PIMCO - IO Feb 2009 Gross Beep Beep

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PIMCO - IO Feb 2009 Gross Beep Beep: "The simplicity of the solution, however, is not easily achieved once deflationary momentum takes hold. Animal spirits, once dampened, are hard to reignite; “fear of fear itself” dominates greed. Under such circumstances, the benevolent hand of government is required and Keynes is reincarnated in an attempt to plug the dike via fiscal spending and imaginative monetary policies that support asset prices. PIMCO has recently been contracted to assist in several publically announced programs which have helped in that effort: the CPFF, which has benefitted commercial paper yields, and the Federal Reserve’s purchase program for agency-backed mortgage loans, which has lowered 30-year mortgage rates to 4.5% and fostered the affordability of new and secondary housing prices. These two programs, in our opinion, have been the major policy successes to date – not because of our involvement – but because they have supported and increased asset prices whose decline has been the major deflationary thrust behind the real economy. Stop asset prices from going down and with a 12-month lag, unemployment will stop going up, and President Obama’s targeted three million new jobs will have a fighting chance of being achieved."

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MetLife Spooks Investors - Forbes.com

MetLife Spooks Investors - Forbes.com: "Insurance stocks plunged Wednesday after MetLife annouced it would be raising capital, cutting jobs and withdrew its 2008 earnings guidance due to the dramatic downturn in the world financial markets.

In an effort to provide some semblance of certainty to nervous investors, MetLife (nyse: MET - news - people ) pre-annouced its third-quarter results, which it said will be hurt by a drop in investment income and fees due to the turmoil in the global financial markets.

In a separate announcement, MetLife said it would sell common stock to bolster its capital amid rising losses on investments. The offering of 75 million shares priced late Wednesday at $26.50, raising nearly $2 billion.

MetLife also promised Wednesday an unspecified number of job cuts by the end of the year.

By the end of Wednesday's highly volatile trading session, MetLife shares fell 26.8%, or $9.87, to $27.00.

"We are in these unprecedented times," Steve Kandarian, MetLife's chief investment officer, said on a call with investors Wednesday, according to the Associated Press. "I think we're as well positioned as anyone in our industry for these times, but we are not immune, nor is any other of our peers."

Those peers fell accordingly. Prudential Financial (nyse: PRU - news - people ) dropped 6.9%, or $3.22, to $43.29, and Lincoln National (nyse: LNC - news - people ) fell 8.5%, or $2.59, to $27.97.

Insurance companies have been among the hardest hit by the recent turmoil in the financial markets. American International Group (nyse: AIG - news - people ) was bailed out by the government, and investment manager and life insurer Hartford Financial Services (nyse: HIG - news - people ) got a much-needed capital infusion from Allianz of Germany. (See "Hartford Recovers With Help From Allianz.")

The mortgage insurance unit of Genworth Financial (nyse: GNW - news - people ) was downgraded recently by Standard & Poor's after its parent company announced that the unit may be on the block. (See "S&P Docks Genworth Mortgage Insurance Unit.")

Over the past month the SPDR KBW Insurance ETF (amex: KIE - news - people ) has fallen 35.9%.

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Bloomberg.com: Exclusive

Bloomberg.com: Exclusive: "Spreading Crisis

And in the last two years, as the crisis has spread to the broader financial system, she's been getting out in front of fellow Republicans, including Bernanke and Paulson.

In September 2006 she told a Fannie Mae conference she was concerned that the proliferation of non-traditional mortgages such as option ARMs was a danger to the banking system. In March 2007, she called for ``aggressive'' foreclosure relief.

Two months later, as Paulson declared the housing market crisis more than half over, Bernanke echoed Bair and called on lenders and the government to intensify efforts to prevent home foreclosures.

``She was one of the first to say that you couldn't just do it by interest rates, that you had to reduce the principal and that you couldn't just do it one by one,'' Frank said in an interview. Bair wasn't available for an interview."

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