The Wall Street Journal on February 25th published a story about December’s messy corporate divorce between Bill Gross and Mohamed El-Erianas, co-Chief Investment Officers at Pacific Investment Management Company (PIMCO), the world’s largest bond fund with almost $2 trillion in assets.  The article focused on the prickly personality of Gross and foul language complaints by El-Erian during a period of stress last summer when the firm was suffering market losses and clients were withdrawing billions.  But despite a carefully crafted image of a traditional conservative bond manager for “serious” money, PIMCO has magnified returns by making trillions of dollars in high-risk derivatives bets.  From personal experience and the firm’s latest financial filings, PIMCO’s leveraged derivatives empire could eventually crash and cause massive pain. In December 2006, I was sworn in as the elected Treasurer of Orange County,...(Read Full Article)