2008-10-07

What Bill Gross wants, Bill Gross gets

Yesterday (I mentioned it here):
(Reuters) - Bill Gross, head of the world's largest bond fund, on Monday urged the U.S. Federal Reserve to take more dramatic steps to jump-start paralyzed credit markets, including direct purchases of commercial paper.

[...] Gross, chief investment officer at Pacific Investment Management Co, wrote in his October letter to investors released Monday afternoon.

Today:

Oct. 7 (Bloomberg) -- The Federal Reserve Board, invoking emergency powers, will create a special fund to backstop the U.S. commercial paper market in an effort to support the financing needs of corporations.

One of the axioms of the Fed is the following:Take from the people to give to Bill Gross.

4 comments:

Tyler Lang said...

Do you think this is an unwise decision by the government? The government needs to heed the advice of the best economic minds out there...regardless of whether they currently work in government or not. Gross, Buffet, Soros, etc. Their ideas should be tapped.

I don't have time to write more, but I don't think they did this simply to help out Bill Gross, but rather for much larger and more important reasons. Whether the Fed was already considering such a move or whether they got the idea from Gross' letter to investors is totally irrelevant.

pej said...

I would say that:
1- market intervention doesn't work
2- people and companies do not need more credit, they already can't repay the ones they have contracted
3- by selecting which company you are going to help, you get the power to decide which is going to live and which is going to die. This is ethically/morally wrong, and it is not equitable.
4- the money you give to these companies come from the people, who are already in big financial trouble :-(

www.slycapital.com said...

This is like watching a serial killer movie except that we are actually in it and its happening.
Bill Gross in charge of commercial paper?

pej said...

This is what takes place in a corrupt system where the establishment are not interested in the well being of the society as a whole, but are only interested in keeping the statu-quo.

They (Paulson, Bernanke, Bush, the senate) are aiming at avoiding any changes in a system which has been proven as a failure and from which they drive a lot of personal profits at the expense of the general public and their citizen.

It is indeed like watching a serial killer movie, but one where the killer is a mass murderer aiming at destroying a whole nation :-(