Homework

Here is your homework assignment - two thousand words describing the Black Swan that would erupt if PayPal has to "break the buck" on their money market fund - the fund that forms the backbone of their online payment system. Just in time for Christmas...

PayPal customers' cash exposed to illiquid assets
By Tim McLaughlin

NEW YORK (Reuters) - Illiquid assets in a portfolio investing the cash of eBay Inc (EBAY.O: Quote, Profile, Research) customers surged 39 percent in the third quarter, exposing them to a larger chunk of troubled corporate debt, U.S. regulatory filings show.

The money market fund of PayPal, eBay's online pay service, invests cash parked by Internet shoppers in a portfolio that holds $1.63 billion in illiquid assets, or 5.5 percent of total holdings, according to the filings. That's up from $1.17 billion, or 4.6 percent of holdings, in the second quarter.

Bonus points for those of you can describe which Circle of Hell the investment manager at PayPal will be plunged into once the lynch mob is done with him (or her)...

(In the interests of full disclosure, it must be noted that I have swept most of the cash that had been held in my PayPal account out a month ago, worrying about this very thing)