Speaking of subprime collateral damage and the Pottery Barn rule of You Break It, You Bought It, I am wondering about the current troubles with Florida’s State Board of Administration pooled funds. As you may recall, the fund was closed last week, but not before panicky municipalities withdrew almost 40% of assets after discovering that fund was heavily exposed to rapidly deteriorating mortgage-backed commercial paper.
The fund will re-open on Thursday for withdrawals, but the situation is changing rapidly. Should things deteriorate further, however, please promise me we won’t nationalize Florida. I like to maintain plausible deniability on any state than can out-weird Carl Hiaasen.