The panic continues

Rust never sleeps

Nor, it would appear, will anyone worried about their future.

The New York Times reports:

But there was little relief from the paralysis that has gripped the credit markets this week, which has sent investors flocking to the safety of Treasury bills and threatened to starve businesses of capital as Wall Street grapples with its most dramatic shake-up in decades.

The Wall Street Journal:

Fears about the safety of money-market funds — traditionally one of the most conservative investor haves — grew after Putnam Funds closed its institutional Putnam Prime Money Market Fund following a surge of redemption requests.

The move comes days after The Reserve Primary Fund, one of the largest money-market funds, said at least a dozen large investors pulled out almost $40 billion of their money earlier this week and caused the fund to "break the buck." That is, its net asset value fell below the time-honored standard of $1 a share.

When asked about the future of the remaining banks, the Financial Times observed:

No one knows [what their fate will be] — hence the panic. Most analysts assume that governments will continue to protect big retail banks. However, some weaker groups are now being removed from the system, via mergers, and the fate of others is unclear.

Business Week asks and then answers its question:

Are we safe yet?

In the short term, no.

Der Spiegel reports that: "Panic is the word of the hour on Wall Street."

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