Bill Gross warns US economy not strong enough for government to “gracefully exit” stimulus spending

Bill Gross, the founder of multi-billion bond fund manager PIMCO, which is one of the world's biggest investors in sovereign debt, says it's unlikely that the US economy is strong enough for the government to “gracefully exit” stimulus spending programs or that private investors would be capable of absorbing the balance in deficit funding.

Six months ago, he began his June 2009 investment outlook with the famous quote from the French writer Honoré de Balzac: "“Behind every great fortune lies a great crime.” He ended with a quote from the American Depression-era comedian Will Rogers, at whose shrine I once paid homage, on Cheyenne Mountain, Colorado Springs. In between, Gross said it was probable that US trillion-dollar deficits are here to stay because any recovery is likely to reflect “new normal” GDP growth rates of 1%-2% not 3%+ as America used to have. Staying rich in this future world would require strategies that reflect this altered vision of global economic growth and delevered financial markets.

Gross said Will Rogers had opined in the early 30s that he wasn’t as much concerned about the return on his money as the return of his money.

In his January 2010 investment outlook, Bill Gross moves to Spain.

He writes:"Quixotic journeys often make for great literature, but by definition are rarely productive. I am, after all, referring to windmills here - - not their 21st century creation, but their 17th century chasing. Futility, not productivity, was the ultimate fate of Cervantes’ man from La Mancha. So it is with hesitation, although quixotic obsession, that I plunge headlong into a discussion of American politics, healthcare legislation, resultant budget deficits and - - finally - - their potential effect on financial markets."

Bill Gross says what amazes him most of all is that politicians can be bought so cheaply - - he should study Irish politics! Public records show that combined labour, insurance, big pharma and related corporate interests spent just under $500 million last year on healthcare lobbying (not much of which went to politicians) for what is likely to be a $50-100 billion annual return. The fact is that American citizens have never been as divorced from their representatives - - and if that description fits the Democratic Congress now in control - - then it applies to Republicans as well - - past and present.