He's got a podcast which is about the best consolidated source of investment advice I've ever found (I've never lost money even for a day using his advice). ----------------------- Bill Gross' $500 Billion Solution Carl Gutierrez, 06.30.08, 11:39 PM ET
It must be galling on many levels for the Grand Old Party that registered Republican and billionaire bond-guru Bill Gross is advising "President Obama" to add $500 billion in spending to the federal budget. Labeling himself as an "ordinary citizen" in a colorful open letter to the presumptive Democratic presidential nominee, the far-from-ordinary head of PIMCO thinks additional government spending of about $500 billion--and the first-ever $1 trillion deficit that would come with it--is the only thing Barack Obama can do to keep the U.S. economy afloat. In a letter posted on PIMCO's Web site, Gross reminded Obama that gross private domestic investment has declined by $200 billion since its peak in late-2006. Meanwhile, thanks to higher unemployment and energy costs, domestic consumption will soon be $300 billion less than it should be for the U.S. to return to historical economic growth rates. Taken together, "consumption" and "investment" renders the "old C + I + G formula" $500 billion short, leaving G--the government--to pick up the slack. Warning of the potential dark alternatives (think Japan), Gross believes his $500 billion suggestion can to work. "Strong global growth spearheaded by developing countries and accompanied by significant commodity inflation should provide a firm background for stimulative U.S. monetary and fiscal policies during your first administration," Gross told Obama in his July 2008 Investment Outlook. Concurrently, current negative real interest rates, along with the "innovative liquidity provisions" taken by Ben Bernanke's Federal Reserve, should promote reflation, as opposed to deflation, making a trillion dollars of government deficit spending a potent medicine, Gross said. However, the bond king told the "president" that the stimulative spending's inflationary effects will not be felt fully during the peak deficit period. "Rather," Gross said, "inflation will accelerate during the subsequent recovery as the government bonds acquired during the recession are transformed once again into risk bearing assets and high levels of investment." To Gross, the scenario suggests that medium- and long-term yields on government bonds have already bottomed and will gradually rise throughout Obama's first, and perhaps second administration. "Your term," Gross wryly quipped, "will not go down in history as investor friendly." ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~| Adobe® ColdFusion® 8 software 8 is the most important and dramatic release to date Get the Free Trial http://ad.doubleclick.net/clk;203748912;27390454;j Archive: http://www.houseoffusion.com/groups/CF-Community/message.cfm/messageid:263223 Subscription: http://www.houseoffusion.com/groups/CF-Community/subscribe.cfm Unsubscribe: http://www.houseoffusion.com/cf_lists/unsubscribe.cfm?user=89.70.5
