[quote=Eugene][quote=Zeitgeist]”The United States is not only not saving nuts, it’s eating the ones left over from the last winter.”
New York Times: U.S. Racing Toward Debt ‘Shock’
“A page one, top-of-the-fold New York Times report Monday warns that U.S. debt is rising so fast that the federal government is careening toward a ‘payment shock’ in the not-too-distant future.”
“The Times lead headline read: ‘Federal Government Faces Balloon in Debt Payments: At $700 Billion a Year, Cost Will Top Budgets for 2 Wars, Education, Energy.’”
“The Times headline appears eerie just as the Senate moves to push forward on a radical healthcare reform — with CBO estimates for a final bill costing nearly $1 trillion dollars over the next year.”[/quote]
Meanwhile, Bill Gross of Pimco has increased his fund’s holdings of US-government-related debt from 48 percent in September to 63 percent now.
But hey, what does one of the most successful bond investors in history know?[/quote]
[quote article]Gross said in his December investment outlook last week that the “systemic risk” of new asset bubbles is rising with the Federal Reserve keeping interest rates at record lows. Under what Pimco has termed the “new normal,” investors should be prepared for lower-than-average historical returns with heightened government regulation, lower consumption, slower growth and a shrinking global role for the U.S. economy. [/quote]
Wait, I dont understand your point. PIMCO is buying more bonds becuase it see’s building bubbles in other assets and that returns in other classes of investments will be lower than historical trend. It would rather be on the recieving end of the future higher government payments than (only) on the taxed end, given that todays other investments are expected to run below previous returns and the US economy will play a shrinking role in the future (read fewer taxes/financial muscle). This seems to play into the times article, especially since it doesnt say what maturities or if the bonds are TIPS or not.
