Schools and local governments in Florida who routinely deposited excess money in a state run investment fund were stunned today when the state suspended withdrawals.
This is because the nimrods who ran the fund were “investing” in extremely risky SIVs. Word got out, there was a run on the fund, now the state has slammed the door shut.
It is a certainty they did this because the fund is taking huge losses and not only do they not want to liquidate at a loss, they can’t, because there are no buyers for the garbage they own. That’s right, this stuff is so toxic that no one wants it.
Bloomberg TV just had an interview with a school official in a Florida town who said, I’ve got a $850,000 payroll for 230 employees to make tomorrow and no money to do it with because the state froze the money. He sounded practically in tears.
We are talking billions of dollars here that will evaporate. And there will be many more stories like this in the coming months.