No PPIP for Pimco

Considering Pimco was an originator of the idea of PPIP and it was well documented the massive fees PPIP would generate, the news Pimco pulled out of PPIP is surprising.

The U.S. plan to help buy as much as $40 billion in assets from banks got started almost four months after it was proposed and without Pacific Investment Management Co., the world’s biggest bond manager and an early supporter.

The U.S. Treasury Department picked nine money managers yesterday for the Public-Private Investment Program, or PPIP, including BlackRock Inc. and Invesco Ltd. Pimco, which in March announced plans to apply, said it withdrew its application in June because of “uncertainties” about the plan’s design.

Pimco & PPIP

The New York Times has a detailed interview & article with Pimco's Bill Gross in Treasury has Bill Gross on Speed Dial. While the article is a nice warm fuzzy on guy pulling himself up with his own bootstraps, outside the box brilliant business acumen etc., some very interesting pieces of information are revealed about Pimco, Bill Gross and the Treasury's PPIP plan.

First is this tidbit:

Last fall, the Federal Reserve Bank of New York, run at the time by Mr. Geithner, hired Pimco — along with BlackRock, Goldman Sachs and Wellington Management — to buy up to $1.25 trillion in mortgage bonds in an effort to keep interest rates from skyrocketing.

Bond Holders Rule the World

Bloomberg has an exclusive story on how bond vigilantes are using the markets as a protest trying to play a game of economic chicken with the administration to reduce the deficit.

For the first time since another Democrat occupied the White House, investors from Beijing to Zurich are challenging a president’s attempts to revive the economy with record deficit spending. Fifteen years after forcing Bill Clinton to abandon his own stimulus plans, the so-called bond vigilantes are punishing Barack Obama for quadrupling the budget shortfall to $1.85 trillion. By driving up yields on U.S. debt, they are also threatening to derail Federal Reserve Chairman Ben S. Bernanke’s efforts to cut borrowing costs for businesses and consumers.

Geithner's PPIP - the Gift that keeps on giving....to certain people that is

Lord knows many financial experts as well as us regular folk bloggers immediately saw the flaws in U.S. Treasury Secretary's PPIP plan, now it appears from Bloomberg's headline Geithner’s Non-Recourse Gift That Keeps on Giving to Bill Gross the press is piping up too:

Treasury Secretary Timothy Geithner’s plan to rid banks and markets of devalued assets may be a boon for Pacific Investment Management Co.’s Bill Gross.