Monday, March 06, 2006
The "Bond King" and the US Economy
If Warren Buffett is perhaps the premier stockpicker in the known world, Bill Gross of PIMCO is surely the number one poohbah in bonds. It doesn't hurt to have a scorching record either. Since this man, like Buffett, has managed to beat the odds over long periods of time, his insights are well worth listening to, and Bill Gross has had enough of the current government and its financial mendacity. Taking on the Economic Report of the President, Gross excoriates the calculated Pollyanna statements regarding the international competitiveness of US students in math and science (US students rank very low by high school), health care spending (high and going ever higher), unfunded future liabilities (think Social Security and Medicare), the current account deficit (importing more than we export; becoming a debtor nation), and the astounding government and personal deficits (the savings rate has dropped to zero). None of this is new or has been insufficiently explored by others (in fact, here's more on this). Gross's conclusion, however, is that dollar devaluation is inevitable and investments might better be deployed overseas. Quite a jolting conclusion from one who has made his fortune in domestic markets.