Posted on 09/27/2013 9:26:35 AM PDT by whitedog57
Carrick Mollenkamp had an interesting piece today called “Special Report: Pimco shook hands with the Fed – and made a killing.”
In short, the fund-management firm, led by co-founder Bill Gross, started buying tens of billions of dollars in mortgage-backed securities guaranteed by federally sponsored agencies like Fannie Mae and Freddie Mac. In the third quarter of 2011 alone, Pimco’s flagship Total Return Fund, the world’s largest mutual fund, doubled its holdings of these securities to $80 billion, according to a Reuters review of trading and other data.
While Pimco was building its hoard, the Fed, in a surprise move long before any word on quantitative easing, said it would start buying more of the same kind of debt, known in the trade as “agency MBS.” The U.S. central bank would acquire as much as $30 billion of the securities a month by reinvesting proceeds from its earlier purchases. Prices rose.
And so did PIMCO’s Total Return Fund after stocking up on agency MBS in Q3 2011.
pimcototret
Don’t get me wrong, Bill Gross and PIMCO are very, very good at what they do. And that includes anticipating what The Fed is likely to do. In fact, The Fed has been bery, bery, good to Bill Gross and PIMCO.
Ah, come on, that’s conspiracy theory.
The free market expressed by Hayek and Friedman has not existed for quite some time.
Fundamentally, Capitalism in it’s purest form, is an expression of human nature and requires a great deal of faith.
Increasingly, the foundations capitalism and an individuals faith in their fellow man is being replaced by faith in Government.
Crony capitalism created Ma Bell, a government sanctioned monopoly until Ronald Reagan opened the door for new technologies and more.
If I ran a large company and could secure my companies continued success by lobbying for laws and regulations that would protect my market by raising the barriers to enter, I would do it because I CAN.
Do you think the Nat Gas companies have an interest in promoting laws and regulations that restrict the use of coal ?
Of course they do.
Do they partner with other groups in order to advance those restrictions ?
Of course they do.
Why ?
Because they CAN.
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