Interesting People: Bill Gross and Mohamed El-Erian

Sun, Sep 28, 2014 - 6:28pm

Day shift leaving, and the night shift not yet arrived.

From the one and only Wikipedia and abbreviated as required:

" Pacific Investment Management Company, LLC (commonly called PIMCO), is an American global investment management firm with over 8,400 employees working in 13 offices across 12 countries. PIMCO is one of the largest active global fixed income investment managers in the world, with over $1.97 trillion in managed assets of 30 June 2014. The company runs the largest bond mutual fund in the world - the PIMCO Total Return Bond Fund, and provides portfolio management and asset allocation solutions for millions of investors worldwide......... PIMCO also has an ETF business, which had approximately $13.581 billion in assets under management, as of Jan. 21, 2014. "

Where did PIMCO come from?


" The firm was founded in 1971, launching with $12 million of assets. Previously, PIMCO had functioned as a unit of Pacific Life Insurance Co., managing separate accounts for that insurer's clients. In 2000, PIMCO was acquired by Allianz SE, a large global financial services company based in Munich, Germany, but the firm continues to operate as an autonomous subsidiary of Allianz.

..... The firm is known to have coined and popularized the phrase "the New Normal" in the aftermath of the subprime mortgage crisis in 2009. More recently, PIMCO introduced the "New Neutral" thesis to characterize a period of lower but stable economic growth, and interest rates to remain low for a longer period of time. "

And who founded PIMCO?


" PIMCO was headed by Co-Founder and Chief Investment Officer (CIO) William H. Gross, (better known as Bill Gross). "


Well that is a truly marvellous company to found and run. A spectacular success. We can learn a lot from such a success story. Let's look further.

Who is Bill Gross?


" William Hunt "Bill" Gross (born April 13, 1944) is an American financial manager and author. He co-founded Pacific Investment Management (PIMCO). Gross also ran PIMCO's $270.0 billion Total Return Fund (PTTRX). "

Ah that Bill Gross! What more leaps out for a fast scan?


" In the 1990s he authored two popular-market books on investing, Bill Gross on Investing and Everything You've Heard About Investing is Wrong! In September 2008, by holding large positions in agency-backed mortgage bonds of Fannie Mae and Freddie Mac, Gross's funds netted U.S. $1.7 billion after the federal takeover of Fannie Mae and Freddie Mac, for which he had lobbied. "


So it's clear that Mr Gross is a seriously heavy hitter, smart as the proverbial tack, not averse to play poker with the US Government over the rescue of an insolvent financial toy in which he has an certain interest. I also note that he has made a 20 million plus dollar donation to a university, as well as other substantial philanthropic donations to good causes.

Bill Gross is definitely at the top of the class when it comes to trading the bond market.


Do you know Mohamed El-Erian?


" Mohamed A. El-Erian born August 19, 1958) is the Chief Economic Adviser of Allianz a multinational financial services company. He is the former CEO and coCIO of PIMCO, a global investment firm and one of the world's largest bond investors, with approximately $2 trillion of assets under management as of December 2013. PIMCO is a company of Allianz.

El-Erian serves as chair of President Obama's Global Development Council.[4]He is a columnist for Bloomberg View, as well as a regular contributor to the Financial Times and ...... "


I think you get the picture about the capable and insightful Mr El-Erian, who recently spoke at the World Economic Forum.

Let's move on. (and that's it with the Wiki quotes!)


I won't bother you with extensive texts copied from the biography of either of these gentlemen. Their photos are everywhere, and their published papers are well worth looking up and reading. I speak from personal experience of reading same.

But as an aside from the purely business arena, it is also worth considering the high level circles of society and leadership they inhabit, the level of the people they advise, and their track record for good judgment.

Fact is they took PIMCO to the top place in bond trading fund size based on the aggregate of skills required to do this.

That's why it's interesting that they have both resigned from PIMCO during 2014.

El-Erian retired during last March, and still is with Allianz as an Economic Advisor, but not connected to the bond trading ETF. Bill Gross announced his retirement this September.

At this point you might like to take a look at this blog article by Barry Ritholz, in particular the long term interest rates chart:

That's a doozy of a bear trend in interest rates/bull trend in bonds!

Highest high for bonds in 300 years!

We need a closer look.

Here is the Fed Funds Rate since the early 1970s:

The 1970s is particularly relevant because it represents the beginning of the period of success for the careers of Mr Gross and Mr El-Erian. It's the beginning of the final swing of the 300 year uptrend in the bond market, from which these two gifted gentlemen derived such success.

And now they have both walked away. From making a living running a bonds fund.


Here is a chart I created at the start of 2014. At the time I said I thought it might take until middle-late 2014 to work out in some fashion.

I was a tad early. It's beginning to work out though, in my view.

Gold is not exactly a commodity. Neither is it an inflation hedge, in the short or medium term sense it does not correlate with bursts of inflation as they come and go. it functions as a long term inflation hedge. But more than anything gold is an anti correlated asset to real interest rates. Which is to say. when interest rates do not rise enough to cover the depreciation to fiat money by inflation, gold rises.

So it's not a bond, neither an inflation resistant bond like the TIPS. Gold is a bond competitor asset for when bonds lose value through default or erosion. So when money flows out of bonds looking for a home, stocks receive some of that money, and so does gold.

Did you notice that recently the Central Banks are publishing economic statistics which show a slowing down of "the recovery". They seem to fear "a recession" or something like that. Funny. It seems to me that these are the exact things they denied were happening for the past five years! Even though everybody else could see them. So why on earth would the central banks and their financial representative agencies do a turnaround on their positivity meme and begin to promote the idea that scary deflation is coming.

Could they be trying to herd capital back into bonds?

But if the central bankers are likely to succeed at this why did both Messr's Gross and El-Erian decide leave their former activities, now. And, as Marc Anthony said, they are all such insightful capable men - or something like that.

It's not quite time for precious metals, but it's close.

What will a 300 year turn in interest rates look like for gold? We should prepare for massive oddities in coming events.


Argentus Maximus

The author posts daily commentary on the gold and silver markets in the TFMR forum: The Setup For The Big Trade. More information about the author & his work can be found here: RhythmNPrice.

About the Author


Sep 28, 2014 - 6:34pm


We have a winner! (#1)

Just happened to be sitting here and noticed the spot was open. ;-)

I had some "PIMCO" in an Insurance Acct., just moved it out a few minutes ago. I guess "Personality Investing" has its pitfalls.

Mr. Fix
Sep 28, 2014 - 6:49pm


"We should prepare for massive oddities in coming events"

Now there is an understatement.

Sep 28, 2014 - 7:24pm

CEO of Trillion-Dollar Company Resigned After His Daughter Told

Former PIMCO CEO Mohamed El-Erian's daughter made him a list of all the milestones he had missed

A 22-point list written by his 10-year-old daughter was all it took to change the trajectory of Mohamed El-Erian’s life.

In January, El-Erian made headlines for announcing his resignation as CEO of trillion-dollar investment fund PIMCO in January. In an article for Worth this summer, which has recently gone viral, El-Erian explains that he decided to step down after his daughter listed out the many milestones he had missed in her life.

When El-Erian asked his child why she wasn’t listening to him when he asked her to brush his teeth, she gave him a list of 22 things he had missed (from first soccer matches to Halloween parades) because of work.

“Talk about a wake-up call,” El-Erian writes. “I felt awful and got defensive: I had a good excuse for each missed event! Travel, important meetings, an urgent phone call, sudden to-dos… But it dawned on me that I was missing an infinitely more important point.”

Sep 28, 2014 - 7:25pm

Well AM, this could get interesting

Tensions had been building within Pimco, the Newport Beach, California-based asset manager with about $2 trillion under management. Co-Chief Investment Officer Mohamed El-Erian, Gross's long-time heir-apparent, made an acrimonious exit in January. The flagship Total Return Fund, the world's largest bond fund, suffered 16 straight months of outflows. The wrangling and the underperformance grated on the executive committee, chaired by Chief Executive Douglas Hodge.

"While we are grateful for everything Bill contributed to building our firm and delivering value to Pimco's clients, over the course of this year it became increasingly clear that the firm's leadership and Bill have fundamental differences about how to take Pimco forward," Hodge said in a statement on Friday.

As Gross, known as the "Bond King" within the industry, butted heads with colleagues, the clashes got worse. In recent days, about five senior portfolio managers told the executive committee that they would quit if Gross stayed, the sources said.

Gross himself threatened repeatedly to quit, letting management know that he had been looking around for a role elsewhere. Jeffrey Gundlach of DoubleLine Capital, Gross' arch-rival and the closest contender for the Bond King crown, said in an interview on Friday that Gross approached him early last week about a possible role.

They met last week at Gundlach's house in Los Angeles. The two discussed the possibility of Gross joining DoubleLine, but Gundlach said he wasn't willing to share direction of the firm with Gross.

"He didn't seem that rattled. But he didn’t seem happy. He seemed a bit angry about what was going on," Gundlach said.

In recent days, when Gross again threatened to quit, the executive committee decided it was time he actually left the firm, one of the sources said.

The firm had already put a succession plan in place, choosing Deputy Chief Investment Officer Dan Ivascyn as the successor. Allianz SE (ALVG.DE), the firm's German parent, had given its blessing. An announcement of Gross' ouster had been prepared, and was set to be announced as soon as Saturday, the source said.

Then, Gross sprung a surprise.

On Friday morning, Gross quit Pimco to join asset manager Janus Capital Group (JNS.N), run by his former Pimco colleague Richard Weil. Gross will manage the Janus Global Unconstrained Bond Fund (JUCTX.O). The fund, started in May, has just $13 million in assets. Pimco Total Return Fund has about $222 billion.

"It is the right thing," Gundlach said of Gross's move to Janus. "Now he can perform better because he isn't managing a lot of money."

Gundlach said Gross left him a voice mail on Thursday evening, saying he was leaving Pimco to join another firm.

Gross didn't respond to requests for comment.


Gross' abrupt departure climaxes a drama that has riveted industry executives, investors and rivals over the past year. It raises questions about the future performance of the firm, which counts tens of thousands of ordinary Americans and major institutions including the CalPERS pension fund as investors in its mutual funds, exchange-traded funds and other products.

U.S. Treasuries prices fell on Friday, Allianz slipped more than 6 percent in German trading and Janus soared 43 percent.

"I think people are concerned that Pimco is going to have to liquidate, so there is some pre-selling going on ahead of the fact that they may have to do some selling," said Tom di Galoma, head of rates and credit trading at ED&F Man Capital Markets.

sierra skier
Sep 28, 2014 - 7:28pm

Bill has been a solid

Bill has been a solid investor forever.

Retiring out of the bond markets at the height of his career is perhaps a great move the way things are setting up. Interest has nowhere to go but up and that would hurt the bond values. I am sure he sees something that would hurt his fund's performance.

Fred Hayek
Sep 28, 2014 - 7:43pm

Criticizing philanthropy doesn't play well, but . . .

There are not many more worthless things you can do with $20 million than to give it to a college or university. Bill Gross gave $20 million, a huge sum of money, likely multiples of the total gross income I'll make in my lifetime, to Duke University.

But, you know what? Duke University now has an endowment of over $6 Billion. That's right. Bill Gross had $20 million to give away as a philanthropic gesture, and he gave it to an entity that essentially has 300 times that much dough sitting in the bank. Is there anything they could do after that, after he increased their holdings 0.3% that they couldn't have done the day before?

What could St. Jude's Hospital do with that? What could the Salvation Army do with that? What could he have done investing that as venture capital in some company or companies involved in manufacturing, not twee little phone apps but actual manufacturing of some sort that might employ blue collar men and women?

But, no, he didn't do any of these things. He contributed a rounding error to an entity that, simply by the fact that it has amassed $6 billion of endowment, we can reasonably surmise has no fvcking clue how, or no intention, to deploy its resources to help students, families, the community or scholarship. Congratulations, Bill, feel GOOD about yourself! You took a huge something and almost assuredly made nothing out of it. What a grand person you must be!

Sorry for the rant.

And, I completely agree, AM that the timing of the departures of Gross and El erian do fit rather neatly with the thesis that the worldwide bond bubble is floating toward a landscape full of cacti.

Sep 28, 2014 - 8:35pm

Fat Cats

It pays to watch the hands of the big shots but listening to what they say will yield a break even at best and watching their eyes will yield a loss.

Sep 28, 2014 - 10:08pm

I have a request.....of Turd....

...on my way to work last night I listened to an interview of Andrew Maguire on KWN. It was quite revealing, and at the same time left me wanting more detail. Andrew's insights into the workings of the metals trade is IMO invaluable. (in particular, more depth would perhaps close some gaps in thought.) I know that an interview doesn't happen at the drop of a hat. Even Turd's hat. But I do think at this junction in time picking Andrew's brain just a little more would benefit all in Turdville. What say yee?!!!

Sep 28, 2014 - 10:21pm

I keep asking

But I haven't been able to get Andy to come on. Will keep trying, though.

Sep 28, 2014 - 10:21pm

Great post, AM

Thanks for writing about this!

Sep 28, 2014 - 10:36pm

they were probably using am's

they were probably using am's charts...

Video unavailable
Safety Dan
Sep 29, 2014 - 12:01am

There Is No Recession & Only Low Inflation

What, you don't believe me? Better look at this 15 year chart of GDP. We averaged nearly 3% from 2000 till 2008. We are almost at 3% again.. So good times are here again.

For Inflation see this graph from this site

Once again we averaged about 2.5% until 2008. We are doing better now at 1.7% inflation. Good times are here again! Spend, spend, spend..

US Inflation Rate Falls to 1.7%
US annual inflation rate slowed for the second straight month to 1.7 percent in August from 2 percent in July, due to falling energy prices. The monthly rate dropped for the first time in sixteen months by 0.2 percent.

The seasonally adjusted decline in the all items index was the first since April 2013. The indexes for food and shelter rose, but the increases were more than offset by declines in energy indexes, especially gasoline. The energy index fell 2.6 percent, with the gasoline index declining 4.1 percent and the indexes for natural gas and fuel oil also decreasing.

The index for all items less food and energy was unchanged in August; this was the first month since October 2010 that the index did not increase. While the shelter index increased and the indexes for new vehicles and for alcoholic beverages also rose, these advances were offset by declines in several indexes, including airline fares, recreation, household furnishings and operations, apparel, and used cars and trucks.

The all items index increased 1.7 percent over the last 12 months, a decline from the 2.0 percent figure for the 12 months ending July, and the smallest 12-month change since March. The index for all items less food and energy also rose 1.7 percent over the last 12 months. The food index has risen 2.7 percent over the span, while the energy index has increased 0.4 percent.

BLS | Joana Taborda | joana[dot]taborda[at]tradingeconomics[dot]com
9/17/2014 1:44:19 PM

Recent Releases

US Inflation Rate Down to 2%
US annual inflation rate slowed to 2 percent in July from 2.1 percent in the previous two months, in line with market expectations and driven by a fall in energy cost. Published on 2014-08-19

US Inflation Rate Steady at 2.1%
US consumer prices rose 2.1 percent year-on-year in June, the same rate recorded in May. On a monthly basis, prices increased 0.3 percent, following a 0.4 percent rise in the previous month, driven by higher gasoline cost. Published on 2014-07-22

Safety Dan
Sep 29, 2014 - 12:06am

More Good News: The End of Monetary Policy

The End of Monetary Policy »

That Pesky Budget Thing

Developed governments around the world are running deficits. France will be close to a 4% deficit this year, with no improvement in sight. Germany is running a small deficit. Japan has a mind-boggling 8% deficit, which they keep talking about dealing with, but nothing ever actually happens. How is this possible with a debt of 250% of GDP? Any European country with such a debt structure would be in a state of collapse. The US is at 5.8% and the United Kingdom at 5.3%, while Spain is still at 5.5%.

Let’s focus on the US. Everyone knows that the US has an entitlement-driven spending problem, but very few people I talk with understand the true nature of the situation, which is actually quite dire, looming up ahead of us. In less than 10 years, at current debt projection growth rates, the third-largest expenditure of the United States government will be interest expense. The other three largest categories are all entitlement programs. Discretionary spending, whether for defense or anything else, is becoming an ever-smaller part of the budget. Social Security, Medicare, and Medicaid now command nearly two-thirds of the national budget and rising. Ironically, polls suggest that 80% of Americans are concerned about the rising deficit and debt, but 69% oppose Medicare cutbacks, and 78% oppose Medicaid cutbacks.

At some point in the middle of the next decade, entitlement spending plus interest payments will be more than the total revenue of the government. The deficit that we are currently experiencing will explode. The following chart is what will happen if nothing changes. But this chart also cannot happen, because the bond market and the economy will simply implode before it does.

A Multitude of Sins

Safety Dan
Sep 29, 2014 - 12:14am

USA: Secular Stagnation or

USA: Secular Stagnation or Public Sector Drag?

This latest theory – “secular stagnation” – argues that powerful and inherently deflationary forces like shrinking populations…

… and potentially slowing productivity growth (as posited by Northwestern University professor Bob Gordon)…

… are adding to the deleveraging headwinds that always follow debt bubbles. According to the “stagnation” theory, structural forces have been bearing down on the natural rate of interest and weighing on the full-employment level of economic growth since the early 1980s; but the slowdown in trend GDP growth has been masked by a series of epic bubbles in technology stocks and housing.

Grant Williams used this chart in a speech yesterday. It shows that we have come to need ever more debt just to produce the same amount of GDP. With a deleveraging in the private sector underway, it is no wonder that growth is under pressure.

Debt is simply future consumption brought forward. Another way to think about it is that debt is future consumption denied. But there comes a point when debt has to be repaid, and by definition, from that point forward there is going to be a period of slower growth.

Sep 29, 2014 - 12:28am
Safety Dan
Sep 29, 2014 - 12:36am

Great post AM, While we know

Great post AM,

While we know both men resigned from their positions with "issues", I believe those issues existed before and were dealt within the organization. For them both to leave within several months of each other suggests they have a pretty good idea what's coming..

I believe Fix stated it best in his post above:

"We should prepare for massive oddities in coming events"

Now there is an understatement.

My question to others... Am I the only person that has funds in bonds? What is one to do if he has funds invested into bonds?

Watch this link for the next couple months as something interesting is about to happen...

The Yield Curve vs S&P 500 Performance

Lucy Sadie
Sep 29, 2014 - 12:53am


The few people I know from PIMCO were the ones selling their large homes in Newport and CdM and renting in 2005-06. Even families with young that tells me they are very macro aware. At the time I was completely floored that someone with a secure good job and a family would go through something so disruptive for a "market correction". After what happened...... FWIW

Safety Dan
Sep 29, 2014 - 12:55am
Green Lantern
Sep 29, 2014 - 2:20am

Hypothetical;  The stock

Hypothetical; The stock market becomes bearish/or crashes. American workers loose alot of money in their 401k just like they did in 2007 and 2009. Obama to the rescue. He begins to force Americans into US Treasuries just like he announced at the beginning of the year. The R Bond . But he'll need a reason to do this. Kind of a financial false flag. He'll tell you that they are guaranteed and back by the US Government.

This already happened in Argentina where gov. demanded that retirement plans be put into bond and many other G7 nations are considering the same move.

Safety Dan
Sep 29, 2014 - 3:41am
Safety Dan
Sep 29, 2014 - 3:44am

Ebola Is Going Global. Or

Ebola Is Going Global. Or Not.

West Africa's Ebola epidemic, which has already claimed about 2,000 victims, could get a lot worse before it gets better -- particularly in the (apparently unlikely) event that the virus evolves to spread from person to person through the air. It could end up in major cities in Europe or the U.S., in India or China.

Will it? The truth is that nobody knows.

Back in 1976, the first outbreak of Ebola in what was then Zaire caused only 318 illnesses and 280 deaths. Since then, a lot has changed to make the virus more mobile. West Africa is much more densely populated, and those people move around more. A global air network links Lagos, Monrovia and other affected cities to other major population centers in Africa and around the world.

Safety Dan
Sep 29, 2014 - 3:54am

Gross Gets Out of Bonds Just

Gross Gets Out of Bonds Just in Time

What does this mean for you, the investor? In general, right after these sorts of announcements is the worst time to flee a market, because there’s a big risk premium assigned to “not knowing what the heck is going to happen,” and if you head for the exits, you’re going to be the one paying for the risk premium. But a lot will depend on how many people decide to leave Pimco over this, and how much stuff Pimco has to sell, at what prices, in order to pay them off. Bond spreads widened this this morning as dealers prepared for redemptions, again, because being the biggest bond fund in the world moves markets.

In other words, expect a bit of a bumpy ride as the markets sort through the chaos.

1 For those who did not take Finance 101, here’s what I mean.

Say you have a bond with a face value of $1,000 and a coupon (interest payment) of 10 percent. That means that if you own that bond, you will get $100 every year, plus $1,000 when the bond matures in 10 years.

Now say we’ve all been expecting annual inflation of 10 percent. In ten years, $1,000 will be worth just over a third of what it is now, because it will take almost three times as many dollars to buy something. Your $100 payment in year nine will also be worth a lot less than today’s coupon payment. So you’re going to want a pretty hefty discount to buy this bond.

But let’s say we get a new Fed chief -- call him Pal Folker -- who has committed to cutting inflation in half, and you believe him. Suddenly you realize that your $1,000 bond will buy you a lot more in year ten than you previously thought it would. So you’ll be willing to pay more for it now, because it’s worth more in terms of purchasing power.

As inflation fell from its 1970s highs, over the next two decades bond funds benefited twice from the decline: The coupon payments they were giving investors were worth more than they’d predicted, and as a consequence, the bonds in the funds were also worth more, so they got capital gains, as well as a steady income.

Safety Dan
Sep 29, 2014 - 4:05am

Falling Out of Love With

Falling Out of Love With Gold

By Mohamed A. El-Erian

Gold has let down its loyal investors during the past year, declining by about 8 percent. It has failed to benefit, as one might expect, from a series of geopolitical crises and concerns that stocks are overvalued. It has even failed to keep up with government bonds, usually the other recipient of flight-to-quality trades. Moreover, it has responded weakly to the excitement in India -- its biggest physical retail market --– over the prospects for economic reforms under newly elected Prime Minister Narendra Modi.

Yesterday again highlighted gold’s malaise. In a lousy day for stocks, with every sector losing ground and major indexes falling as much as 2 percent, gold prices essentially went nowhere even as the bond market managed a decent rally.

I can think of three major reasons for gold’s disappointing performance.

First, it usually does badly when the dollar appreciates. The greenback has gained during the past year as foreign-exchange traders have started to take account of less accommodating U.S. monetary policy, including the widening contrast with Europe and Japan.

Second, gold has been hurt by a general slump in commodity markets as global economic growth has fallen short of expectations in both developed and developing nations.

Third, it has found few investors willing to buy on the dip, either directly or through commodity funds.

None of this is likely to change anytime soon absent a bigger conflict in Ukraine or the Middle East. As such, gold is likely to continue to disappoint its devotees. Yet investors shouldn't forget that gold has its place and that a well-diversified portfolio should have gold holdings equal to 3 percent to 8 percent of total assets.

The biggest risk facing investors today is a large and sustained fall in assets whose prices have been artificially supported by central banks -- particularly bonds and equities. This is especially the case should a decline in global growth be accompanied by greater geopolitical turmoil.

There are good reasons for gold to be unloved at this stage and thus having a position in gold toward the lower end of the allocation range is justifiable. But only brave investors would omit it from their investment portfolios given the fluid world we live in.

To contact the writer of this article: Mohamed A. El-Erian at M[dot]El-Erian[at]bloomberg[dot]net.

To contact the editor responsible for this article: James Greiff at jgreiff[at]bloomberg[dot]net.

Safety Dan
Sep 29, 2014 - 5:07am

Are Central Bankers Building a Debt Bomb

WSJ Video - Are Central Bankers Building a Debt Bomb?

This article can also be accessed if you copy and paste the entire address below

into your web browser.

Safety Dan
Sep 29, 2014 - 6:07am

I Am Putting Everything In

I Am Putting Everything In Goldman Sachs Because These Guys Can Do Whatever The Hell They Want"

Submitted by Tyler Durden on 09/28/2014 - 19:18

If you can't beat it, may as well bid it. That, at least, is the take home lesson to Nanex' Eric Hunsader who says that after listening to the "Goldman Tapes" I'm putting everything in GS - because these guys can do whatever the hell they want"...

Sadly, just like a year ago, so this time too, we are reluctant to say anything will change. In fact, there is too much at stake, for Goldman to drop the reins and disassociate from the NY Fed: for pete's sake, the president of the NY Fed is a former Goldman employee - does it get any more conflicted than that?!

But, wait, Goldman will do penance by "prohibiting its bankers from buying stocks"... the horror. Luckily at least purchasing politicians and Fed presidents is still perfectly allowed.

In fact, what has become clear to everyone is that aside from yet another dog and pony show (led by, you guessed, it thehead dog and ponier herself, Elizabeth Warren), not only will nothing change, but in fact the best way to take advantage of a broken, corrupt, sinking system, is to join it. And the best summary of just that sentiment was released over the weekend by Nanex' Eric Hunsader as follows:

Curious what made up Eric's mind? Then fast forward to minute 24 to hear what it sounds like when a top Fed official "questions" Goldman Sachs:

Safety Dan
Sep 29, 2014 - 6:28am

Goldman Changes Conflicts Policy.. Go Carmen Segarra!

Update: Congressional Reaction, Goldman Changes Conflicts Policy

Here are developments following our report about the New York Fed and Carmen Segarra’s secret recordings:

  • Sens. Elizabeth Warren, D-Mass., and Sherrod Brown, D-Ohio, called for Senate hearings to explore whether the New York Fed is too deferential to banks it supervises, according to reports in The Hill and Reuters.
  • Goldman Sachs is reportedly changing its conflict of interest policy to ban employees from trading in individual stocks or bonds in certain situations, according toBloomberg and BuzzFeed. As we reported with This American Life (transcript), Segarra had been tasked at the New York Fed to investigate Goldman’s policies in 2011. At the time, Goldman faced conflict of interest accusations in a shareholder lawsuit over Kinder Morgan’s acquisition of the energy company El Paso. Goldman was advising both companies and held a large stake in El Paso. A Goldman banker who worked on the deal advising El Paso had a $340,000 personal stake in Kinder Morgan. The case settled, but a judge called Goldman’s handling of the conflict “inadequate.”
  • For more coverage, see ProPublica’s previous reporting on Segarra, the El Paso-Morgan deal and Goldman’s conflict of interest policies and predicaments.
Safety Dan
Sep 29, 2014 - 6:30am

60 min interview with Carmen

60 min interview with Carmen is a MUST LISTEN

536: The Secret Recordings of Carmen Segarra

An unprecedented look inside one of the most powerful, secretive institutions in the country. The NY Federal Reserve is supposed to monitor big banks. But when Carmen Segarra was hired, what she witnessed inside the Fed was so alarming that she got a tiny recorder and started secretly taping. ProPublica's print version.

You get to hear one of the players at the Fed who do the Squid's bidding. Two that are on the recording are Michael Silva and Jonathon Kim:

Jonathon Kim's Linkedin link no longer works

So Who is Carmen Segarra? A Fed Whistleblower Q&A

Here's something interesting you might like:

Safety Dan
Sep 29, 2014 - 6:33am

FRBNY-BankSupervisionReport H


Here is a list of the questions sent from ProPublica and This American Life to the Federal Reserve:

Responses from the Fed:

Here is a list of questions sent to Goldman Sachs by ProPublic and This American Life:

And the Goldman response:

The confidential report from Columbia professor David Beim written for the New York Fed in 2009, to address what is essentially Janet Yellen’s “I didn’t see any of that coming until it happened.” claim relative to the financial crisis.

From: Johnny Cash ~ Will The Circle Be Unbroken?

Safety Dan
Sep 29, 2014 - 6:39am

Finally, the Truth About the

Finally, the Truth About the Bailout


The A.I.G. case is an opportunity to explain the Fed’s decisions.....

From the middle of the article:

At the heart of the controversy is the fact that the government has never provided a plausible explanation for why the Federal Reserve Bank of New York, which had enormous leverage over banks like Goldman thanks to its role as their regulator, didn’t lean on them to accept less than 100 cents on the dollar in their payouts from A.I.G.

Former Treasury Secretary Timothy F. Geithner, who orchestrated the bailout from his previous perch as New York Fed president, insists that extracting these “haircuts” would have shattered the market’s confidence and undermined the A.I.G. bailout.

But this explanation is both counterintuitive — the haircuts would have helped save A.I.G. and stabilize the financial system — and ahistoric. The Fed has long used its leverage over banks in similar situations, to great effect. During the Asian financial crisis of the late 1990s, an episode Mr. Geithner observed up close as a senior Treasury official, the New York Fed president, William J. McDonough, leaned on Korea’s creditors to roll over and lengthen their loans and prevent that country’s financial collapse.

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Which leaves only two possible explanations for the overly solicitous treatment of Goldman and the others. The first is that their own financial position was so precarious that accepting anything less than the billions they expected from A.I.G. would have destabilized them, too. Which is to say, it really was a backdoor bailout of the banks — many of which, like Goldman, claimed they didn’t need one. Alternatively, maybe Mr. Geithner simply felt that Goldman and the like had a more legitimate claim to billions of dollars in funds than the taxpayers who were footing the bill.

Either way, forcing an honest admission out of Mr. Geithner, who is scheduled to testify in the trial, would be a helpful, even cathartic, development. Traumatic historical episodes often require a high-profile public reckoning before the country can move on. During the Great Depression, that reckoning came in the form of the Pecora investigation, in which a congressional panel summoned the titans of Wall Street to answer for their shady dealings in the run-up to the crash.

The aftermath of our recent crisis has brought a variety of attempts to recreate that level of drama — from the Congressional Oversight Panel hearings chaired by Elizabeth Warren to the congressionally chartered Financial Crisis Inquiry Commission. But none fully exposed the weakness of Mr. Geithner’s logic about the A.I.G. payouts, at least not in a prominent public forum.

Safety Dan
Sep 29, 2014 - 6:48am

Representative Cliff Stearns

Representative Cliff Stearns questions Hank Paulson about the bailouts and highlights how AIG was bailed out with taxpayer money and used to FUNNEL it to the squid. He brings up conflicts of interest with the government and the squid. It is maddening to watch this and realize that NO ONE has gone to jail for any of this. This is from 2009, but still very important.

See this 5:25 video...

Long read but should be downloaded and considered (including the minimum wage paid trolls of opinion).

The Network Of Global Corporate Control. 36 page read.. check the abstract and page 25 forward.

What Do Top Economists Say About the Financial Crisis? SciTech Connect


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