Paper Economy - A US Real Estate Bubble Blog: Question(s) of The Day?

Monday, September 08, 2008

Question(s) of The Day?

Can someone explain to me why I should stop thinking PIMCOs Bill Gross is a total creep?

Am I missing something or did he just contribute to forcing a taxpayer bailout of Fannie and Freddie to his own absurdly obvious benefit?

It was coming anyway but seriously, is what he pulled even legal?

Labels: bailout, bill gross, fannie mae, freddie mac

7 Comments:

He's a ratbastard.

He was made whole on the backs of Joe Sixpack who just doesn't know any better.

Bill Gross: Big Bet, Big Fail?

By Ben Bittrolff, at 10:52 AM
Ben,

I agree... I think what he did was totally unethical.

It appeared that he loaded up on GSE debt just when he knew they would inevitably collapse into the hands of the taxpayer ... then he tipped the process over the edge by prompting a buyers strike.

I'm not sure I understand how the trade would make him $$ though...

Whats your thoughts?

Also, to all other readers... be sure to read Ben's blog The Financial Ninja... as it is chock-full of great coverage every day.

By SoldAtTheTop, at 11:11 AM
To me it looks like Gross is only guilty of trash-talking Fannie/Freddie. Pimco holds a lot of F/F debt, he tells everyone the govt better step in, confidence erodes, and the govt acts. His bet pays off. Soros did worse back in '92 -- he actively contributed to the fall of the pound by selling short. By buying and holding GSE debt Gross was actually helping F/F stay afloat. If he'd dumped the debt the govt may have had to act sooner.

So he's only guilty of talk. And profiting when a lot of others are suffering. Or am I missing something?

Maybe he's a jerk, winning a bet against the govt and taxpayers. But I think he played by the rules.

If we the people feel ripped off, we can just raise his taxes.

By Dagger, at 11:22 AM
"Therefore a prudent ruler ought not to keep faith when by doing so it would be against his interest, and when the reasons which made him bind himself no longer exist."

By born to lose, at 2:22 AM
I'm not sure I understand how the trade would make him $$ though...

I understood he bought GSE debt at distressed prices -- less than par. Back in the days when the 'implicit guarantee' was just that.

?

By eh, at 5:19 AM
Hi,

I found an interesting article about teh handling of Gold price:
http://www.24hgold.com/viewarticle.aspx?langue=fr&articleid=313496_La+Manipulation+du+Prix+de+l%e2%80%99Or
have a look at this.

Cheers,

Bibi

By Anonymous, at 7:44 AM
But my understanding is that he began to load up on GSE debt fairly recently... haven't spreads been elevated for a while?

What was the exact strategy?

By SoldAtTheTop, at 9:02 AM