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  • x7mm4kx x7mm4kx Sep 1, 2007 6:26 PM Flag

    Pimco's Gross Urges Bush to Bail Out U.S. Homeowners

    Today Bloomberg published the following report.

    Pimco's Gross Urges Bush to Bail Out U.S. Homeowners

    By Patricia Kuo

    Aug. 23 (Bloomberg) -- Bill Gross, manager of the world's biggest bond fund at Pacific Investment Management Co., urged the Bush administration, rather than the Federal Reserve, to bail out U.S. homeowners to avoid ``destructive housing deflation.''

    Let�s dig into this a little bit.

    Pimco's Gross Urges Bush to Bail Out U.S. Homeowners

    No, Bill. Bush doesn�t have that kind of money.

    Gross advised President George W. Bush to set up a ``Reconstruction Mortgage Corporation'' and ``write some checks'' to bail out homeowners

    Oh � I see. You want Bush to use MY money. How generous of you.

    ``Fiscal, not monetary policy should be the preferred remedy,'' said Gross, who manages the $103 billion Pimco Total Return Fund.

    You skipped a crucial question. Why does there need to be a "remedy"?

    Bill Gross, manager of the world's biggest bond fund at Pacific Investment Management Co., urged the Bush administration, rather than the Federal Reserve, to bail out U.S. homeowners to avoid ``destructive housing deflation.'

    Destructive to whom? Sellers? What about buyers? How can we bemoan the "unaffordability of housing" for buyers out of one side of our mouths and then take the side of sellers out of the other?

    Only deflation is destructive? Inflation is not?

    ``This rescue, which admittedly might bail out speculators who deserve much worse�''

    Glad you were able to admit that.

    There are precedents from previous crises in the 1990s, Gross said. The U.S. government created the Resolution Trust Corp. to rescue the insolvent savings and loan industry and the Fed organized a bailout to prevent billions in losses from rippling through Wall Street after the collapse of Long-Term Capital Management LP hedge fund in 1998.

    You don�t see the connection? It�s called "moral hazard," Bill.

    So now you want to sow the seeds of the next crisis. We do this by taking money away from people who did NOT speculate, leverage up, and try to get rich quick, and give it to the ones who did.

    ``Even cuts of 200-300 basis points by the Fed would not avert a built-in upward adjustment of adjustable-rate-mortgage interest rates,'' Gross said. ``Nor would it guarantee that the private mortgage market, flush with fears of depreciating collateral, would follow the Fed down in terms of 15-30 year mortgage yields and relaxed lending standards.''

    Now you�re talking. The way to "avert a built-in upward adjustment" would have been to not issue credit at artificially low rates to begin with.

    Not that there isn�t anything that should be done. Maybe some kind of bail-out is in order. How about handing the tab to the lenders who extended credit to people they knew wouldn�t be able to pay it back?

    Allow no foreclosures on loans made under circumstances of fraudulent lending? Given the creativity of the American tort industry, heck, probably no legislation would be needed.

    Sure, probably see quite a few more hedge funds would go belly-up, but betcha a truckload of bonds that it would be a long time before we had another crisis like this one!

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    • God save your ass, you have no idea what you're posting?

    • Sorry to hear of your loss, the internet did not indicate your loss.

    • Complex:
      Margaret, Peggy, died from ovarian cancer 5 years ago, and my Sons and Grandsons thank you for your Labor Day wish.
      Walt Calahan
      PS: I lived in Brevard County, Florida from 1978 to 2005 - -decided that hurricanes were not friendly to old people, so I moved to be closer to my Son's home. Good decision on my part, too.

    • Say hello to Walt Jr. and Margaret for me!

      Wish them a happy Labor Day!

    • "Multi" Complex:
      Have a nice day, but stay out of the sun. Labor Day was set aside for the hard working American citizen whose contribution made this Country great. Enjoy the many privileges we Americans have received - - we are the envy of all the world!
      W A Calahan

    • Don't live in Florida anymore maybe you need to look at yourself before you start declaring that all who do not follow your way of thinking are the demons in life that you are protecting us from. My contacts with the victims was humanitarian in nature and involved the distribution of water that I had shipped in via trucks that I paid for. I spent 2 weeks there helping the relief workers. Please tell us how you use your spare time to help others besides posting out here telling us how all the politicians are corrupt and the Doctors are not doing their job and how. While I could care less about how you handle your life it seems strange how you catagorize everyone else into meaningless groups of perople who are out to get you. Those who charge you to much or disagree with your way of thinking. While I can't change everything I disagree with there are some things I can alter or make better and it is to that extent that I strive for. You on the other hand like to associate people with activities and descriptions to allow others to form their own opinions about an individual or individuals to degrade them in some way. Your cutsey little descriptions, a sure description of how what you have done in life has been a failure.

      Have a nice life!

    • Complex:
      Have a good day. Suggest you stay out of the sun for any length of time and also drink a lot of fluids, especially water. Florida must certainly be a better place to live now with people such as you helping it to recover. Hurricane damage cleanup is costly and hard woork, but provides economic opportunity to those capable of obtaining Federal funded emergency contracts to perform the work. I understand those contracts are very lucrative. I feel for those Central America countries about to be stuck by a "five" this week - - now they will need help.

      W A Calahan

    • Seeking Alpha blog has exposed Bill Gross who is attempting to pump up one of his bond funds and bailout his whole firm.
      http://seekingalpha.com/article/45689-bill-gross-wants-a-pimco-bailout

    • People usually bring up news events of which they can relate when the situation does not relate to the subject at hand. I don't know what your medical problem is or was but you seem to have lingering effects,

      LMAO, LMAO

    • sensiseattl...

      you are one stupid nut

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