millions and millions of overpriced homes and asset-backed colla

Gross said in an interview that he had spoken with former FedChairman Alan Greenspan on Monday, but declined to say what had beendiscussed.

"PIMCO looks for the Fed to issue an insurancepolicy in the form of lower Fed Funds at some point over the next 6months. And what happened to our glass half-full secular thesis of lastmonth? We still believe in strong global growth, but…as we alsosuggested…that the U.S. housing downturn will affect growth andshort-term yields over the next year or so.

We remainconsistent and resolute. Contagion? Maybe, but you won't be finding itat “99.9%” pure Bear Stearns. Look for it instead, in the subprimelyfinanced homes of Las Vegas, Rockford, Illinois, and Miami, Florida.This problem – aided and abetted by Wall Street – ultimately resides inAmerica's heartland, with millions and millions of overpriced homes andasset-backed collateral with a different address – Main Street."

Bill Goss' latest letter, Looking for Contagion in All the Wrong Places