Bill Gross's Dire Predictions For The Economy

Bill Gross is the Bond guru from PIMCO. Here are his latest thoughts on the US economy...

PIMCO Bonds - IO March 2006:

"If pensions, healthcare, (and defense), are going to drain such an increasingly significant share of GDP in future years, where does the money come from to promote economic growth of the sort that will pay for all of this? And how can we believe that America's value added/productivity advantage in the one sector where we remain competitive - technology - will continue if our math and science report card keeps getting a D+? Let's talk turkey; let's shoot straight, folks, without the requisite hyperbole that seems to define America�s modern age and current politics. We can't do it all - not just because our reach constantly exceeds our grasp but because this time we have exhausted our savings, lost our competitive edge and squandered our educational heritage. We have grown soft - THEY have grown stronger. We have lost a sense of why we have prospered - THEY have learned to replicate our work ethic of yesteryear. The solution as the Council rightly suggests, is to save more, get smarter, trade more freely and to maintain a competitive tax base. Well yes - thanks for the straight talk after all - but that is a plateful and it will require the long-term acquiescence of those strangers who will wish nothing more than to supplant us at the top of the economic/geopolitical totem poll. Instead, our solutions more likely will pursue an easier trail, characterized by currency devaluation, the inflating away of long-term pension liabilities, and the payment of rising healthcare expenses via higher personal and corporate taxes. Investment markets in the United States will not ultimately prosper under such an increasingly odorous environment. It is only sensible, therefore, to diversify globally. Sorry for the straight talk folks, but don't you think it's about time?"