly get worse...

So this brings us back to

WHAT TO DO WITH OUR CASH????


If you have less than $100,000 dollars you are insured by the FDIC right??? Well in one of my last postings on this blog... capitalinvestor1836.. I presented the weakness of the FDIC and how little money they really have to play with.. Quick summary...FDIC was holding approx 53 Billion..This year.. there have been several small banks that failed.. but one large on called Indy Mac... They took with them approx 10 Billion dollars from the kitty... So how do you feel now..With Lehamn imploding..AIG imploding... isn't quite possible there will be another dominoe falling... I would bet yes... so how the FDIC protect your money???

They are running out of money ...The same as the FED.. the only choices are to "PRINT MONEY" or RAISE TAXES... that is it... the feel good 400 some odd point rally yesterday... possibly has not changed anything... as well as all the emergency liquidity injected into the markets from all the central bankers all over the world...

SO WHAT DO WE DO WITH OUR MONEY???

Everyone is looking for answers... and this is a very tough question... I trust the US govts ability to tax and print money... I do not trust the FDIC ..I do not trust the money markets.. I do not trust the banks...

I believe anything can happen... and I believe ( Hope) that possibly yesterdays FED actions.. will help confidence and the markets... I suggest.. have a plan... nothing that is seat of the pants.. nothing induced by fear... something that fits your personality...I personally have been ....this year and last...rolling over short term US GOVT interest rate vehicles... historically they have been the safest... that is registered only in my name and my wife's name.. not the bank's name...this is an important issue... As well I personally watch the dollars strength...and as airlines hedge their risk with the price of oil... I will be hedging my dollar in case of weakness...

These are tough times... One needs to think of return of money as a pose return on money!

Andrew Abraham
My investors Place
A social networking site for investors

worrying times indeed. It is my plan during these times to spread my money as widely as possible, and try to get my finger in as many pies as posible. I am looking at investing my money in antiques, in a variety of different banks and building societies accounts, in a few stocks, and in premium bonds.....hopefully all these will be safe, but if one or some of them fail, at least I dont have all my eggs in the one basket.

Its definately Hard.

I'm only 20, so i actually have to save the cash before i put it anywhere.

I'm going with the future and putting a good chunk into websites and web development, sites ranging from $100-2,500 for now and let them grow over time.

As i said, it depends on the cash available and individual as personally if i had alot more, i'd be looking to stake in start up and established businesses.

This is a great article and sums up the fundamental dilemma at the moment, which is one of trust.

And in the midst of all the deabcles going on, from fraud to subprime to banks lending like headless chickens, the excuses, nay reasons emerge, making these things appear like honest mistakes or due to excesses of greed or risk-taking etc.

But this is simplistic. The problem in my view is far deeper. It lies in the fact that both as organisations and individuals, those concerned KNEW they were ripping off other people, KNEW what they were doing was dangerous and unsustanaible, and above all, just didn't CARE about the consequences. Trust.

Now the problem exists with allour investment decisions: who, or what, do you trust?

Anything to do with paper: stocks, funds, bonds, even Treasuries and gilts, have a human factor attached, and we wonder - will the people responsible do to us again (to use Adam Smith's phrase 'one way or another') what they have just done with toxic bonds, subprime scams, pyramid Ponzi schemes or inflation by stealth?

What is happening is quite unparallelled, in my view. I remember reading, some time back, in a disused building the graffiti: 'Eat the rich to feed the poor'. What we have just seen, and continue to see (for no-one has really yet grasped the problem at its root) is 'Eat the poor to feed the rich'. In other words, a conspiracy among the educated classes on a quite large and loosely co-ordinated scale, of enriching themselves no matter the real cost. It is corruption, plain and simple.

My natural reaction would then be 'do not trust paper, because the values of those issuing it are uncertain'. So what then?

The instinct would be to invest in tangibles: gold, silver, maybe oil (through ETFs) yet the sorry state of affairs is that our educated classes, be they governemant organisations like the Fed or other interested parties, are manipulating the prices of these goods in the market. There is really no end to the meddling and interference of all these white collar crooks.

Of course if you or I would do what they did, we'd be in jail...

Here is the rub: it's the entire legal framework of our societies that are at odds with such values as honesty, honour and trust.

Caveat emptor? Ah, but that would be to assume we have the choice...