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"Central banks are where bad bonds go to die," quips Pimco's Bill Gross. His comments come on...
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Tuesday, September 18, 2012, 10:33 AM ET"Central banks are where bad bonds go to die," quips Pimco's Bill Gross. His comments come on the back of the Fed announcement of another QE and as the ECB prepares to increase the amount of riskier bonds on its balance sheet - and just a week after Pimco revealed that it had pared back holdings of U.S. government bonds in its flagship bond fund to just 21% at the end of August, down from 33% at the end of July. "Sell bad bonds, buy good ones," Gross says. "Investing sometimes can be very simple."
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Pretty simple.
Also true for bad MBS. Once they're in the hands of the CB, then there is no need to make the homeowner pay back his loan. Just print more fiat instead. Perfect end run on DeMarco and the FHFA.
A beautiful deleveraging, indeed.