Bill Gross is a man in charge of his destiny—and ours
At least it kind of seems that way. On October 6, the bond king wrote in his much-read investment outlook that the Federal Reserve should start buying commercial paper—short-term notes companies use to fund working capital. The next day, with the commercial paper market in full lock-down, the Fed said it would start a program do just that. Today the Fed announced that PIMCO, Gross's firm, would run it.
I'm not suggesting anything nefarious—it's hardly a stretch to imagine how PIMCO, one of the biggest bond shops out there, is the most qualified outfit for the job. And anyway, the Fed was thinking about buying commercial paper before Gross trumpeted the idea.
Still, I thought it worth going back and seeing what else Gross was calling for last week. Could it, perhaps, help predict our future? Here's the relevant paragraph:
A systemic delevering likely requires a systemic solution, which moves beyond cyclical interest rate cuts, liquidity provisions, or even the purchase of subprime mortgage-backed bonds. We believe that the Federal Reserve must now act as a clearing house, guaranteeing that institutional transactions clear (and investors receive) their Big Macs at the second window. They must also take another bold step: outright purchases of commercial paper. They should also cut interest rates to 1%, because we are experiencing asset deflation, and the threat of headline inflation is long past.
The federal funds rate is currently at 1.5%, after it was cut from 2% on October 8. So, yeah, going to 1% would be some more bold action.
Then there's that idea of the Fed acting as a clearinghouse for trades of financial instruments like credit default swaps—i.e., Big Macs that you pay for at one window before driving ahead 20 feet to collect. Yep, we've got people working on that too.
Barbara!
-
1
Saturday, October 4, 2008
Even William Gross Would Be ProblematicI've already said that one of the few financial experts I listen to is William Gross.He has offered to help with the bailout plan for free. My problem with that is the following:
http://www.nytimes.com/2008/09/25/business/economy/25pimco.html?pagewanted=all
"Luis Maizel, a senior managing director of LM Capital Group in San Diego, said the government should instead turn to someone like a former official of the Federal Home Loan Bank Board, which is now defunct, or the Federal Reserve.
“They should start with somebody who doesn't have a conflict,” Mr. Maizel said. “Bill Gross is a good friend of mine, but if you put this in Bill's hands, Pimco is going to come out great and I don't know that the government will.”
Now, if there is one person whom I would trust and put into this position it is William Gross. However, it simply seems to me that questions of conflict of interest will necessarily come up if he is involved.
And that's my problem with this aspect of the plan. Who can the Treasury Department get to administer it? For me, if it's not William Gross, who then?
I'm still bothered.
-
2
And that's my problem with this aspect of the plan. Who can the Treasury Department get to administer it? For me, if it's not William Gross, who then?
Put the people who were running the Treasury Department for Bill Clinton in charge of it all. They already gave us the Clinton economic growth miracle, and if anyone can pull off a second miracle, its them.
-
3
Even with the market going down - there's a lot of people making money with wise investments.
There's a company online that provides investment advice on stocks and options no matter on your skill level. Apparently they are doing very good with the falling market. GoToGuy recently did a post on this company. http://www.gotoguy.com/?p=436
The website for the investment advice company is http://tradewithpros.com/
-
4
I thought you guys had a rule against spam here. The first time I read Brandon's post, I thought it might be spam, but wasn't sure. But this is the second thread I've read it it... he's promoting a investmnet website, not talking economics.
-
5
@lp1: We have filters, but they don't work so well. So we go in and delete spam messages pretty regularly. But I guess I'll leave this Brandon special alone so the rest of this comment trail makes sense.
-
6
I'm guessing you guys might also feel a little icky about Bank of New York Mellon being named the administrator of TARP today? You know, considering they're about to sell a few billion dollars worth of preferred shares to the U.S. government?
- TIME Why big shopping bargains are bad news for America | http://su.pr/1QyQ09 - 2 hours ago
- TIME See the photographs behind the art of Norman Rockwell | http://su.pr/1EKACs - 19 hours ago
- TIME Looking for other things to do on Black Friday besides shopping? Some ideas from @techland | http://su.pr/2J92d3 - 20 hours ago
Most Popular »
- Chutzpah
- UPDATE: Guess Who Came To Dinner?
- Two Game-Changing SF Novels I Read This Fall
- The Five Greatest Gadgets of All Time
- State Dinner, Uh, Fashion
- 1,000 Words: Gate-crasher Edition
- Gleeks and Shrieks: Fox Unveils Midseason, Glee Gone Until April
- Happy Thanksgiving From The AppleGeeks
- Little Town Bombards Daschle with Healthcare Woes
- The Five Most Underrated Sci-Fi Masterpieces
- The 00's: A Decade from Hell
- Helicopter Parents: The Backlash Against Overparenting
- Scientology : The Thriving Cult of Greed and Power
- Black Friday Sales Were Encouraging, Retailers Say
- Germany's Doubts About Afghanistan Grow After Revelations About Air Strike
- Will Dubai's Financial Problems Spread Around the Globe?
- Why Big Shopping Bargains Are Bad News For America
- How to Get Smarter, One Breath at a Time
- Obama's First Year Policies Need Time to Settle In
- Why the Philippines' Maguindanao Massacre Happened
Quotes of the Day »
RSS