In his October newsletter to clients of Pacific Investment Management Company (PIMCO), founder Bill Gross summarized the coming disaster that faces the country, and noted that “only gold and real assets would thrive…” Noting that America is considered the “cleanest dirty shirt” among the major economies, he says that the country’s debt-to-GDP ratio, its excellent credit ratings, and its currency being the world’s reserve currency appear to stand it in good stead:
We have world-class universities, a still relatively mobile labor force and apparently remain the beacon of technology — just witness the never-ending saga of Microsoft, Google and now Apple.
Obviously there are concerns, especially during election years, but are we still not sitting in the global economy’s catbird seat?
As far as America’s imminent demise is concerned, he comments:
Armageddon is not around the corner. I don’t believe in the imminent demise of the U.S. economy and its financial markets. But I’m afraid for them.
Gross manages the world’s largest bond fund along with CEO Mohamed El-Erian, with nearly $2 trillion of assets under management. His clients include individual retirees, pension plans, educational institutions, foundations, and endowments, each seeking safety of principal along with reasonable returns. Accordingly he must temper his words not to frighten away the very people he serves. But he’s courageous enough to tell the truth.
After reviewing reports from the International Monetary Fund (IMF), the Congressional Budget Office (CBO), and the Bank of International Settlements (BIS) on the state of the American economy, he says that the United States is no “clean dirty shirt” after all. It is, instead,