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Bill Gross, the manager of the world's largest bond fund, is sounding like a Wall Street ghost-hunter in his latest investment letter.
Calling the current market environment "paranormal," Gross said this year will be characterized by "credit and zero-bound interest rate risk" and less incentives for lenders to extend credit.
"It's as if the Earth now has two moons instead of one and both are growing in size like a cancerous tumor that may threaten the financial tides, oceans and economic life as we have known it for the past half century," Gross said in an investment letter released on PIMCO's website on Wednesday. "Welcome to 2012."
In the letter, Gross said "paranormal" was a more fitting description for the current economic environment than the phrase "New Normal," coined several years ago by his chief co-investment officer Mohamed El-Erian to describe a world of low-growth and high unemployment. This year, Gross argues that process will get messier.
"We are left with zero-bound yields and creditors that trust no one and very few countries. The financial markets are slowly imploding - delevering - because there's too much paper and too little trust," he said.
Those factors may lead financial markets to experience "the fat-left-tailed possibility of unforeseen - delevering - or the fat-right-tailed possibility of central bank inflationary expansion."
Originally posted by Rockpuck
reply to post by Amaterasu
..Why would we need energy if we had no money? Are you going to stand in a factory making big screen TV's for 12hrs a day all for a bowl of soup and a mud wattle hovel?
I won't. I'll sit on my rump and watch the free TV and laugh at the idiots working for nothing.