Friday, April 4, 2008

The Bond King

Dear Investor

My name is Bill Gross but most of you know me as the Bond King. I am the recognized grand ruler of the fixed income universe. I manage one of the largest pool of fixed income assets known to man aka PIMCO. You may have seen myself or my Secretary of Propaganda Paul McCulley. The reason for this letter is to let you know what is going on in fixed income land. I have been in this business most of my adult life and I have never seen things like this. Down is up and up is down, now how is one supposed to make money in this type of environment. You know the saying, it's a recession when you neighbour loses his job and a depression when you lose yours. Well, I was all for capitalism and survival of the fittest Ayn Rand thing when I thought this credit thing was contained. Paul and I were okay when it was affecting all the leveraged cowboys and gunslingers out in hedge fund land but did you really expect us to sit still and let all that crap now affect us?

I must confess that capitalism is a great thing only and until it starts to interfere with Paul and my bonuses, hence our misinformation campaign. Have you noticed us on Pom Pom TV, errr excuse me CNBC a little more frequently? That's not by chance dear investors, it's all according to our master marketing campaign. Do you really expect me, the King of Bonds, to sit back and let a, quite frankly, long overdue and clearly unsustainable housing bubble collapse right in front of me. I thought so. Therefore I am calling on all civic groups, labour unions, and other social equality entities to mobilize. We need to press our government into action, big action! The Bear Stearns/JP Morgan thing was a drop in the bucket and does nothing to address the underlying disease of homes being too expensive relative to income. We need to redirect the issue to anything and everything but this issue. If they powers that be find out what the real issue is, overpriced homes, we're all cooked and by 'all' I mean all of us who borrowed more than we could handle.

The campaign is to convince government to buy all these bonds I and others like me are carrying on our (hence your) portfolio. (pension funds) Now I haven't used the leverage like my hedge fund cowboy counterparts have but I can see the writing on the wall and it ain't good! If the government doesn't step in and make a market for this toxic paper I and others like me are cooked ! We are looking at a problem that will make what happened to tech stocks look like a walk in the park.

Now I know that if you borrowed prudently, put a significant down payment, and got a fixed mortgage you may be saying why would I help you Mr. Bond King. My answer to that is screw you! If you did all the above it probably means you haven't been carrying your own weight in our consumer spending driven economy. You probably don't have a piggyback mortgage on top of your no money down, neg-am adjustable rate mortage. You probably didn't HELOC the hell out of your home and probably haven't maxed out your credit cards. Your the reason everything is going to hell in a handbasket. That fiscal stimulus rebate cheque you're about to get, if you're gonna get one, will probably be used to pay down debt. Damn it! You need to spend it! Didn't you get the memo. Damn!

I lost my train of thought.... Oh yeah, the campaign. Anyway we just gotta convince congress to bail me out, errr I mean the homeowner. Govern yourself accordingly.... or else!

Sincerely,
The Bond King !

this piece really wasn't written by Bill Gross but rather is a parody written by yours truly.

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