Posted on 03/09/2011 6:54:29 PM PST by blam
It almost sounds like the took a page from the Housing Bubble Scheme book. As long as Fannie and Freddie will buy the mortgage paper, even if it is no good, the Countrywides kept writing them. Now the banks are buying the bonds because the know the Fed will buy them.
No known one. Why do you ask?
ping
Bonds have risen as high as they are going to go now that interest rates are as low as they can get. The Treasury should be converting as much of this debt as possible to long term bonds to lock in the low interest rate.
If that is true then the Fed is draining money out of the system.
“This really is a stunning move by PIMCO.”
Maybe they are going to hold cash for a while then buy bonds when the yields are higher. Inflation anyone? Remember the 70’s?
“the Federal Reserve is currently buying up about 70 percent of all new U.S. government debt”
So, would this be considered a new type of Ponzi scheme?
The Return of the Bond Vigilantes.
“Like, totally, like oh my God! “
That is called “Valley Girl” speak, “like, gag me with a spoon.”
It is an old song done by one of Frank Zappa’s kids.
Like, 1980, totally.
I hated that song.
Been using that simple rule for 64 years, not that hard to do if you think as an adult.
I saw Gross on Tech Ticker this week. He looks like he has aged dramatically. That guy is really really stressed out about something...
Nobody else in the world wants our junk bonds anymore. The only serious buyer is the Fed and they use fake money... so...
“PIMCO (biggest bond fund) Dumping All Treasuries, Bringing “Government Related” Holdings To Zero”
I disagree with Durden on his assumption that “Bill Gross is now convinced there will be no QE3 at all.” Treasury bonds (especially long term) have been a no-no for some time, according to many other advisors and managers. If there is another quantitative easing move, bonds will still be risky. Same with mortgage backed securities, wherever QE3 would go.
We might take a look at where much money is likely going in the longer term: net energy exporters advancing. ...and where it is leaving: declining net energy importers with the worst sovereign debt problems.
Someone else said that about him too.
sfl
It's a bad day for me to be answering this question: I am just furious. This action is the single most egregious fraud that I have personally witnessed over course of three decades.
Last fall al Arian and Gross were on CNBC very oftern, seemed like twice a week. At the time, I was telling anybody who would listen that bonds are unlikely to go higher because: (i) the rates had already fallen to the level of October 2008; and, more importantly, (ii) it'd become common sense to buy Treasuries. Too many people were urging that --- a sure sign of a bubble-think to me.
My opinion could and should be questioned, of course. The point is that buying bonds at the time was far from trivial. But what did Pimco do? Gross and al Arian were telling the world, day in and day out, how dangerous it was out there, everyone should be accumulating Treasuries, and rates will fall all the way to 2% from then current 2.5%.
And now, just a couple of months later they have zero investment in those bonds?! If this is not fraudulent --- urging people to buy as you are selling to them --- I don't know what is.
As you know, it's not easy for me to use such words; I've been taking flack for years now, trying to stop unfounded accusations against Wall Street, the Fed, etc. But do think that this behavior is fraudulent. I think it would qualified to be called such if, while advising others to buy, they themselves sold 20% of their holding. But zero holdings? It's like yelling, "You suckers!" to all those mutual fund managers that followed al Arian's and Gross' advice.
I am just furious. I've got to distance myself from these emotions before I can think about economics again.
Respectfully..... everyone is out to make a buck. This includes investment advisors, hedge funds, banks, the Fed, politicians, and even many of the media types.
I don’t know or fully understand what is happening. However, I do know that we are on a very dangerous path and one bad event in our economy, bond market, or our currency could mortally wound our nation. That is the thing that frightens me.
Everyone seems so consumed with the short-term news cycle of the economy but that is where many of the big boys make their money. I am concerned with the long term future of my kids.
Just a thought and I would not let today’s news ruin tomorrow.
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