Gross: Bush needs to rescue homeowners

[cobra de capell]

Gross: Bush needs to rescue homeowners
Famed bond manager says a rate cut by the Federal Reserve won't stop millions of Americans from losing their homes.
August 23 2007: 12:51 PM EDT


NEW YORK (CNNMoney.com) -- Famed bond fund manager Bill Gross said the White House should bail out the millions of American homeowners who face the dreaded prospect of foreclosure this year.

"If we can bail out Chrysler, why can't we support the American homeowner?" Gross wrote in his monthly investment outlook on PIMCO's Web site.

With nearly 2 million homeowners at risk of losing their homes this year and with housing prices rapidly receding, Gross said President Bush, not the Federal Reserve, is the best hope for "almost homeless homeowners."

"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," said Gross, a founder of the fixed-income investment firm PIMCO and a columnist for Fortune.

"Write some checks, bail 'em out, prevent a destructive housing deflation that (Fed Chairman) Ben Bernanke is unable to do. After all 'W', you're 'the Decider,' aren't you?" Gross wrote.

Many have called on the Federal Reserve for help with the worsening state of the housing market, including cutting short-term interest rates. While the central bank has been reluctant to do so, Gross warned that such a move would not necessarily guarantee that adjustable-rate mortgages would not keep climbing or that mortgage lenders would relax their lending standards.

More and more troubling news has emerged from the already battered housing market recently as foreclosures nearly doubled during the month of July from last year, RealtyTrac reported earlier this week.

Home prices have also been hard hit recently, falling 1.5 percent during the second quarter, according to the National Association of Realtors. While falling home prices "might be healthy", the decline could represent an asset depreciation not seen since the Great Depression, warned Gross.
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I hope that this idea doesn't go anywhere - I cannot image bailing out people for doing such a stupid thing - if we start to bail out people for making stupid financial decisions we may as well kiss all our money goodbye, and sell our Cobras.