Bill Gross Pushes Book, Makes Fun Of US Blondes, Ridicules Roubini and Trims Moustache

Bill Gross' March investment letter/PIMCO monthly demand for taxpayer money is out. Nothing new here: the US government should avoid nationalization, but no viable alternative provided. Some harsh language on Roubini, Dodd, Greenspan and Orange County blondes. And as always, demands for more taxpayer funds to keep coming as otherwise PIMCO may be impaired as a creditor in most bank holdings.

I think Roubini, Dodd and Greenspan haven't thought this one through. The U.S. isn't Sweden, and not just because our blondes aren't au naturel [Billy must have a lot of carpet curtain matching experience with the Desperate Housewives of OC]. Their successful approach revolved around a handful of banks but we have 7,500 as well as many S&Ls and credit unions, which would have to be flushed into government hands. Regulators are overwhelmed as it is and if you thought Lehman Brothers was a mistake, just standby and see what nationalizing Citi or BofA would do. Our banks remain at the heart of the domestic/global financial transactions and daily clearing, while those Scandinavian banks were not. PIMCO would not dispute the need to further capitalize systematically important banks via convertible bonds held by the government, which unfortunately dilute shareholders' interests. To go further, however, and "haircut" senior debt or even existing preferred stock similar to that issued via the TARP would create an instability policymakers should not want to risk. In turn, forcing creditors [ed. i.e. PIMCO] to take haircuts would undermine other financial sectors such as insurance companies and credit unions. The goal of future policy should be to recapitalize lending institutions while maintaining the basic infrastructure of credit markets [ed. or else PIMCO will fail]. Outright nationalization and haircutting of creditors will do just the opposite.

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