Bill Gross urged Government to bail out economy

--Bill Gross urged presiden, not Fed, to bail out economy -- Bill Gross, manager of the world'sbiggest bond fund at Pacific Investment Management Co., urged theBush administration, rather than the Federal Reserve, to bail outU.S. homeowners to avoid ``destructive housing deflation.'' ``Fiscal, not monetary policy should be the preferredremedy,'' said Gross, who manages the $103 billion Pimco TotalReturn Fund. ``This rescue, which admittedly might bail outspeculators who deserve much worse, would support millions ofhard working Americans whose recent hours have become ones offrantic desperation.'' --Why is it possible to rescue corrupt S&L buccaneers in theearly 1990s and provide guidance to levered Wall Streetinvestment bankers during the 1998 LTCM crisis, yet throw 2 million homeowners to the wolves in 2007?'' Gross wrote. ``If we can bail out Chrysler, why can't we support the American homeowners?' --provideadditional avenues for people to get cheaper, reasonable, safercredit'' without relying on subprime loans --Even cuts of 200-300 basis points by the Fed would not avert a built-in upward adjustment of adjustable-rate-mortgage interest rates,'' Gross said. ``Nor would it guarantee that theprivate mortgage market, flush with fears of depreciatingcollateral, would follow the Fed down in terms of 15-30 yearmortgage yields and relaxed lending standards.'' -- Almost half of all collateralized debt obligations sold inthe U.S. in 2006 contained subprime debt, according to a Marchreport by Moody's Investors Service. CDOs are packages of bondsand loans.