Bill Gross, founder and chief investment officer of PIMCO, had a great article in Fortune last month. He described the "sub-prime" financial mess this way:

"The tangled web of sub-primes has claimed more than its share of victims in the last months; homeowners by the hundreds of thousands, to be sure, but also those who created, packaged, insured, distributed, and ultimately bought what should have been labeled "junk mortgages" but which by a masterstroke of marketing genius received more respectable imprimatur.

Skim milk masquerades as cream," warned Gilbert and Sullivan over a century ago, and sure enough, today's subprimes, packaged into financial conduits with monikers like SIIV's and CDO's, pretended to be AAA - cubes of butter."

Subprime Crisis Hits Money Funds

LOS ANGELES: Money market funds were invented 37 years ago to offer investors better returns than bank savings accounts while providing a high degree of safety. Most of the $2.5 trillion sitting in these funds is invested in assets like U.S. Treasury bills, certificates of deposit and short-term commercial debt.

Unlike bank accounts, money market funds are not insured by the federal government. They almost never fail.

Unbeknown to most investors, some of the largest money market funds today are putting part of their cash into one of the riskiest debt investments in the world: collateralized debt obligations backed by subprime mortgage loans.

Collateralized debt obligations are packages of bonds and loans, and almost half of all CDOs sold in the United States in 2006 contained subprime debt, according to Moody's Investors Service.

[Via International Herald News]