Home > Best assets to buy, Best assets to buy 2010 > Robert Mead pimps for PIMCO

Robert Mead pimps for PIMCO

An Aussie ‘Mini Me’ version of Bill Gross, Robert Mead, appeared on Lateline Business (10 Aug 2010) pimping Other People’s Debt for his employer US bond giant PIMCO (surprise, surprise).

The interesting aspect of the interview was how quickly this spectacled ‘Mini Me’ had picked up the American way of talking in euphemistic ‘double-speak’ about the absolutely corrupt workings of the international debt markets.

He stated that PIMCO was particularly focused on ‘non-market’ risks – code for corrupt governments bailing out bankrupt market participants.  He then pointed to the machinations of the AOFM in the RMBS market as an example of this ‘non-market’ or ‘regime’ risk.

AOFM is the Aussie ‘Mini Me’ equivalent of the absolutely corrupt Fannie Mae and Freddie Mac in the US.  It’s amazing that we are actively going down the path of building up the greatest moral hazard and systemic risk death-trap that could possibly exist in our financial markets – particularly after what has happened in the States – but you can never underestimate the vile corruption and stupidity seeping out of the paper palaces in Canberra and Martin Place.

Watching the PIMCO Mini Me pimp RMBS (particularly the 2004-2007 ‘vintages’), I just loved how the meek Mead slyly mentioned the AOFM as a prime example of ‘non-market risk’.  Cute doublespeak.  What he was really saying was this:  ‘Don’t worry about the Oz housing market because the govt will bailout bondholders anyway so – buy our bonds!  There is no market risk because the corrupt AOFM will put a floor under our market.  Call it the AOFM put.’

So clever, in a shysterish kind of way, to call this govt guarantee ‘non-market risk’, like it’s something scary.  It’s scary for Joe Taxpayer who is being slugged to bailout these gamblers.  It’s not scary for those participants in the market who know the government has put an artificial floor under their own market.  You could call that ‘non-market’ risk.  Or simply corruption.

I prefer the simpler expression.

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