Posted on 03/31/2011 6:42:25 AM PDT by dennisw
Gross runs Pimco, the $1.2 trillion investment manager that has spent recent months selling Treasury bonds, citing their low yields and poor prospects. He explains in his monthly investment outlook posted Wednesday evening that U.S. government bonds "have little value" in a world of bloated budgets.
While outstanding federal debt totals $9.1 trillion, he estimates the government's actual liability at $75 trillion, counting promises made under Medicare, Medicaid and Social Security.
"The incredible reality is that the $9.1 trillion federal debt that constitutes the next-to-tiniest ball in our chart is nothing compared to unfunded Medicaid and Medicare. It is like comparing Pluto to Saturn and Jupiter," Gross writes.
That starry-eyed talk is only the latest warning out of Gross. He predicted a bond market turkey shoot in October, while calling the borrow-from-the-future mindset of our elected leaders a "Sammy scheme."
He has since warned that the U.S. is losing its competitive edge thanks to a political failure to confront our structural problems, such as declining education standards and eroding infrastructure, and predicted the end of Fed bond buying will wrack markets of all kinds.
But now the gloves are off. To drive his latest point home, Gross compares the U.S. to Europe's least solvent nation, and not favorably.
"This country appears to have an off-balance-sheet, unrecorded debt burden of close to 500% of GDP!" Gross exclaims. "We are out-Greeking the Greeks, dear reader."
(Excerpt) Read more at finance.fortune.cnn.com ...
More and more people are going public with what has been obvious for a very long time.
The riots are coming as the cities and stated go broke. Bernake will have to bail them out.
Unfortunately, he’s grossly misunderestimating the size of the problem. Unfunded liabilities for Social Security are $18.7T, not $7.9T; the liabilities for Medicare are $59.2T, not $22.8T etc. I assume the Medicaid figures are similarly flawed. Together with state and local debts, unfunded liabilities for pensions/health and all the interest we’ll have to pay on funds borrowed to keep these entitlements going, the total tab exceeds $200T.
http://www.bloomberg.com/news/2010-08-11/u-s-is-bankrupt-and-we-don-t-even-know-commentary-by-laurence-kotlikoff.html
Obama’s attitude seems to be “Well, we’re bankrupt anyway, why not have a big bash before they turn the lights out?” Proposing a budget that adds many trillions more to what we owe is obscene.
ping
I’m no fan of this camera-whore on a German payroll, but he makes his point in a compelling way.
Big difference here is when Greece went under, there were other countries left standing to prop them up.
If we go under, it will be every country for themselves.
The other countries of the world can’t bail us out. We are the big dog on the porch but we have heartworms.
Still amazing to watch supposed intelligent people who think that economic laws don’t apply once the scale gets big enough. None of these pinheads are spending more than they make in their personal lives, so how can it work in the trillions?
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