When the world biggest debt investor (PIMCO) calls the world biggest debtor (the US Government) Charles Ponzi, we are up for trouble …
See November investment outlook by Bill Gross: Run Turkey, Run.
Well, let me be the first to acknowledge that the best route to prosperity is the good old-fashioned route (no, not the dated Paine Webber road map utilizing hoped for paper gains of 12%+) but good old-fashioned investment in production. If we are to EARN IT – the best way is to utilize technology and elbow grease to make products that the rest of the world wants to buy. Perhaps we can, but it would take a long time and an increase in political courage not seen since Ronald Reagan or FDR.
In a new “normal” world growth will be half of what it was, profit growth will be half of what it was and returns on almost all assets — including bonds — will be half of what we’ve grown used to.
Focus on high quality bonds and steady dividend paying stocks that can survive, if not thrive, in our journey to a “new normal” economy of slower growth, muted profit gains, and potential capital destruction via default, abrogation of property rights, and dollar devaluation.
