A Newport Beach executive has got President Obama's back, saying the U.S. may
slump into a “mini depression” unless policy makers spend
trillions of dollars to spur growth. “This economy needs support from the government, a check
from the government in the trillions,” Bill Gross, the co-chief investment
officer at Pacific Investment Management Co., says in a Bloomberg Television interview from PIMCO's Newport Beach HQ. “There is a potential catastrophe if
the U.S. government continues to focus on billions of dollars.”
Actually, at $900 billion, Obama's proposed stimulus package
is just shy of a trillion. The Federal Reserve awarded PIMCO a contract in December as one of
the four managers of a $500 billion program to purchase
mortgage-backed securities.
Gross said the Federal Reserve will likely have to buy debt if, as expected, China and others slow down their American debt purchasers as they deal with their own weak economies. “It is
incumbent upon the Fed to step in,” Gross says. “If they do, that will be a
significant day in the bond market and the credit markets.”
The 64-year-old billionaire manages the world's biggest bond fund, the $132 billion Total Return Fund, which gained 4.8 percent last year
and has outperformed 99 percent of its peers over the past five
years, according to Bloomberg's data, which shows the average
government and corporate bond fund lost 8 percent in 2008.
“Gross is worth heeding,” writes money manager and investment editor Eric Roseman on his Roseman Eruptions blog on The Soverign Society (“Feel the Freedom of Total Wealth”) website. “He is the dean of bond investing in the United
States for more than three decades and has made some prescient calls on
interest rates and other macroeconomic trends.”
But Jeff Poor (no, I'm not making that up) of the Business N Media Institute (“Advancing the Culture of Free Enterprise in America”), accuses Gross of sensationalism. “Bill Gross doesn't have a grasp of how much 'trillions' are,” Poor writes on his own site.
“Although Gross is one of
the most successful bond traders and fund managers in the private
sector, this isn't the first time he's appeared in the financial news
and produced a sensationalized headlines,” Poor adds. “On Aug. 23, 2007, Gross
called for a full fledged housing bailout.”
OC Weekly Editor-in-Chief Matt Coker has been engaging, enraging and entertaining readers of newspapers, magazines and websites for decades. He spent the first 13 years of his career in journalism at daily newspapers before “graduating” to OC Weekly in 1995 as the alternative newsweekly’s first calendar editor.