In case you don't know the money from nothing scam the banks pull on you watch this 10 minute video, Money as Debt part 1.If you are aware of this crime, then just read this from Optionarmageddon/ml-implode.
Nice work, if you can get it
The Federal Reserve will print money to buy $500 billion worth of mortgage-backed securities by June, specifically MBS issued by Fannie, Freddie and their sister Ginnie Mae. And guess who the Fed has hired to manage the purchases? PIMCO, Goldman, BlackRock and Wellington.
This is quite a scam for all of them, especially PIMCO. The ultimate self-bailout you might call it. As of June 30th, 61% of the PIMCO’s assets were invested in MBS. $500 billion in total. No doubt the others also own a pile of Fannie/Freddie/Ginnie bonds.
In sum, these firms just got hired to use the public’s money to buy assets from themselves.
Is it any wonder why PIMCO chief Bill Gross argued so vociferously for Treasury to start buying troubled assets? In a much publicized investor letter on Sept 4th, he said the following:
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.
To be fair, he wasn’t wrong. A “debt liquidation of historic proportions” is indeed what would have happened had the Fed and Treasury not stepped in. And that would have crippled the world economy. But Gross, the largest bond fund manager on the planet, may have been hardest hit of all.
Once upon a time, the Chinese owned hundreds of billions worth of MBS themselves, as did the Russians. But when Fan and Fred collapsed, the foreigners skedaddled. Can you blame them? They had invested their people’s hard-earned savings in piles of Fannie and Freddie debt which, save for a U.S. Treasury guarantee, would have fallen precipitously in value. Now the government has to make good on that guarantee, buying up all these MBS that no one else wants.
The Fed argues this will boost housing by lowering mortgage interest rates. In reality, lower rates may actually “spur a new wave of defaults.”
By the way, the Fed will “monitor” each firm to avoid conflicts of interest:
Each investment manager will be required to implement ethical walls that appropriately segregate the investment management team that implements the Federal Reserve’s agency MBS program from other advisory and proprietary trading activities of the firm. The New York Fed will monitor each investment manager’s compliance with this requirement.
Good thing we have “ethical walls” to protect taxpayers.
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