We The People, Off With Their Heads!!
From Bill Gross's latest at the Pimco Web Site.
in a global financial marketplace in the process of delevering, assets that go up in price are rare diamonds as opposed to grains of sand.
What Happens During Delevering
1. Risk spreads, liquidity spreads, volatility, term premiums – they all go up.
2. Delevering slows/stops when assets have been liquidated and/or sufficient capital has been raised to produce an equilibrium.
3. The raising of sufficient capital now depends on the entrance of new balance sheets. Absent that, prices of almost all assets will go down.
A 10% aggregate asset price decline does more than make us all 10% less wealthy.
Because many of these assets are leveraged and margined, the more they decline, the more frequent and frenzied the margin calls,
and if the additional cash flow is not provided, not only an asset liquidation but a debt liquidation follows.
It is the debt liquidation that potentially turns a stagnant/recessionary economy into something much worse.
This rarely observed systematic debt liquidation is what confronts the U.S. and perhaps even the global financial system at the current time.
Unchecked, it can turn a campfire into a forest fire, a mild asset bear market into a destructive financial tsunami.
Over $400 billion in bank- and finance-related capital has been raised during the past year, a decent amount of it, by the way...
having been bought by yours truly and my associates at PIMCO. Too bad for us and for everyone else who bought too soon.
There are few of these deals now priced at par or above, which is bondspeak for “they are all underwater.”
We, as well as our SWF and central bank counterparts, are reluctant to make additional commitments.
To ultimately stop this asset/debt deflation, a fresh and substantial new source of buying power is required.
Without a new balance sheet, their only resort is to sell assets, which in many cases leads to further price declines, or ultimately debt liquidation/default.
If we are to prevent a continuing asset and debt liquidation of near historic proportions...
we will require policies that open up the balance sheet of the U.S. Treasury...
not only to Freddie and Fannie but to Mom and Pop on Main Street U.S.A., via subsidized home loans issued by the FHA and other government institutions.
The Nattering One muses... Most snickered & laughed when we Nattered three years ago that in the near term...
GM, FNMA & FHLMC would all be bankrupt or bailed out, and real estate would be in the toilet along with the entire emasculated service economy...
Guffaws and chortles were heard when we predicted our trifecta... a major bank, mortgage lender and Wall Street investment bank...
would be bailed out or fail in the near term. And then we named them in our Dead pool (IndyMac, Countrywide and Bear Stearns).
Today, we get the last laugh as Mr. Gross at PIMCO echoes one of our sentiments, yes, a Tsunami is on the way.
Everyone is busy watching the tide go out, as it goes out further, more beach gets exposed and more people shuffle further out into the freshly exposed sand bar.
It is readily apparent to most observers, of those being swept out by this tide, who is naked. But don't stand still and stare too long...
Because finally, someone will look up and gasp, OMG! As a massive tidal wave slams everyone and everything into the sand.
Its no wonder Mr Gross opines for the opening of a "new balance sheet" or source of fresh capital from the US Treasury...
and a further socialist nationalization of the housing market, because its in his OWN best interest.
Not only has Mr, Gross been catching falling knives which have cut him deeply, i.e. "they are underwater" and...
if this continues without a Treasury bailout Pimco will ex sanguinate... Bill Gross at Pimco is the manager of the world's biggest bond fund.
About 61% of the holdings of Bill Gross's Pimco Total Return Fund are mortgage backed securities, mostly debt guaranteed by Fannie, Freddie or Ginnie Mae.
Said debt is part of the $5.2 Trillion in GSE debt that WE THE PEOPLE will guarantee...
And of course Mr. Gross will be the first in line to profit from the Mother of all bailouts.
So Mr. Gross and other's "bought too soon"? Too bad. All those attempting to put a false bottom on any assets deflation should suffer the consequences.
From the beginning we have decried every bailout attempt with our standard warning:
This trainwreck is a fait accompli, cut and bail out all you want, NOTHING and NO ONE can stop it.
These greedy bastards who demanded the funding for the bailouts, which are all going to fail, now want the bailouts to be bailed out in the mother of all bailouts?
The collapse in the debt markets needs to run unabaited, and if bond giants like Pimco fail, and GSE debt becomes worthless, so be it.
That is called free market capitalism.
But you wouldn't know that from the likes of Mr. Gross who along with the greedy speculators on Wall Street and Main Street (real estate)...
and the elected and appointed whores which infest Congress & our Federal Agencies as incumbent elitist & socialist traitors...
wrap themselves in the flag and masquerade in three piece capitalist clown suits.
Letting this pack of ship jumping rats die or drown, would be the proper thing to do.
If we keep bailing these greedy idiots out, they will never learn, and with our codependent behaviour...
we will enable them to commit the same crimes over and over again.
These multi national, globalization preaching, elitist scumbags who are sworn to money and loyal to none...
have robbed us of our hard earned money, raped our children of their future, deceived us out of our liberty, and murdered our way of life...
Denying us of our constitutional right to the pursuit of life, liberty and happiness.
Would you let a repeat traitorous rapist and murderer back on the streets? I think not.
I do agree that this is one case of plague that should not be allowed to run its course. We need to learn a lesson AGAIN from the French...
We should do the world a favor, and accelerate the process, instead of the mother of all bailouts...
WE THE PEOPLE need to cut our losses, so, a swift kick in the rear to get the elitist Leper's in position on the chopping block, and off with their heads!!!
in a global financial marketplace in the process of delevering, assets that go up in price are rare diamonds as opposed to grains of sand.
What Happens During Delevering
1. Risk spreads, liquidity spreads, volatility, term premiums – they all go up.
2. Delevering slows/stops when assets have been liquidated and/or sufficient capital has been raised to produce an equilibrium.
3. The raising of sufficient capital now depends on the entrance of new balance sheets. Absent that, prices of almost all assets will go down.
A 10% aggregate asset price decline does more than make us all 10% less wealthy.
Because many of these assets are leveraged and margined, the more they decline, the more frequent and frenzied the margin calls,
and if the additional cash flow is not provided, not only an asset liquidation but a debt liquidation follows.
It is the debt liquidation that potentially turns a stagnant/recessionary economy into something much worse.
This rarely observed systematic debt liquidation is what confronts the U.S. and perhaps even the global financial system at the current time.
Unchecked, it can turn a campfire into a forest fire, a mild asset bear market into a destructive financial tsunami.
Over $400 billion in bank- and finance-related capital has been raised during the past year, a decent amount of it, by the way...
having been bought by yours truly and my associates at PIMCO. Too bad for us and for everyone else who bought too soon.
There are few of these deals now priced at par or above, which is bondspeak for “they are all underwater.”
We, as well as our SWF and central bank counterparts, are reluctant to make additional commitments.
To ultimately stop this asset/debt deflation, a fresh and substantial new source of buying power is required.
Without a new balance sheet, their only resort is to sell assets, which in many cases leads to further price declines, or ultimately debt liquidation/default.
If we are to prevent a continuing asset and debt liquidation of near historic proportions...
we will require policies that open up the balance sheet of the U.S. Treasury...
not only to Freddie and Fannie but to Mom and Pop on Main Street U.S.A., via subsidized home loans issued by the FHA and other government institutions.
The Nattering One muses... Most snickered & laughed when we Nattered three years ago that in the near term...
GM, FNMA & FHLMC would all be bankrupt or bailed out, and real estate would be in the toilet along with the entire emasculated service economy...
Guffaws and chortles were heard when we predicted our trifecta... a major bank, mortgage lender and Wall Street investment bank...
would be bailed out or fail in the near term. And then we named them in our Dead pool (IndyMac, Countrywide and Bear Stearns).
Today, we get the last laugh as Mr. Gross at PIMCO echoes one of our sentiments, yes, a Tsunami is on the way.
Everyone is busy watching the tide go out, as it goes out further, more beach gets exposed and more people shuffle further out into the freshly exposed sand bar.
It is readily apparent to most observers, of those being swept out by this tide, who is naked. But don't stand still and stare too long...
Because finally, someone will look up and gasp, OMG! As a massive tidal wave slams everyone and everything into the sand.
Its no wonder Mr Gross opines for the opening of a "new balance sheet" or source of fresh capital from the US Treasury...
and a further socialist nationalization of the housing market, because its in his OWN best interest.
Not only has Mr, Gross been catching falling knives which have cut him deeply, i.e. "they are underwater" and...
if this continues without a Treasury bailout Pimco will ex sanguinate... Bill Gross at Pimco is the manager of the world's biggest bond fund.
About 61% of the holdings of Bill Gross's Pimco Total Return Fund are mortgage backed securities, mostly debt guaranteed by Fannie, Freddie or Ginnie Mae.
Said debt is part of the $5.2 Trillion in GSE debt that WE THE PEOPLE will guarantee...
And of course Mr. Gross will be the first in line to profit from the Mother of all bailouts.
So Mr. Gross and other's "bought too soon"? Too bad. All those attempting to put a false bottom on any assets deflation should suffer the consequences.
From the beginning we have decried every bailout attempt with our standard warning:
This trainwreck is a fait accompli, cut and bail out all you want, NOTHING and NO ONE can stop it.
These greedy bastards who demanded the funding for the bailouts, which are all going to fail, now want the bailouts to be bailed out in the mother of all bailouts?
The collapse in the debt markets needs to run unabaited, and if bond giants like Pimco fail, and GSE debt becomes worthless, so be it.
That is called free market capitalism.
But you wouldn't know that from the likes of Mr. Gross who along with the greedy speculators on Wall Street and Main Street (real estate)...
and the elected and appointed whores which infest Congress & our Federal Agencies as incumbent elitist & socialist traitors...
wrap themselves in the flag and masquerade in three piece capitalist clown suits.
Letting this pack of ship jumping rats die or drown, would be the proper thing to do.
If we keep bailing these greedy idiots out, they will never learn, and with our codependent behaviour...
we will enable them to commit the same crimes over and over again.
These multi national, globalization preaching, elitist scumbags who are sworn to money and loyal to none...
have robbed us of our hard earned money, raped our children of their future, deceived us out of our liberty, and murdered our way of life...
Denying us of our constitutional right to the pursuit of life, liberty and happiness.
Would you let a repeat traitorous rapist and murderer back on the streets? I think not.
I do agree that this is one case of plague that should not be allowed to run its course. We need to learn a lesson AGAIN from the French...
We should do the world a favor, and accelerate the process, instead of the mother of all bailouts...
WE THE PEOPLE need to cut our losses, so, a swift kick in the rear to get the elitist Leper's in position on the chopping block, and off with their heads!!!
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