Freaky Friday Potpourri: Help Wanted in Washington!
Bill Gross has joined the march to the Treasury.
Remember all those discussions we had about the perils of moral hazard and the percolating sense of entitlement?
They’re coming full circle as evidence mounts that all roads lead to deflation.
As I said Wednesday in Pirate’s Booty, one of two scenarios will play out.
Either the credit cancer will phase through our economy, infecting sector after sector until debt is destroyed, or we’ll witness a credit car crash if the September issuance can’t be absorbed.
Neither of these scenarios is something one would wish for but if wishes were knishes, I would weigh 300 lbs.
Yesterday, one more man joined the Million Man March to the Treasury.
Not just any man, mind you, the man in the wonderful world of credit.
His name is Bill Gross and no, that’s not a metaphor for the disgusting dollar.
Bill runs PIMCO, the world’s largest bond fund and he’s made a pretty penny through the years. He played the game and made a name for himself as the most powerful man in fixed income.
And yes, there was a time when that was a good thing.
Yesterday, Bill stepped on to the world stage when he said "If we are to prevent a continuing asset and debt liquidation of near historic proportions, we will require policies that open up the balance sheet of the U.S. Treasury."
Gross continued on his firm's Web site. "[A] systematic debt liquidation is what confronts the U.S. and perhaps even the global financial system at the current time. Unchecked, it can turn a campfire into a forest fire, a mild asset bear market into a destructive financial tsunami.”
Pepe Depew covered this story with a stylistic approach that would make Hunter S. Thompson smile with pride. Credible analysis is a rarity these days, particularly when married with analogies of metaphorical junkies in a strung out system looking for a fix.
If you haven’t read it yet, you’re missing the last call for protocol as the bartender begins to flicker the lights.
When I first read Bill’s statement, my immediate reaction was to ask “Why?”
I don’t profess to know credit intricacies as well as Mr. Gross but I understand the nuances of human nature and complexities of capital markets.
If he’s asking the government to further soil their already bloodied sheets, chances are that he no longer wants to sleep in the bed that he helped make.
There is a reason for everything but sometimes we must read between the lines.
If the Treasury is a buyer, it will be quite interesting to see if PIMCO is the counter-party. Imagine that.
Don’t Hate the Player, Hate the Game
We’ve been following the changing State of the Art in the financial system for years, offering that fat needed to drip from a bone borne from greed and overcapacity.
That dynamic has come to bear as years of financial engineering unwinds and the grand experiment implodes.
We’ve also discussed the hedge fund bubble, which was akin to ten thousand traders standing in a circle shooting at each other.
That too has popped, as evidence by the recent closing of Ospraie Management, Andor Capital and a litany of other funds that opted to chase reward rather than manage risk.
This isn’t an indictment of the system, it is a necessary consequence of it.
Want top traders to sit at your desk and share their insight and ideas?
Minyanville's Buzz and Banter- 14 day FREE trial
Todd Harrison is the founder and Chief Executive Officer of Minyanville. Prior to his current role, Mr. Harrison was President and head trader at a $400 million dollar New York-based hedge fund. Todd welcomes your comments and/or feedback at email@example.com.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.
Copyright 2011 Minyanville Media, Inc. All Rights Reserved.