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Prior to returning to self-employment, Tim ran International Investment Conferences, a producer of mining investment networking events. He came into the position thanks to a blend of experience in the media and mining industries. He gained a working knowledge of the mining industry as well as... More
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  • PIMCO hires Neel Kashkari & sends a bad signal 0 comments
    Dec 8, 2009 9:16 AM
    Deal Breaker has the full text of a memo from bond giant PIMCO saying it has hired Neel Kashkari to help it venture into active equity management and other ventures.

    Kashkari, aka ‘Cash-n-Carry’, was hand-picked by for U.S. Treasury Secretary, Hank Paulson, to run the TARP slush fund.

    And a boondoggle it was from its genesis when Kashkari invented the $700 billion sum required to “urgently” prevent a systemic collapse of the American and global financial system.

    Think we’re being too harsh? Well, here’s some juice from the man himself (be warned, the photo essay is so fawning as to be embarrassing):

    “In Washington, he used his BlackBerry to determine the bailout sum presented to Congress. His arithmetic: “We have $11 trillion residential mortgages, $3 trillion commercial mortgages. Total $14 trillion. Five percent of that is $700 billion. A nice round number.”

    “Seven hundred billion was a number out of the air,” Kashkari recalls….”It was a political calculus. I said, ‘We don’t know how much is enough. We need as much as we can get [from Congress]. What about a trillion?’ ‘No way,’ Hank shook his head. I said, ‘Okay, what about 700 billion?’ We didn’t know if it would work. We had to project confidence, hold up the world. We couldn’t admit how scared we were, or how uncertain.”

    How comforting will that be to PIMCO investors? The company has hired a guy who was instrumental in getting government to print $700 billion for a program that was a case study in non transparent fear-mongering. And the $700 billion was just a reckless guess that proves to be more reckless with each passing month.

    It’s quite pathetic how Kashkari whines in the WaPo article about being ambushed in Congressional hearings on TARP.

    Anyway, we have to wonder about PIMCO. It’s not as though Kashkari is unusual.

    Mohamed A. El-Erian is a great guy by all accounts, and super bright. But he was also the architect of Harvard’s endowment which proved to be good only for certain seasons. And he’s now a very big wheel at PIMCO too.

    Is PIMCO going to become a refuge for these sort of careers? We hope not, and at least the hiring of Franklin Resources Inc.’s Anne Gudefin and Charles Lahr as global equities portfolio managerscounters the Kashkari announcement. A little.

    Disclosure: No Position
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