Friday, May 6, 2011

Pimco trade on the rocks...

Pimco's Bll Gross says will change his mind on shorting us treasuries if there is potential for another recession...
The main question is when will he force himself to make the switch and how badly will his "cover" curdle the markets? Remember PIMCO has 18% of their entire portfolio currently short Treasuries. I hate to remind Bill Gross - "There is no NEW NORMAL". This whole mess that BURNanke and his cohorts have made really smells bad, there is NOTHING normal about it...and the results are not going to be pretty...but this is what happens when you give a bunch of fools who get everything wrong promotions and power.

Rewarding failure is never proper and the results are never good.


I suggest a reread of my previous post: Swan Dive...the real picture...

And of course, another recession will mean more QE, which means more debt monetization, which means that naturally, the first and last buyer for Treasury bonds, the Fed, will be there for ever and ever, which means more fiat printing, which means $5+ trillion in Fed "assets", which means more inflation expectations, etc, etc. - Tyler Durden
I could not disagree with the complaceny of Tyler's assumptions more. Tyler is a smart guy...but his post represents a complete misunderstanding of the financial reprocusions that are on the table in my opinion. The fed just destroyed ton's of freshly printed dollars by inducing people into malinvestments...further efforts will yield the same results which will end up forcing the dollar shortage to new extremes...of course that would also be represented in the dollar prices too.
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