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Bill Gross of PIMCO has attacked quantitative easing as a "Ponzi Scheme," and charged the American public and our politicians, not Ben Bernanke, with fault. Gross writes: "The Fed, in effect, is telling the markets not to worry about our fiscal deficits, it will be the buyer of first and perhaps last resort. There is no need – as with Charles Ponzi – to find an increasing amount of future gullibles, they will just write the check themselves. I ask you: Has there ever been a Ponzi scheme so brazen? There has not. This one is so unique that it...

Ken Fisher: PIMCO's New Normal Is "Idiotic", The Next Decade Will Be Amazing Joe Weisenthal Sep. 28, 2010, 8:25 AM Some great fighting words form money manager Ken Fisher. Bloomberg: Fisher said the concept of a “new normal” is “idiotic,” pitting him against money managers including Mohamed El-Erian, the CEO of Pacific Investment Management Co., which coined the term to describe a world of high unemployment, more regulation, and the shrinking importance of the U.S. in the global economy. “We are chimpanzees with no memory,” Fisher said at the Forbes Global CEO Conference in Sydney. “The next 10 years are...

PIMCO Makes Massive Bet That Bernanke Will Create Inflation Joe Weisenthal Sep. 15, 2010, 8:15 AM The last time we heard from PIMCO, the gigantic bond house was back to buying long bonds, betting on deflation. And we know that the firm's chief mouthpiece, Mohamed El-Erian has been warning about this scenario, pegging the odds at about 25% (it's not his base-case scenario, just a substantial risk). But obviously this isn't the whole story. The firm is also betting against deflation. Bloomberg: Bill Gross’s Pacific Investment Management Co. made an $8.1 billion wager that the U.S. won’t suffer a decade...

As overlord of the fixed-income finance market, PIMCO generates billions annually in effort-free profits. Now it wants to make things worse. Some raids on the US Treasury by America’s crony capitalists are so egregious as to provoke a rant -- even if you aren’t Rick Santelli. One such rant-worthy provocation is Pimco latest scheme to loot Uncle Sam’s depleted exchequer. According to Bill Gross, who heads what appears to be the firm’s squad of public policy front runners, the American economy can be saved only through “full nationalization” of the mortgage finance system and a massive “jubilee” of debt forgiveness...

El-Erian: If You Doubt The Danger Of Deflation Get On A Plane And Go To Japan Gregory White Aug. 10, 2010, 10:32 AM Mohamed El-Erian of Pimco spoke to CNBC this morning ahead of the Fed's announcement on how it intends to deal with the current economic situation. * 0:40 The Fed will revise its language, point to disinflation, and further explain that there is an uncertain outlook. * 1:00 It is unknown whether the Fed will push for more risk taking in the market. * 1:30 The country is facing structural problems, and the Fed can't solve them. *...

excerpt: “I will go so far as to say that not only growth but capitalism itself may be in part dependent on a growing population,” Gross wrote. “Production depends upon people, not only in the actual process, but because of the final demand that justifies its existence.” read on.

/snip PIMCO is the latest to launch a Black Swan product, though of course it's Mr. Black Swan himself Nassim Taleb who has been at this the longest, with his various funds (Empirca, and now Universa, which he advises) designed to pay off in the event of an extreme event. There's a lot to be skeptical about here, quite obviously. For one thing, as Felix Salmon recently pointed out, designing these products are really, really, hard, since even if you can basically predict the crisis, knowing how various assets will actually move in the event of them is dicey, at...

PIMCO's Bill Gross: It May Not Be Possible To Reduce Debt By Reducing Spending Joe Weisenthal May 26, 2010, 10:26 AM PIMCO boss Bill Gross is out with his latest investment outlook. There's not a lot new in it, but this part is important, as it represents the latest thinking on the benefits of so-called austerity, namely that it doesn't work in many cases: Granted, sovereign debtor nations are now saying all the right things and in some cases enacting legislation that promises to halt growing debt burdens. Not only Greece and the southern European peripherals, but France, the U.K.,...

PIMCO's El-Erian: The Current 'Death' Of Inflation Is Just The Calm Before The Storm Vincent Fernando, CFA May 24, 2010, 1:16 PM Despite the fact that U.S. inflation seems to be dying right now, PIMCO's Mohamed El-Erian remains concerned about the future explosion of inflation. He's worried about an even larger scale use of central bank balance sheets, similar to what was done in the U.S. and more recently in Europe. We may have gotten away with such activities once, but in the view of Mr. El-Erian, we've used our 'spare tire' and won't be able to repeat these kinds...

Serious Question: Is PIMCO Actively Trying To Freak Out European Markets? Joe Weisenthal | May. 16, 2010, 10:02 AM | 184 | comment 2 We have to admit, we're stunned by the extent to which PIMCO folks are talking down the prospects of Europe pulling through its current crisis. It was reported by FT that the gigantic bond fund had dumped its Greek and Portuguese debt, then in the same article, portfolio manager Ramin Toloui is quoted as saying that ECB bond market intervention could be "backfiring". Strong words. Then yesterday, the top dog Mohammad El-Erian wrote another guest post...

Pimco's El-Erian Warns Inflation to Hit US, Europe Friday, May 14, 2010 10:33 AM Although price pressures are currently muted, the United States will get an uptick of inflation over the medium term, the world's biggest bond fund management company said on Thursday. Extensive money printing by central banks to buy securities in emergency measures, such as those the European Central Bank recently announced to stabilize euro zone government bond markets, will ultimately stoke inflation, wrote Mohamed El-Erian, CEO and co-CIO of Pacific Investment Management Co., or Pimco, in a three- to five-year "Secular Outlook" summary. "This potential evolution from...

"The world is on a journey to an unstable destination, through unfamiliar territory, on an uneven road and, critically, having already used its spare tire(s)." "Through a series of transitions, collisions, and trade-offs (the journey), we are heading to a world that is re-regulated, de-levered, and growing less rapidly in the industrial countries (the destination). It is a world in which concerns about the dark side of globalization temper enthusiasm for its net benefits, and in which politics matter a lot for markets and the economy." The above quote is from an excellent article by the staff of PIMCO, written...

NEW YORK (Reuters) - Although price pressures in the U.S. economy are currently muted, inflation could accelerate in the United States in the next three to five years, the world's biggest bond fund management company said on Thursday. The extensive printing of money by central banks to buy securities in emergency measures, such as those the European Central Bank recently announced to stabilize euro-zone government bond markets, will ultimately stoke inflation, wrote Mohamed El-Erian, chief executive and co-chief investment officer of Pacific Investment Management Co (PIMCO) in a 3-year to 5-year "Secular Outlook" summary. PIMCO oversees more than $1 trillion...

greece Mohamed El-Erian has an important piece on Greece in tomorrow’s FT; if you want to boil his 750-word article down to 3, it’s basically “Greece will default”. El-Erian comes to this conclusion using three logical steps. The first: A number of things have to happen very fast over the next few days to have some chance of salvaging the situation. At the very minimum, the government in Greece must come up with a credible multi-year adjustment plan that, critically, has the support of Greek society; EU members must come up with sizeable funds that can be quickly released and...

In an interview with Bloomberg's Tom Keene, Richard Clarida of PIMCO has pretty much sealed the fate of Greece: "I don’t think that [7%] would be an attractive enough yield. Greece is sort of like the Titanic. Eighteen things went wrong, and when they go wrong at once it’s problematic." Of course, with this kind of rhetoric the 10 Year will be trading at 8% tomorrow, followed up by Clarida saying not even 9% would be attractive, and so forth. When you have the world's largest bond fund say it is not touching Greece with a ten foot pole essentially...

The results of today's Treasury auction were a shot across the bow of the government.And, according to David Zervos, head of fixed income strategy at Jeffries, may be an indication of just how skittish some investors are feeling about the fiscal soundness of the United States, in light of big government spending for health care and other costly programs.“It’s the health-care realization trade,” Zervos told CNBC, post-auction, from the firm’s trading floor. “We’re coming to grips with the fact that we have a Congress that’s ready to go, and spend.”Zervos, who worked at the Federal Reserve in Washington, DC last...

PIMCO: End of mortgage buys form of tightening Jennifer Ablan Tue, Mar 16 2010 NEW YORK (Reuters) - The end of the Federal Reserve's program of purchasing $1.25 trillion of mortgage-backed securities at the end of March is a form of tightening monetary policy, the chief of the largest U.S. bond fund manager said on Tuesday. Mohamed El-Erian, chief executive and co-chief investment officer of Pacific Investment Management Co, or PIMCO, said the end of the Fed's mortgage program, one of the U.S. central bank's major support programs, signals a form of credit tightening. The Federal Reserve Open Market Committee's...

Every once in a while, the world is faced with a major economic development that is ill-understood at first and dismissed as of limited relevance, and which then catches governments, companies and households unawares. We have seen a few examples of this over the past 10 years. They include the emergence of China as a main influence on growth, prices, employment and wealth dynamics around the world. I would also include the dramatic over-extension, and subsequent spectacular collapse, of housing and shadow banks in the finance-driven economies of the US and UK. Today, we should all be paying attention to...

Bill Gross: The U.K. Rests On A Pile of 'Nitroglycerine' Vincent Fernando Jan. 27, 2010, 6:01 AM Bond king Bill Gross has stern words for the U.K. in his latest commentary -- the entire nation sits on a pile of financial 'nitroglycerine'. Stay away from U.K. bonds at all costs: Daily Mail: 'The UK is a must to avoid. Its gilts are resting on a bed of nitroglycerine.' High debt with the potential to devalue its currency present high risks for bond investors. 'In addition, its interest rates are already artificially influenced by accounting standards that at one point last...

PIMCO: There's No Way The Market Can Absorb The Fed's Giant Balance Sheet Once It's Time To Tighten Vincent Fernando Jan. 6, 2010, 12:01 PM PIMCO's Bill Gross has become substantially bearish in his latest January commentary. There's no way private demand will step up to the plate once the Fed stops supporting the U.S. treasury market. Even year to date, they've already been avoiding treasuries like the plague as shown in Chart 2 below.[snip]