Nov 26, 2007

Pimco Financial And Bill Gross

Part of a series The Great American Write-Down

Pimco Financial: Bill Gross is the chief investment officer for Pimco, the world’s largest bond fund. When interviewed on CNBC he said: "A Fed cannot afford to let homes go down by 10 to 15 percent like we saw in Japan," Mr. Gross saw the turmoil our markets are experiencing more than a year ago and steered his fund away from the troubled sectors. The result is that Morningstar has listed his fund in the top 2 percent of all bond funds.

From a Brett Arends
article on

“Last week, Gross grabbed the headlines by warning that the housing slump could lead to devastating economic consequences. He argued that a 10% fall in prices nationwide could set off price deflation of a kind not seen since the Great Depression, while waves of mortgage defaults could undermine confidence in the financial system here and abroad.”

Mr. Gross sees the problem as being much worse than reported and is calling for immediate federal action to directly aid troubled home owners.

Jim Jubak describes the environment the bond market is in these days in his article, The Bond Market's Shaky Foundation on

“The unstable foundation is built on overseas cash flows and currency manipulation by foreign central banks. Dry rot threatens the whole system of ratings. And some of the banks propping up the market for credit derivatives shake at the slightest touch.”

“The professionals in this market -- the traders, the underwriters and the more sophisticated investment banks -- know exactly how shaky the whole edifice has become. They're determined not to be the last out the door.”

Housing bubble bust helps Pimco's Gross rebound
UPDATE 2-PIMCO: Fed "can't afford" to let housing crack
FACTBOX-Writedowns and losses at major global banks