From Bill Gross, Managing Director of PIMCO, in his otherwise serious monthly report of the economy.

Make no mistake, the current conundrum that must be solved is: how to make the price of 120 million U.S. barns [homes] stop going down in price and then to make them go up again. That, however, is easier said than done. One of the wisest men I know has this serious but admittedly impractical solution: have the government buy one million new/unoccupied homes, blow them up, and then start all over again. Absent that, he’s not quite sure what to do, nor am I, with the exception of the next paragraph’s proposal.

He thinks that, since mortgage rates continue to rise even as the Fed drops rates, the omnibus housing/GSE bill is a first step in a long road to recovery. Yes, a New Deal-like program of massive governmental spending and bailouts seems both inevitable and badly needed.

PIMCO manages several hundred billion in bonds. People pay attention to Gross and when this report, released today, projected $1 trillion in financial institution writedowns due to bad mortgages, the markets promptly nosedived.

He also has a sense of humor. This month’s column is titled “Mooooooo!” because in his estimation the financial markets currently have a case of Mad Cow disease.

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Is Liberman trying to out-do David Horowitz for the crown of looniest right winger? He now wants to pardon Eduardo Arocena, “the Federally-convicted leader of the Cuban-American terrorist group Omega 7″, the man who orchestrated bombings in and around NYC and Miami.

Senator Lieberman is the junior Senator from Connecticut and the chairman of the Senate Homeland Security and Governmental Affairs Committee. That he would be siding with a convicted terrorist is bad enough. That he would be advocating the release of a man who led a bombing spree across Manhattan, where many of his constituents work, and in Miami, is simply incredible. That he is doing so while serving as chairman of the Homeland Security Committee, is unacceptable.

The Democrats should remove Lieberman from all committees immediately. He has become an unhinged, reactionary lunatic.

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Sheila Bair, FDIC chair, promises to keep a better watch over those pesky bloggers claiming that bloggers  spread misinformation about the IndyMac collapse something which, y’know, could panic people. The “misinformation” in question was factual reports of people standing in line at banks. Goodness, the FDIC can’t have people reporting the truth, now can they?

She concluded her remarks with a Happy Smiley Face report that all is and will continue to be well, and to just ignore minor speed bumps like major financial institutions collapsing because, darn it, everything really is just peachy keen.

From Mish.

When I first saw the headline “The FDIC plans to pay closer attention to the blogosphere” I thought, WOW the FDIC is going to watch the only people that have called the housing bubble and banking problems accurately: blogs.

Indeed, blogs like Mish’s, Calculated Risk, and Naked Capitalism, to name just a few, have reported accurately and early what was happening as the subprime debacle spread. They’ve been way ahead of mainstream media on this.

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Gov. Schwarzenegger of California wants to cuts the pay of 200,000 state workers to minimum wage until a budget is passed (then pay it back.) The state controller says he will not implement it, setting the stage for court battles.

Thus, the Banrupterator is cynically and deliberately using state workers as pawns in a political game of chicken. I’m sure their mortgage companies and landlords will understand when they can’t pay the mortgage or rent because they made $6.65 an hour last month rather than their regular pay.

Of course jobs vital to public safety will be exempt. Don’t want the California Highway Patrol or the politically sacrosanct prison guards union angry at the governor or god forbid, to stop making political contributions.

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They want to make the city a “foreclosure sanctuary” and stop banks from foreclosing. If successful, the lawsuit should provide all manner of chaos, merriment, counter lawsuits, and unintended results.

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From a Treehugger post about how the sclerotic Los Angeles City Council can’t quite bring itself to ban plastic shopping bags even though Australia, San Francisco, and China have already or are implementing such bans.

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