As an addendum to this post, we have this follow-up.

The Bill Gross-managed Pimco Total Return fund reaped a $1.7bn payday following the US government takeover of home loan giants Fannie Mae and Freddie Mac.

While shareholders in Fannie and Freddie suffered deep losses, the world’s biggest bond fund saw its highest ever one-day rise against its benchmark index on Monday, benefiting from the bet made by Mr Gross on mortgage bonds issued by the agencies.

Gross had made a big shift out of US Treasuries and corporate bonds over the past year and into agency bonds, betting that the government would support Fannie and Freddie Mac. By May this year, more than 60 per cent of his $132bn fund was in mortgage debt.

Gross, while he had been shifting out of corporate bonds and Treasuries, was publicly clamoring for a government bailout – but only because that was necessary to avoid a financial tsunami, and, of course, it was good for the middle class and Main Street. All the while he was betting on a government bailout – a pretty easy and low-risk bet – that would make him vastly richer, and a winner. Gross is a high-profile and powerful guy who carries lots of influence in the markets, and he used his position, power, and influence to sway New Deal-style policy in favor of his pocketbook and his clients. I once read an interview with Gross where he stated that he “had more money than he knew what to do with,” and thus it’s not about the money – he only “wants to win.”