Skip to comments.US in even worse shape than Greece - Pimco founder Bill Gross (America's largest Bond Investor)
Posted on 06/14/2011 7:03:55 AM PDT by SeekAndFind
The founder of one of the largest bond fund management companies in the world thinks the US is in worse financial shape than Greece.
When adding in all of the money owed to cover future liabilities in entitlement programs the US is actually in worse financial shape than Greece and other debt-laden European countries, Pimco's Bill Gross told CNBC Monday.
Much of the public focus is on the nation's public debt, which is $14.3 trillion. But that doesn't include money guaranteed for Medicare, Medicaid and Social Security, which comes to close to $50 trillion, according to government figures.
The government also is on the hook for other debts such as the programs related to the bailout of the financial system following the crisis of 2008 and 2009, government figures show.
Taken together, Gross puts the total at "nearly $100 trillion," that while perhaps a bit on the high side, places the country in a highly unenviable fiscal position that he said won't find a solution overnight.
"To think that we can reduce that within the space of a year or two is not a realistic assumption," Gross said in a live interview. "That's much more than Greece, that's much more than almost any other developed country. We've got a problem and we have to get after it quickly."
The financial community is concerned that we don't have the political will to solve our debt problems. They may be right. It is rapidly becoming clear that the medicine we're going to have to take is going to be long term and bitter. And politicians don't appear to have the courage to accept it.
This is the same "financial community" that came screaming for a bailout two years ago. What a bunch of jokes. And its the same financial community that is pushing Republicans to increase the debt ceiling. They are completely undermining the resolve that at least some people have to face the debt crisis. And its the same financial community that heavily supported the Socialist in Chief in the last election. They have no credibility.
And yet, we do have to do something. We have to cut spending and entitlements. But no one--not even many conservatives--are willing to do so. Talk about extending the retirement age for Social Security and Medicare and you get screams about how people "paid into the system" and so their benefits shouldn't be touched, as if there is some magical pot of money available to be tapped. No one wants to face the fact that Social Security tax money was spend 10, 20, 30 years ago. It isn't there. The only way to "pay back" current retirees is by taxing the sh&t out of current taxpayers, who don't have a prayer of getting back what they paid in.
Most Americans understand what is needed and are acquainted with duty and sacrifice. They accept the challenge and are willing to do what is necessary.
However, not only do we have to fight the actual economic battle BUT, we have to fight the selfish, socialist, anti-American politicians who lack the political will to even allow that an economic abyss in yawning in front of us . much less to squarely meet the challenge and recover ourselves!!
THEY want to retain their STATUS and $$$$ at all cost
THEY want to use OUR tax revenues to buy continued power
THEY could care less what ultimate damage this does to the country and its future
THEY misrepresent the urgency of the situation and distract voters with the emotional, immediate, personal and temporary
Well, the necessary stuff is unpleasant, painful and deeply unpopular. But it's necessary.
I'm just not sure that the financial community really wants it. I would bet that they are actually urging us to take the easy, happy road in which everything has a pleasant outcome for everyone. There's just one problem with that ...
“And politicians don’t appear to have the courage to accept it.”
Neither does the average american. The current mantra is cut his, but leave mine.
Yap, yap, yap.
I have yet to hear even one of the “smart” people suggest bringing back American manufacturing.
Until then, they’re not smart. Just stuck on old scripts.
their STATUS ..that We the People grant them....and $$$$...are OUR tax dollars.
Our politicians conduct, in general, reflects the responsibility, or the the lack thereof, of OUR civic oversight of the work OUR employees are or are not doing.
“Most Americans understand what is needed and are acquainted with duty and sacrifice.”
I’m not sure about the adjective “most”.
We are dangersously close to half the population being on the government dole. Look at the number of people you know that are connected, in some way, with the BigEducation machine alone.
IMO we passed the 51% barrier long ago, now its Republicans for Medicare not small government. Case in point my mother-inlaw, die hard conservative, but hint that she can’t go to a doctor for whatever ails her this week and she goes off her rocker.
Pimco’s head pimp, the Gross one, was an avid supporter for Obozo in the election of 2008.
He, also, told 0b0z0 in 2008 to really spend our money when he became president. See link below:
Bond king Bill Gross called on presidential nominee Barack Obama to double the federal budget deficit to $1 trillion by fiscal 2011 if he became president.
The economy will need an additional jolt of $500 billion or so of government spending real quick, said Gross in a letter to President Obama posted on Pimcos Web site. It must replace both reduced residential investment and consumption whose decline has placed the U.S. economy near, if not in a recession.
Gross noted that this years budget deficit should be about $500 billion. By doubling that to $1 trillion in three years, that would put the deficit at about 6% of gross domestic product, a mere pittance by Japanese standards. He said its deficit exceeded 10% at its peak a decade ago.
In taking shots at President Bush and the mess Obama would inherit as chief executive, Gross a registered Republican said, Although your campaign slogan says, Yes we can, I have my doubts. While saying increased income taxes under an Obama administration would end an eight-year lease extension on the high life, he called on the presumptive Democratic presidential nominee to drop pretenses of Obamas plans not adding to the budget deficit.
While the Republicans will blame you for years and label you Trillion Dollar Obama in future campaigns, there is in fact not much that you or any other President can do, said Gross. Youve inherited an asset-based economy whose well has been pumped nearly dry with lower and lower interest rates and lender of last resort liquidity provisions that have managed to support Ponzi-style prosperity in recent years.
As a result, What you need now is fiscal spending and lots of it. No ordinary Starbucks will do, Mr. President, you need to step up for a six-pack of Red Bull.
Gross noted that the spending will help push inflation higher still early next decade, with Treasury yields likely to continue rising into a potential second Obama term. Your term will not go down in history as investor friendly, he said. Kevin Kingsbury and Shara Tibken
One of Grampa Dave’s basic financial core advise is to never invest with anyone who is a liberal or a rino like Gross, who supported 0b0z0 and advised him.
” One of Grampa Daves basic financial core advise is to never invest with anyone who is a liberal or a rino like Gross, who supported 0b0z0 and advised him. “
Grampa Dave speaks the truth.
I do wonder what would happen if everything was cut to the bone. And that’s what will have to happen in order to start spending less than we’re taking in. If we want riots, that’s the way to do it. But maybe that’s the only solution.
“Case in point my mother-inlaw, die hard conservative, but hint that she cant go to a doctor for whatever ails her this week and she goes off her rocker.”
You should see how people act in our office when they have a copay or deductible.
God Forbid that they should have to pay some out-of-pocket portion for their own health care.
I wish I could say this diseased mindset is limited to idiotic liberals....
Government spending KILLS private sector jobs.
Whenever somebody discussing politics laments about “the will” to do something, it is always code for raising taxes.
How did you come by this information???
What seems to constantly get lost in the Social security and Medicare issue is that for years they have been drained by people who paid nothing in: anchor babies, illegal aliens, and brand new immigrants along with their extended families. We’re talking hundreds of billions per year. This is an issue neither party has addressed.
I’d remove all freebies from these people before I’d pull it from those who worked all their life and as a condition of employment had a portion of the ‘sweat of their brow’ confiscated and redistributed.
Second, I’d remove the special health care and pension plans from our government and fold into social security and medicare.
Third I’d eliminate is the billions and billions of foreign aid that gets swallowed up in third world hell holes. Fourth defund all those new czarships and the alphabet soup of bureaucracies that are attached to the executive - EPA, HUD, HHS, Dept of Education etc.
The great Yahoo search machine is incredible if you know how to phrase the search ? ! Google is good for maps but not for dirt on liberals.
There are apparently tv videos of with Pimpco’s head Pimp supporting 0b0z0 in 2008.
As you know, I have had problems with Pimpco and Gross for a long time. We sold all of our Pimpco mutual funds at about the same time as the liberal whoreacle of Omaha got out of them. We made good money, but the derivative bs re making 12% or better on Fannie/Freddie bonds making 5-6% got to be scary and too good to be true.
As my Grand Dad told me, “If the investment sounds too good to be true, it probably is bad for most of us!”