Sunday, July 01, 2012

EU Eurozone Bank Bailout: Understanding the Current Debt Crisis as a Financial World in Deleverage : Bill Gross, Founder and Manager of PIMCO, World's Biggest Bond Fund, Gives Us the Nuts and Bolts

William H. Gross ("Bill"), founder and manager of Pacific Investment Management Co. (PIMCO), the world's biggest bond fund, has said that Europe is in a Debt Trap, Even After the Bank Bailout.

Bill Gross is a very bright guy, be sure about that, so his opinion carries weight with this author, and it is advisable to read what he writes.

We do think that Europe is stronger than Americans can imagine and we think that the USA by contrast has serious economic, political and social problems to solve down the road, so we are not necessarily in agreement with Gross on his conclusions that America is currently a better investment than Europe. But then again, we are not managing a $250 billion fund, and Gross does.

What Gross has been writing recently at his Investment Outlook page at PIMCO is outstanding in delivering basic economic knowledge (from an investment standpoint) about a world that is "delevering".

If you really want to get a nuts and bolts view of the current world debt situation, the PIMCO writings of Bill Gross are an absolute reading must.

Below are links to some of his writings at Investment Outlook at PIMCO together with excerpts we have chosen to give an idea about the content:

The Great Escape: Delivering in a Delevering World by William H. Gross:
"[T]he Great Leveraging of the past 30 years .... was a world not of yield, but of total return, where price and yield formed the returns that exceeded the ability of global economies to consistently replicate them. Financial assets relative to real assets outperform in such a world as wealth is brought forward and stolen from future years if real growth cannot replicate historical total returns."
Wall Street Food Chain by William H. Gross:
"The whales of our current economic society swim mainly in financial market oceans. Innovators such as Jobs and Gates are as rare within the privileged 1% as giant squid are to sharks, because the 1% feed primarily off of money, not invention. They would have you believe that stocks, bonds and real estate move higher because of their wisdom, when in fact, prices float on an ocean of credit, a sea in which all fish and mammals are now increasingly at risk because of high debt and its delevering consequences. Still, as the system delevers, there are winners and losers, a Wall Street food chain in effect."
What's in A Name by William H. Gross:
"An authentic debt crisis – which the world is now experiencing – can only be ultimately cured in two ways: 1) default on it, or 2) print more money in order to inflate it away."
See links to all of the articles by Gross at Investment Outlook Overview.

Crossposted at LawPundit.

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