Socialist thinking can often pop up in the most unexpected places.
One of the “most powerful bond investors in America” is calling for a full-fledged government bailout of homeowners who are struggling to pay their mortgages. Pimco Chief Investment Officer and founder Bill Gross thinks the Fed and monetary policy need to step aside for direct government intervention by President George Bush.
“Write some checks, bail 'em out, prevent a destructive housing deflation that Ben Bernanke is unable to do," wrote Gross on his September blog, which appeared in an Associated Press story on August 23. “This rescue, which admittedly might bail out speculators who deserve much worse, would support millions of hard working Americans whose recent hours have become ones of frantic desperation.”
The story, written by AP Business Writer Jeremy Herron, failed to make mention of a taxpayer cost for such a move by the Bush administration.
Gross suggested the Bush administration could beat the Democrats at their own game – by offering more handouts.
“And if you’re a Republican office holder, you’d win a new constituency of voters – ‘almost homeless homeowners’ – for generations to come,” wrote Gross. “Get with it Mr. President and Mr. Treasury Secretary. This is your moment to one-up Barney Frank and the Democrats.”
Gross has also been active in calling for a Fed rate cut – by as much as 2 or 3 percentage points.