Five Things You Need to Know: Pimco's Gross Lets the Freak Out

[Joanne98]

Kevin Depew's Five Things You Need to Know to stay ahead of the pack on Wall Street:

The Freak is Out . . . The Revelations Playbook . . . You Never Know What Water You Will Drink . . . Feeding the Beast, the Rise of Alan Greenspan . . . Where Did It All Go Wrong?

The Freak is Out

There comes a point in every junkie's descent when the tentative restraint of self-consciousness and self-image loosens up just enough to let the freak out. For most of us, once that line is crossed there's no going back, ever. Naturally, no one knows when that moment will arrive. Indeed, the unpredictability of it is what lends the trip down the chute from recreational abuser to full-on foaming-at-the-mouth dope fiend its delusional aura of impossibility; the conviction that It Just Won't Happen to Me. For Bill Gross, that moment came today.

It's conventional journalistic wisdom that you can't go off half-cocked calling the managing director of the world's largest bond fund, in this case the Pacific Investment Management Company, a metaphorical junkie and freak without some kind of substantiation and context. In the old days, people were beaten and thrown in jail for far less.

But this is The Age of Self-Evidence. Waist-deep as we are in facts based on theories disseminated by Washington D.C. Federal agencies and weird anti-truths assembled from half-baked rumors and innuendo bubbling up from Wall Street, what's a little more kindling on the fire going to hurt? In the metaphorical land of the blind, the one-eyed man is king.

This is the kind of story that would ordinarily require the marshaling of all available resources and legitimate reporting skills, but there's little time for that now. The Managing Director of Pacific Investment Management Company, PIMCO, just called for the government to start buying financial assets. The freak is out.



The Revelations Playbook

"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 wrote today on his firm's Web site. " 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," he added.

If that kind of talk seems terrifying, it's probably because it is taken almost verbatim from the book of Revelations, an increasingly popular source book for Federal Reserve lackeys and financial types these days. It's hard to blame them. If I was doomed to work in the Federal Reserve, or if I managed the world's largest bond fund, I'd be scared too.



You Never Know What Water You Will Drink

"You never know what water you will drink."
- Ancient Chibchan aphorism

A good fix is hard to come by these days. Supply of credit is in absolute and total lock-down mode. The usual dealers are frozen in both place and time. Hell, they have their own vicious back monkeys to deal with. And that's a lesson worth keeping in mind. When the Ponzi scheme's scaffolding begins to finally shake loose and gyrate, it's every man for himself.

It is under such dire circumstances that the social order begins to disintegrate and people find themselves doing things they previously would have thought unimaginable; drinking nail polish remover, sniffing airplane glue, tying a bag filled with fresh spray paint over your head. Hence, the Ancient Chibchan aphorism: "You never know what water you will drink." Only a fool would tromp recklessly on Chibchan wisdom. Or an ignoramus. These days it's hard to tell the difference between the two, and normally safer to quietly tiptoe around the situation when someone like Gross lets the freak slip out. But the stakes have been raised to a point where we all have something on the line now. It's like watching someone stuff hundred dollar bills into a crooked slot machine and then waking up to the realization that that someone is you.



Feeding the Beast, the Rise of Alan Greenspan

No one sets out with the intention of becoming a toothless meth head. That's the kind of thing that slowly creeps up on you while you're busy feeding the beast, working to keep it far down deep inside and well-hidden.

The United States managed to feed its own beast for two full decades with only a handful of behavioral lapses. The main supply was operated out of a Washington D.C. quasi-public, bureaucratic branch office of the United States Federal Reserve, then headed up by Alan Greenspan, a former disciple of Ayn Rand with a rumored-to-be fake doctorate degree from NYU.

That a Randian Objectivist would suddenly find himself at the helm of largest credit creation machine in the world is as implausible as it is horrifying. Make no mistake, I'm no fan of Rand's Objectivism. Apart from being badly written, her philosophy, such that it is, flaps angrily in the wind, rootless, mistaking mere success at something for heroism.

Then again, from that standpoint alone, Greenspan's tenure as the chief supplier was remarkably heroic. We are now, stem to stern, the most deeply indebted society in the history of the world. While credit appetites ran huge during Greenspan's years at the Fed, it was his willingness to shower the Street with a seemingly endless supply of it that both enabled and reinforced excessive.... no, EGREGIOUS risk taking... even while soothingly spouting off econo-gibberish before politicians in Washington and on national TV. That's something only a fake doctor could get away with.

Perhaps most incredible is Greenspan's sheer durability. Even in retirement, he remains the Fountainhead, and it was this source that likely pushed Gross over the edge.

Continued>>>
http://www.minyanville.com/articles/index/a/18807