Quote of the Day: Bill Gross on Monolines

Monday, February 11, 2008 | 12:30 PM

Bill Gross, in the FT, asks some rather intriguing questions late last week:

"How could Ambac (ABK), through the magic of its triple-A rating, with equity capital of less than $5bn, insure the debt of the state of California, the world’s sixth-largest economy? How could an investor in California’s municipal bonds be comforted by a company that during a potential liquidity crisis might find the capital markets closed to it, versus the nation’s largest state with its obvious ongoing taxing authority?"

- Bill Gross


The alchemy identified by Gross: Wrapping high risk paper in a high risk derivative / insurance contract does not eliminate any of the risk, nor does it make high risk paper investment grade.

This is slowly being realized for what it actually is: Massive fraud on a widespread structural basis.


Rescuing monolines is not a long-term solution
William Gross
Published: February 7 2008 18:14

Monday, February 11, 2008 | 12:30 PM | Permalink | Comments (29) | TrackBack (0)
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Pimco talking it's book.

He should just come out and say what he WANTS to say but can't or won't.


Posted by: michael schumacher | Feb 11, 2008 12:36:49 PM

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