Tom Lindmark

PIMCO's Bill Gross Sees a Bleak Future

I'm surprised Seeking Alpha doesn't have a spam filter for this. Seeing more and more of it. My little wordpress site catches this stuff. There must be a way for SA to do it.


On May 31 09:51 PM dcb wrote:

> this is a link showing cetins nailing address. does does anyone know
> how to jam a site. perhaps we as a community should consider engaging
> in sabotage because he doesn't have a problem doing it here.

PIMCO's Bill Gross Sees a Bleak Future

Phil,
I tend to agree with you. I too have seen too many end of the world cycles that turned out to be bumps in the road. This one is a big bump but I suspect that somehow enterprising Americans will figure out a way to get through this one, reinvent some businesses or invent some new ones and send us off on another good track. The only thing that can probably keep that from happening is too much "help" from the government class.


On May 31 12:47 PM Phil Trupp wrote:

> Bill Gross is a conventional corporate thinker. As such, he is hardly
> a reliable prognosticator. Still, there are bits and pieces of wisdom
> in what he says, truisms we all know. He takes into account the obvious
> indicators upon which other writers have elaborated, but he has failed
> to see that action at the surface of the financial world almost never
> reflects what is happening in the deeper, more opaque reality of
> the ever-shifting world economy. The superficial (read immediate)
> problems of the dollar will eventually be resolved out of sheer necessity.
> Rates of global growth, nation by nation, are cyclical and are at
> the mercy of unpredictable shifts in power and the often shocking
> events of realpolitik. There's an old saying: "Bulls slowly climb
> the stairs, bears jump out the window." Mr. Gross has done the latter.
> Paul Krugman is right behind him, falling through space into a world
> he has predicted will be a sunless abyss. Not long ago, he said if
> we knew what was really going on in the economy, we'd buy up all
> the canned goods and head for the bunkers. Forgive me for having
> lived too long and having seen too much to wear the sandwich board
> that cries, "REPENT OR PERISH!" We will work our way out of the current
> crisis as we have worked through others, and we will do so by the
> efforts of pragmatists, not hysterical "prophets."

Ambrose Evans-Pritchard, Are We Really Nearing a Bottom?

Morph,

I agree with you on the Baltic Dry Index. It swings too wildly to have much confidence that it is not being manipulated.

Is Inflation Dead?

It's an interesting piece with some good thoughts. One problem I have with your analysis is that while interest rates may be zero on a nominal basis, in a deflationary environment they can be punishing on a real basis. That's the reason that expansion in a deflationary period is rare indeed.

Another Day, Another Bailout: Deleveraging Denial

Steve,
Thanks for your comments but one observation. If I'm not mistaken the ABS market is relatively new so any historical comparisons suffer from the fact that they represent an easy money period. If the statistics went back 20 or 30 years or more, I might be inclined to agree that they are at an all time high. Right now, they may well be simply representing an acknowledgement of the risk inherent in the product.

The Worst Is Likely Behind Us

Tough comments but probably accurate. The 10% growth figure since 1929 is simply playing with numbers. Pick the right low point and you can conjure up anything you want. Reality Check: The S&P has not grown over the last 10 years.

More on the Fannie/Freddie Heist

While I am not a big fan of the Fan/Fred bailout, I do think it is important to get the numbers right and properly analyze the risk. While Fannie and Freddie had approximately $5.3 trillion in debt and mortgage guarantees outstanding, these liabilities were offset by more than that amount of assets. The extent to which the assets do not perform will determine the ultimate loss to the Treasury. Potentially, it could be quite profitable. Here is a link to a back of the envelope analysis I did and a reader's reply that goes more in depth. blog.metro-real-estate...

A Self-Serving Non-Solution to Negative Equity in America

Wow you sure stirred up some people. Good job calling out Ross. Now go after Bill Gross.

Alt-A Mortgage Delinquencies Are also Rising

Nice article. Since we are at the front end of Alt-A and Option ARM resets this is a little unsettling. If you have an interest here is a link to the calendar for the resets of these products-blog.metro-real-estate...

Foreclosures Prove Loan Modification Isn't Working

I'm all in with those of you who see this as just another chicken little article. Need more data and fewer quotations and anecdotal sidebars.

1990 All Over Again?

Balsamo's charts require an explanation. The Fed decided to classify the TAF and the primary dealer credit facility as borrowed reserves. If you back out those facilities then total reserves have been very steady. No need for the alarm a first look at the chart tends to cause.

Wall Street Breakfast: Must-Know News

So Fannie loses a couple billion and the regulators lower their capital requirements. Brilliant!

The Liquidity Tsunami

Interesting, but don't you have to draw a distinction among the various efforts of the Fed. Some of the guarantees merely averted the collapse of specific firms, they didn't add reserves to the system and thus didn't add liquidity. At most a lot of the Fed's actions have just restored the liquidity that became frozen.

To be sure they have added a lot of liquidity and let's cross our fingers on that one. Remember excess liquidity is what got us into this fix in the first place. There's no reason the law of unintended cosequences won't pop up and bite us in the butt again. I for one hope the Fed is just as quick to mop up liquidity as things improve.