Downgraded S&P Rating, China, Cuba, Obama, The Illuminati and Their Scary Ties to Newport Beach
And ever-more mounting, conspiratorial, totally uncorroborated evidence suggests this may be tied to a Communist Chinese/Cuban plot based in Nouveau Riche to destroy America the Booty-full from within.
Let us follow the deflating ball, shall we?
But betting is one thing: creating an investment strategy built around the downgrade, showing up anywhere and everywhere on radio, TV and in print predicting it was going to happen and then leaning on ratings boards like S&P to make it happen are another.
That's what Gross and PIMCO CEO Mohamed El-Erian have been doing since April, laments economist Paul Krugman (via the New York Times) and Raymond J. Learsy (via the Huffington Post).
Reports the later:
When the rating agencies were slow to react, their credibility was put into question as well. El-Erian called for "some kind of process to evaluate the performance of the agencies." He would pronounce much in the tradition of "I'm Shocked, I'm Shocked." Rarely did El-Erian's interlocutors pin him down as to whether such a downgrade would help or hurt his book, leaving most listeners with the impression that they had received the accumulated wisdom from high on the hill unaware that the sermon being delivered was from atop a mount built upon billion dollar bets against U.S. Treasuries/U.S. Debt instruments.
And this wasn't a first for PIMCO, which in September 2008 "turned a massive about face on its much vaunted investment strategy of quality only, making huge investments in what was then widely recognized as quintessential junk, namely Fannie Mae and Freddie Mac subordinated debt," snatching it up for pennies on the dollar, Learsy reminds.
Then, much as Gross and Mohamed El-Arian have today, Gross had almost unlimited access to CNBC and other broadcasters, permitting them to endlessly lecture listeners and those with authority about the systemic dangers of a Freddie and Fannie collapse, or currently to goad the rating agencies to bring about a ratings downgrade. In 2008, the coziness with the broadcasters was such that Pimco never had to answer a query of whether they would, and how they would benefit from a Fannie and Freddie bailout.
Back then, Gross boasted about his close relationship with then-Treasury Secretary Hank Paulson.
And then, abracadabra, the Treasury without thought of renegotiation or shared risk, paid out Fannie and Freddie sub-debt at 100 cents on the dollar. It thereby set the standard for covering Wall Street speculation and all that was to come thereafter. Others could bet and lose, but Wall Street would be given a pass.
Meanwhile, after questions were raised about the nature of trips by non-Cuban Americans to Cuba through the luxury travel firm Abercrombie & Kent--let alone how the Newport Beach-based company managed to snag one of the first permits from the Obama administration allowing non-leisure travel to the Communist country--A&K has suspended the trips.
When it comes to the -based past of the above paragraph, A&K has a "virtual office" in Newport Beach that three companies share for receiving mail and phone-answering services, and a second "office" nearby at 11 Lucania Drive, Newport Coast--which is a private residence.