A Compliment to PIMCO’s New Leadership

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By Catherine Austin Fitts

There is nothing more impressive than grace under fire.

Over the last two years, Bill Gross, former head of PIMCO, has had one of the most childish public meltdowns in the history of the bond market.

We can all appreciate why leadership responsibility for the world’s largest bond fund would be nerve racking when all signals indicate that the long-term bull market in bonds is coming to an end. The infrastructure that provides liquidity in the fixed income market was shrinking – clearly a cause for concern. When prices head south and credits weaken, just how does the largest player sell positions if redemptions accelerate?

I can even understand why one might get frustrated with the corruption behind the explosion of debt on Planet Earth. However, Gross had no problem riding that corruption and making a fortune on the financial coup d’etat while times were good. So he seemed a bit disingenuous when his whining started.

As the whining got louder, Bill’s temper tantrums drove his heir apparent out of PIMCO. There were more tempter tantrums for many months and then in a huff he resigned in 2014, making quite a public fuss. The company he sold PIMCO to, German financial services giant Allianz, was left with a mess, and no smooth leadership succession and transition.

So Gross starts a company, rides the wave of a financial coup d’etat and the financial debasement of everything, sells the company to Allianz for a huge and hideous personal profit, then years later when the going gets tough, goes into a meltdown and abrogates multiple obligations as a CEO. He abrogates his duty to provide for successful leadership after his departure. In so doing, he abrogates his obligations to Allianz and to his employees.. He then proceeds to go to another company, announcing the opening of a new fund. As bad publicity mounts, the price of PIMCO funds is negatively impacted and redemptions increase. So Gross harms the investors who trusted him with their savings.

Gross proceeds to announce a large amount of funds coming into his new fund. Later it is revealed that a large portion is coming from the broker who manages Bill’s his own money. He tried to pull a fast one.

I keep reading chatter on the Internet making Gross out to be some kind of hero for criticizing the global leadership.


Where was Bill Gross when $4 trillion went missing from the US Treasury from October 1998 to September 2002? I will tell you were he was – he was busy selling PIMCO to the Germans for a huge and hideous profit. While he was doing so, “mums the word” on the real deal on the fraud in the US bond market. Given the divergence between the number of mortgages collateralizing pools in mortgage securities markets and the number of actual homes or between the amount of US Treasuries on the US balance sheet and the US Treasuries floating around in the markets, don’t tell me that Bill Gross did not know. And if he did not, what does that say about his research and analysis? The statute of limitations is probably up, but I will bet you $1 that Mr. Gross declined to disclose to the Germans everything he knew about the risks in the US bond and dollar denominated fixed income markets.

Ecclesiastes 10 is a pretty good prediction of what Gross can expect, “He that diggeth a pit shall fall into it; and whoso breaketh an hedge, a serpent shall bite him.”

Meantime, there has not been one unprofessional word from Allianz or PIMCO. If I missed something, let me know. I expect they are doing their best to do the right thing for all concerned – investors, shareholders, employees.

My compliments to the PIMCO management for grace and discernment under fire. They are not out of the woods yet, but so far their discipline in communications is a good sign.

I’m impressed.

Related Reading:

Gross’s Fund Got $700 Million From Adviser’s Brokerage

Pimco Total Return Has Worst Year of Redemptions Ever

Bill Gross on Wikipedia

PIMCO on Wikipedia