Pimco, Bill Gross and CNBC

Discussion in 'Wall St. News' started by SouthAmerica, Feb 24, 2009.

  1. .
    February 24, 2009

    SouthAmerica: I wonder how much money Pimco pays to CNBC for all the advertising that Pimco does on that cable TV station.

    I also wonder if it is part of the contract between Pimco and CNBC to feature Bill Gross and his partner as experts about what is happening in the financial markets.

    I heard Bill Gross set up the market over and over again on CNBC regarding Fannie and Freddie and when we had the US government intervention his company made a killing on these securities – they made over $ 2 billion dollars in profits.

    Since then everything that Bill Gross and his partner says I take with a grain of salt.

    Last night one of the commentators on a CNBC program was suggesting that Bill Gross would be part of the solution and he would help the US government fix the problem regarding the toxic assets.

    You can bet that any solution coming from Bill Gross and his partner also would include taking the US government for a ride and they probably would pocket billions of US dollars in profits.

    For all practical purposes today the reality is: CNBC it has become a stage where Bill Gross can set up his next financial scheme with the help of many talking heads from that cable TV station.

    The talking heads at CNBC give the impression to the viewing audience that the entire world is expecting Bill Gross’s expert advice about the financial markets – when the reality is Bill Gross and his partner are only using that cable station as their marketing tool for their own gain.

    I used to respect Bill Gross and his partner until I realized what was going on regarding CNBC. These guys are only two smart guys trying to game the system for their own advantage and nothing else.

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  2. CNBC has become the 21st Century street corner not unlike the street corners of the 1930's.

    But instead of common folk hitting up other common folk for a hand out with the phrase "Brother, can you spare a dime", we got billionaires and multi-millionaires hitting up Uncle Sam for Gubmint trillions in bailouts with the phrase, "We're too big to fail!"
     
  3. CNBC is basically an infomercial network
     
  4. .


    February 26, 2009

    SouthAmerica: Today when I was visiting our local library I noticed an article published in the latest issue of Fortune Magazine – “Pimco’s Power Play.”

    It was an informative article I was not aware that Pimco was a subsidiary of a major German financial conglomerate Allianz.

    As the article said: basically Bill Gross is an agent of a foreign company and the Germans have the US government and corporate America by the balls. The exact quote from that article: “But Pimco is much more than just a big bond house. For one thing, it has become the U.S. government's partner in reviving the credit markets. It runs the Federal Reserve's $251 billion commercial paper program, which keeps short-term loans flowing to corporate America. It is also one of four asset managers picked to run the government's $500 billion program to purchase mortgage-backed securities.”

    The article also said: “With many traditional bond market players - like investment banks, insurers, and pension funds - on the sidelines, Pimco is serving as a buyer of last resort for hedge funds and others seeking to sell bonds to raise cash.” - Pimco also has the American Hedge Funds by the balls.

    …“Pimco also will be among the few institutional investors able to soak up the coming onslaught of Treasuries, as well as mortgage paper backed by Fannie Mae and Freddie Mac, and municipal bonds.”

    …“In short, thanks to the missteps of its rivals as well as its own success, Pimco has become essential to the functioning of the credit markets - and the revival of the economy…. Gross is well aware of his firm's special status. "Our role now is to make money for Pimco, but it is also much greater," Gross tells Fortune. "We efficiently allocate capital around the U.S. and the world. We are in the business of capitalism."

    The article said: "Gross, a famously good gambler…” - Anyway, there were many good gamblers around who eventually run out of luck or lost their “Midas Touch” such as Warren Buffet. If you stay long enough on the table in the long run you most likely will lose your shirt.

    Americans are not that smart and the US financial markets have trillions of dollars in losses to back that up – and even with the obvious they take forever to connect the dots.

    You don’t need to be a rocket scientist to figure out that Allianz being a major German conglomerate they must own the stock in many important German companies directly and indirectly. And you can bet that when their American subsidiary – Allianz – is in the process of “running the Federal Reserve's $251 billion commercial paper program, which keeps short-term loans flowing to corporate America” they also are keeping in mind which companies are competing head-on with German companies. (That is a nice way to eliminate the competition, and the competition is not even aware of what is going on.)

    As you can see by the content of this article China is not the only country that has the US on its knees – the Germans are shafting the Americans and they are not even aware of what is going on.


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    Pimco is a subsidiary of a major German financial conglomerate Allianz.

    In North America several companies with specialized expertise operate under the roof of the Allianz Group. Property & Casualty Insurance is provided by Fireman's Fund, Life Insurance and Healthcare Risk Management by Allianz Life, and Asset Management by Allianz Global Investors' network of companies, such as PIMCO, Nicholas-Applegate Capital Management and Oppenheimer Capital.
    http://www.allianz.com/en/about_allianz/regions_countries/americas/usa/page1.html


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    Pimco's Power Play
    By Katie Benner, writer
    Fortune Magazine
    March 2, 2009

    On the wall of his office overlooking the Pacific Ocean, Bill Gross has hung a poster of Jesse Livermore. In the early decades of the last century Livermore made and lost several fortunes on Wall Street before killing himself in 1940. Alongside the picture is an adaptation of a quote from the deceased: "An investor has to guard against many things and most of all against himself."

    It's a warning that Gross, 65, founder and co-chief investment officer of Pimco, the world's largest and most influential bond investment house, says he thinks about a lot these days as Wall Street legends all around him lose their money and reputations. "Human nature means that institutions at some point lose their sense of mission," he says. "That sense of vulnerability drives Pimco."

    So far Gross and Mohamed El-Erian, 50, who serves as both CEO and co-CIO, have deftly navigated the most treacherous bond market in memory. Thanks to enormous bets on mortgage bonds backed by Fannie Mae and Freddie Mac, Pimco had an outstanding year. Total Return, the firm's flagship mutual fund, earned 4.8% in 2008 while the typical intermediate-term bond fund lost 4.7%, according to Morningstar. That gain, plus investor inflows of $14 billion, help cement Total Return's position as the world's largest mutual fund, with $132 billion in assets (as of Jan. 1). Pimco, which since 2000 has been a subsidiary of German financial conglomerate Allianz, now manages $747 billion in assets.

    But Pimco is much more than just a big bond house. For one thing, it has become the U.S. government's partner in reviving the credit markets. It runs the Federal Reserve's $251 billion commercial paper program, which keeps short-term loans flowing to corporate America. It is also one of four asset managers picked to run the government's $500 billion program to purchase mortgage-backed securities.

    With many traditional bond market players - like investment banks, insurers, and pension funds - on the sidelines, Pimco is serving as a buyer of last resort for hedge funds and others seeking to sell bonds to raise cash. "They don't want to, and often can't, sell their bond portfolios in bits and pieces," says El-Erian, "but we are big and liquid enough to buy the entire thing." Pimco also will be among the few institutional investors able to soak up the coming onslaught of Treasuries, as well as mortgage paper backed by Fannie Mae and Freddie Mac, and municipal bonds.

    Part 1 of 2

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    Part 2 of 2

    In short, thanks to the missteps of its rivals as well as its own success, Pimco has become essential to the functioning of the credit markets - and the revival of the economy. "If Pimco didn't exist, the government would have to create it," says Paul Kedrosky, a senior fellow at the Kauffman Foundation and a strategist with institutional money management firm Ten Asset Management. "It needs an entity that can provide the market liquidity that Pimco can provide." Gross is well aware of his firm's special status. "Our role now is to make money for Pimco, but it is also much greater," Gross tells Fortune. "We efficiently allocate capital around the U.S. and the world. We are in the business of capitalism."

    Not everyone is comfortable with Pimco's growing power and prominence. Peter Cohan, a venture capitalist and management consultant, says he's concerned that Pimco may have too much sway over Washington and be in a position to dictate policy choices that might be good for Pimco but bad for taxpayers. "This is a bilateral monopoly with one big seller and one big buyer," he says. "Gross, a famously good gambler, knows that winning in this type of market means threatening not to buy when the government needs to sell. Gross has the government in a weak negotiating position." Josh Rosner of research firm Graham Fisher is not happy with Pimco's dual roles as private investor and manager of government bailout programs. "Gross is a deeply conflicted player given undue sway in matters of public interest that are potentially at odds with his positions."

    Indeed, Pimco's success stems from shrewd bets on government intervention. Rewind the clock to May 2004, when Pimco managers gathered at the firm's Newport Beach, Calif., headquarters for an annual brainstorming event called the Secular Forum. It's an opportunity to hear outside speakers and develop macroeconomic theses that will determine investment strategies for years to come. At the 2004 session a view emerged that although the world looked calm, the economy was being fueled by an unsustainable borrowing binge. At some point it would have to end, and this so-called deleveraging process would trigger an economic storm, beginning with housing and financials. Ultimately the government would have to step in to ease the pain.

    That vision of the future has guided Pimco's investments - though not even Gross and company foresaw just how big Uncle Sam's role would become. For example, in 2008 Gross shifted from Treasuries and corporate bonds into mortgage debt backed by Fannie and Freddie because he believed that the government would ultimately keep those government-sponsored enterprises (GSEs) afloat. By May, Gross had moved 60% of Total Return into GSE-backed bonds, up from 20% the year before. "In a way, we've partnered with the government," says El-Erian. "We looked for assets that we felt the government would eventually have to own or support."

    Pimco also made a bet on GMAC, the struggling finance arm of General Motors, reasoning that Washington would not let the lender fail for fear of crippling the U.S. auto industry. "We tried to move ahead of the government," says Gross, "to purchase assets before we believe they will have to."

    Once the financial crisis hit, Gross was not shy about calling for a bailout - and he is an especially effective advocate for his causes. Where many big money managers try to keep a low profile, Gross has always maintained a forceful public persona, making regular television appearances to promote his views. An excellent writer, he delivers influential market commentaries on the Pimco website and in newspapers and magazines (including Fortune).

    In a Pimco newsletter published on Sept. 4, 2008, for example, Gross wrote: "We, as well as our sovereign wealth fund and central bank counterparts, are reluctant to make additional commitments" to troubled companies unless the Treasury essentially guarantees their solvency. Later that day Gross made the same argument to CNBC's Erin Burnett. "You can say that I'm talking my book," Gross told Burnett. On Sept. 7, three days after Gross's CNBC appearance, the government placed Fannie and Freddie under conservatorship. That move trashed Fannie and Freddie's common and preferred equity but provided a huge boost to their bonds - and to Pimco. The Total Return fund jumped 1.3%, or $1.7 billion.

    Well, money managers often make statements that would help their investments. But a number of critics contend that Gross was giving the government an ultimatum. "He convinced the Treasury to keep his bonds from going to zero, or else he would stop lending money to distressed companies dthat were important to the economy," Cohan says. The U.S. government will need to raise lots of capital to fuel efforts to end the recession. That will mean issuing lots of bonds. Since Pimco is one of the few buyers capable of absorbing such vast amounts, Washington "can't afford to let him walk away," says Cohan. "The government should recognize that just as some institutions are too big to fail, Pimco is too big to talk its book," says Rosner. He thinks that the government should have clipped bondholders as well as shareholders when it took over Fannie and Freddie.

    The case of GMAC also raises questions about Pimco's power. Last fall GMAC executives applied to make GMAC a bank holding company so that it could access federal funds. Before they would approve the move, federal regulators insisted that 75% of GMAC's bonds be swapped for equity to shore up the company's capital base. Offering 60 cents on the dollar, GMAC was able to buy 59% of its bonds. But Pimco, which held a big chunk, refused the deal. The government blinked, allowing GMAC to become a bank holding company in late December even though it hadn't met the 75% threshold. After the conversion, GMAC bonds rose in value; Pimco says it plans to hold them to maturity.

    Are the criticisms fair? Is Pimco simply pursuing selfish goals in the guise of aiding the markets? Gross thinks for a long time before addressing that question. "If you're in a marriage, each person has his or her own concept of what the argument is about. That's because they perceive reality differently, and not always because one is right and the other is wrong," he says. "The policy prescriptions I've proposed were a realistic attempt to assist the markets. In my eyes, they had nothing to do with bailing out our positions." And to be sure, many economists and bankers agree with Gross's view that a failure at Fannie or Freddie would have had disastrous effects, spreading more pain throughout the housing markets and the asset-backed securities market, and hitting China, a huge holder of Fannie and Freddie debt, and other central banks. And as far as Pimco's participation in federal bailout programs goes, Gross says he has no contact with the Pimco employees managing government money.

    Gross is not about to pull in his horns. He says that he has been criticized within the firm for his numerous television, radio, and print appearances. But, he says, he speaks out because he believes in his ideas. And he, El-Erian, and other Pimco executives are still on the stump, talking up the mortgage market. In the pages of the Wall Street Journal, on Bloomberg, and on CNBC, they have recently said that the government should buy mortgage-backed securities and agency debt rather than long-dated Treasuries, as the Treasury officials have proposed. They've also supported the idea of the government's buying bad assets from banks. These opinions support the firm's book: Pimco still has a huge position in GSE-backed mortgage debt, as well as the preferred stock and debt of big banks. But that doesn't make the views wrong.

    As with other aspects of this financial crisis, we seem to be in uncharted waters here. Rarely, if ever, has one firm occupied such a pivotal role in the nation's financial system; but rarely has the system been in such distress. Some critics, of course, may simply be envious of Pimco's success. "It could be a case of attacking the leader," says Lawrence White, the Morningstar analyst who covers Pimco. For his part, Gross has no illusions that Pimco's recent good fortune is any kind of guarantee. "I do yoga to forestall the inevitable," he says. "I do what I do here at Pimco to forestall it too. But even though I wish we did, no one has license to live forever."

    http://cnnmoney.mobi/money/latest_n...3;jsessionid=AAF6AF65BC640428B34A7EAE608BC29D

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  6. thanks for posting info which many of us intuitively knew to be true.....INFO LIKE THIS will never be discussed on CNBC
     
  7. .

    February 27, 2009

    SouthAmerica: correction

    I wrote on my posting:

    You don’t need to be a rocket scientist to figure out that Allianz being a major German conglomerate they must own the stock in many important German companies directly and indirectly. And you can bet that when their American subsidiary – Allianz – is in the process of “running the Federal Reserve's $251 billion commercial paper program, which keeps short-term loans flowing to corporate America” they also are keeping in mind which companies are competing head-on with German companies. (That is a nice way to eliminate the competition, and the competition is not even aware of what is going on.)


    Should read instead:

    You don’t need to be a rocket scientist to figure out that Allianz being a major German conglomerate they must own the stock in many important German companies directly and indirectly. And you can bet that when their American subsidiary – "Pimco" – is in the process of “running the Federal Reserve's $251 billion commercial paper program, which keeps short-term loans flowing to corporate America” they also are keeping in mind which companies are competing head-on with German companies. (That is a nice way to eliminate the competition, and the competition is not even aware of what is going on.)

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  8. .

    March 24, 2009

    SouthAmerica: Last night Paul Krugman, Joe Nocera and Andrew Ross Sorkin – all columnists of The New York Times – participated on a roundtable discussion about the US economy on The Charlie Rose Show.

    Here are some comments about the latest developments regarding the US economy:

    http://www.charlierose.com/view/interview/10164#comment_70060


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  9. .
    February 26, 2009

    SouthAmerica: Today when I was visiting our local library I noticed an article published in the latest issue of Fortune Magazine – “Pimco’s Power Play.”

    …As the article said: basically Bill Gross is an agent of a foreign company and the Germans have the US government and corporate America by the balls. The exact quote from that article: “But Pimco is much more than just a big bond house. For one thing, it has become the U.S. government's partner in reviving the credit markets. It runs the Federal Reserve's $251 billion commercial paper program, which keeps short-term loans flowing to corporate America. It is also one of four asset managers picked to run the government's $500 billion program to purchase mortgage-backed securities.”


    You can read the entire posting at:
    http://www.elitetrader.com/vb/showthread.php?s=&postid=2324103&highlight=Bill+Gross#post2324103


    *****


    January 7, 2010

    SouthAmerica: If this kind of massive conflict of interest had happened in any other country in the world, then that country would be called a “Banana Republic” by the other members of the International financial community.


    There is no better example in the world of “crony capitalism” than this:


    1) Bill Gross is heavily involved with the US government Wall Street bailout program.


    2) Neel Kashkari - US$ 700 billion Wall Street Bailout Czar - (TARP):


    October 6, 2008
    SouthAmerica: How to build “TRUST” into a corrupt U.S. financial system?

    Bring in one of your old cronies to help you take the system for a ride.


    *****


    “Paulson picks interim head for rescue effort”
    By MARTIN CRUTSINGER, AP Economics Writer
    Associated Press – October 6, 2008

    WASHINGTON (AP) — An official says the administration has decided to pick a key Treasury Department official to be the interim head of its $700 billion rescue effort for financial institutions.

    The official said Monday that Neel Kashkari, Treasury's assistant secretary for international affairs, will soon be announced as the interim head of Treasury's new Office of Financial Stability. The official asked not to be identified by name because the selection has not been announced publicly.

    The 35-year-old Kashkari is a former Goldman Sachs Inc. banker, the investment giant once headed by Treasury Secretary Henry Paulson. The new office was created by the emergency legislation enacted Friday to fund the largest government bailout in history.

    http://www.elitetrader.com/vb/showthread.php?s=&threadid=138485&perpage=6&pagenumber=2



    3) Former Neel Kashkari TARP bailout czar and Pimco


    Here is the ultimate example of crony capitalism.

    Just to clear the air: Congress should investigate all the dealings between the US government and Pimco to check if there were some sweetheart deals and other conflict of interest done from October 2008 and the time when Neel Kashkari left his job as the TARP bailout czar.

    Maybe the US financial system is so corrupt today that crony capitalism it is just a fact of life like in any other “Banana Republic.”

    That is one of the reasons why I lost 100 percent of any faith that I used to have in the US economic and financial system.


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    “Kashkari’s move to Pimco is fuel for critics of ‘revolving door’ jobs”
    By Tom Braithwaite in Washington and Nicole Bullock in,New York
    Financial Times (UK)
    Published: December 8, 2009

    Neel Kashkari, who ran the US government's $700bn troubled asset relief programme during the Bush administration, has joined Pimco, the asset manager specialising in bonds.

    The move is likely to provoke criticism of the "revolving door" between government and the financial sector.

    Mr Kashkari, a former Goldman Sachs banker, served in government under Hank Paulson, former treasury secretary and Goldman's ex-chief.

    Asked about Mr Kashkari's role in government, Mark Porterfield, Pimco spokesman, said: "Mr Kashkari is bound by a strict non-solicitation agreement with various parts of the US government by which he and Pimco intend to abide."

    As head of Tarp, the bank bailout fund passed reluctantly by Congress, Mr Kashkari was subject to testy questioning on Capitol Hill.

    In an interview with the Washington Post on Sunday, he attacked the political backbiting of Washington and acknowledged that officials worried that their efforts would prove unsuccessful.

    He said: "We were terrified the banking system would fail, but the thing that scared us even more was, what would we do the day after? How would we take over 8,000 banks?"

    After President Barack Obama's election, Mr Kashkari stayed on at the request of Tim Geithner, Treasury Secretary, until a replacement could be found. Herb Allison, former chief executive of Fannie Mae, took on the role in May. Now the government is focused on the money being repaid by banks rather than struggling to formulate financial rescues.

    Mr Kashkari, a former engineer who worked on Nasa science missions, has spent several months with his family since leaving the government. At Pimco, a unit of Allianz, the insurance conglomerate, he will help direct the company's expansion into equities.

    "Extending Pimco's investment activities into active equities and thus across the capital structure is a logical and natural extension of the firm's successful investment process," Bill Gross, Pimco's founder and co-chief investment officer, said.

    Pimco, which has $940bn under management and is based in Newport Beach, California, also hired two equity portfolio managers - Anne Gudefin and Charles Lahr - from Franklin Templeton
    Investments.

    http://www.ft.com/cms/s/0/344f4a8e-e399-11de-9f4f-00144feab49a.html?nclick_check=1


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    #10     Jan 7, 2010