CNBC's Fawning Coverage Helping Bond Billionaires Fleece Main Street

No matter the cost, no matter the damage to the public weal, there are always some who through access and sheer financial wherewithal will turn a national disaster to profitable gain, not by contributing to the solution but by positioning themselves at the public trough to rain riches upon themselves while the nation, its citizens from all walks of life foot the bill. And thus, riding piggy back on the government bailout of Fannie Mae and Freddie Mac, Pimco, the worlds largest bond fund, cashed in with a one day profit of $1.8 billion.

On Thursday, the Wall Street Journal's lead editorial. "Bailout for Billionaires" pointedly questioned Mr. Paulson's motivations in giving "subordinated debt holders an entirely free pass". That, according to the WSJ, the subordinated debt hardly posed a systemic risk given that it represented only 1% of senior debt. It is debt that carries a higher rate of return but therefore carries a higher risk which is why it is held by deep pocketed investors better able to absorb potential losses. As the situation at Fannie and Freddie deteriorated investors reasonably feared a sub debt wipe out or at the very least a significant restructuring proposal asking "for some cash and giving them a new piece of paper" otherwise termed as a "haircut".

But wait. That kind of thinking doesn't apply to the powerful such as Pimco and especially if you have almost unlimited access to an influential and widely followed broadcaster on matters business and finance such as CNBC. Yes, the very same network whose hysterical oil reporting over the past couple of years has helped nudge prices to previously unimagined levels to $147 a barrel, exemplified by their recent reporting on the advent of hurricane Gustav and its prospective impact on the price of oil. With Gustav barreling along a few weeks back, CNBC commentators were more interested in drama than a cool analyses of the facts (please see "Gustav and Oil Price Hysteria" 09.01.08) . Viewers were regaled with cartoon depictions of a sea of oil rigs in the Gulf of Mexico overlain with ominous arrows evidencing the storm's trajectory, in combination with bobbing heads predicting an Armageddon of disruptions, shortages and ten dollar crude oil price rises all presented to CNBC's viewership as emerging gospel. This, without a scintilla of incredulousness, nor questioning. If you were listening, it was enough to make you hide under the covers.

The very same network made its airways available to the incessant agitations of Bill Gross the manager/CEO of Pimco permitting him to browbeat the powers to be, and frighten the public, militating for an urgent government bailout of Fannie Mae and Freddie Mac. He was given repeated face time on CNBC while its array of commentators never made it clearly understandable to their hapless viewers what was at stake for Pimco, the enormous profits to be wrought and at what cost to the body public.

After the Fannie Mae, Freddie Mac bailout CNBC , with no little fanfare presented the news that on Monday September 8th the day after the bailout, was the most profitable day in Pimco's history. A bonanza of $1.8 BILLION flowed into their coffers on the backs of the government bailout and taxpayer risk. Continuing their role as patsies, CNBC after presenting us with this bit of news, had the poor taste to invite Gross on the air again for a victory lap without the slightest self-examination of how their actions and subservience to Pimco might have contributed significantly to making Pimco's triumphal heist possible.

The WSJ, in its editorial, conjectured that Goldman Sachs was also "a lot richer" given the bailout terms, reminding us that Goldman Sachs "is where Mr. Paulson used to work". Well Main Street, straighten up, stop whining and get to work. You have a lot of work to do to pay up all that bread your government has given away to their well connected friends on Wall Street, in high financial circles, in the oil patch. As for the Press ? Shh! Not so loud.

You'll wake them up (herein, the WSJ excepted).

Oh, and by the way in case you missed it, a company called "Allianz" is negotiating with the New York Giants and Jets for naming rights to their new stadium. It was pointed out that Allianz, a German insurance giant, was reported to have had ties to the Nazis according to the Associated Press and as highlighted this weekend in the New York Sun (see "Company With Nazi Ties Seeks Stadium Naming Rights" New York Sun 09.12-14.08). Allianz insured the death camps and "had refused to pay life insurance claims" to the families of those who held Allianz policies and were murdered in the camps. Instead it granted the proceeds to the Nazis. Allianz says they have atoned for their past history. Pimco, since 2000, has been a subsidiary of Allianz.

Comments

[cylindar]

Very interesting!

[joebaggadonuts]

PIMCO has been a sub of ALLIANZ since 2000?

If death camps could be funny, I would be ROFLMAO. I would bet there are some connected folks who are laughing. I bet they have stock in BlackWater too. I'm not laughing.

Thanks. Ray, for pointing out this interesting tidbit.

[Marlyn]

It's the rats deserting the sinking ship. The rats are moving their money to Dubai. The sinking ship is America. Thanks W.

For more of the same? Vote McCain.

[Realist]

HAHAHA

How about Vince Ferrell calling the bottom a few weeks ago on CNBC while Erin did what she does best - "duh..... smile"

Who watches these idiots on Wall Street anymore? Does anyone still beleive that politicians and wal streeters are honest good people? They are self-indulgent, narcistic, arrogant pigs who, when the revolution comes, I will be glad to see tared and feathered.

Let Wall Street eat cake. I bought my house with cash, same with my car, - and I expect them both to be worth zero when I die. How's that Wall Street?

[KingofChing]

Wall Street can't collapse fast enough for me! We can thank Bush and his boys for anothe fast response. Welcome to the 1930's!

[iambusto]

Next time dont whine that why people arent getting home loans, car loans and student loans. Definitely not whine why companies are laying off people by the dozens.

tonight is just the start. HP laying off 24000 in next 3 years.what­s tomorrow?

[budderbean]

Political Tapioca. They get the smoooooooo­oooooooooo­oth.
AND WE GET THE LUMPS!

[WilliePilgrim]

You'd think people wouldn't need a disclaimer in the form of a running scrawl caption at the bottom of the screen saying right out that what these guys are saying is designed to improve their ratings and therefore their profits and may have nothing at all to do with reality. There is no law that requires what they say not be deceptive. It's commercial TV and why would they want to reveal information if it didn't make their advertisers happy?

[george99]

......and their owners (GE in CNBC's case).

[budderbean]

$30K per year and all I got was Tee shirt. I'm gonna go to Vegas and see if I can get a bailout.
Oh, That's right you have to fly before you can bailout. Since we're just trying to keep our feet on the ground the fall wont be as far.... All I gotta do is trip and a face plant Eh?

[jhNY]

If I had based all my actions in my marriage on the advice available to me from Ann Landers in the local paper, wouldn't it still be my own damn fault if my marriage went blooey? I mean, I chose to follow the advice in her columns-- I was under no duress to do so. And now a terrible divorce. Can I honestly lay that at the feet of my advice columnist?

Similarly, the gasbags on view at MSNBC may have said any number of things which were wrong and misleading and inflammatory, but as nobody was forced to listen to them or act on their advice, doesn't responsibility for what happened in the markets remain the responsibility of the actors and not the commentators?

[marignymitch]

The author is speaking about the financial gasbags on CNBC not MSNBC.

[budderbean]

$35K per year and I'm worried about someones investment? NOT. I have paid $8K on a charge card bill of $5K. Do I really need to worry about filling someones pocket (besides mine) with money they don't need?. Should I worry about how somebody flies around on airlines that have done themselves in because of poor planning? Hell I'm doing everything I can to just keep my feet on the ground!.

Austin Texas... An onion $1.00, A potato $1.00. Soon we will only be able to afford Rammin noodles. Maybe spice it up with a rock er two. Maybe I'll go to Vegas and see if I can git me one of them there bailouts.

Hey you fat cats. You gambled and you lost......­.......... Now it's time for ya'll to divvy up.

The old saying was "Who cares about the price of rice in China"? Now the question should be.
who cares about the price of cabbage in America.

My brain and belly hurt this time.

[Realist]

Now the saying goes, who cares about the price of a ham sandwich on Wall Street, BTW, i smiled when I read the Lehman crowd were in the "office bar." Hey guys, now that you've stolen from all the American people I say screw them. Let;s go back to barter system and block the fat cats out of your life. Pay off your CC bills and send no more to the banks. F em.

[budderbean]

"There you go again" Didn't some old dude say that back in the 80's? some old guy with a memory problem? What's the point of us small folks to even care anymore. We are used to eating soup and bread. I have my grandma's recipe for rock soup hanging around. I really don't care about the big fish of the economy anymore.

When are US the PEOPLE of America gonna get serious and deport these parasites. Oh I forgot they already live off shore. The majority of us who make less than $40k are NOT worried about investments.
Why you ask? Because our largest investment is keeping our rents payed.

Man I'm on a rant now and my head and belly hurt this time.

Many in my position in life "cast" if you will, have lost sight on the American dream.....­Whatever that is.
Did you know that a raw onion (forget about bread) cost the consumers (in Austin Tx. )
around $1.00. A russet potato costs about the same!. Airfare prices up? hell The majority of us lower "cast" folks could care less because we're to busy trying to keep our feet on the ground. Forget about the sliver in our brothers eye's around the world. What about the board(room) in our eye.

Energy and security issues from the twits that drive around in gas guzzling hummers and SUV's

[BBackSoon]

Is this FINALY our ‘let them eat cake’ moment? Is it time to storm the Bastille?

[marignymitch]

Apparently not. Americans are flocking to McBush/Palin.