A recession for the world’s “developed economy,” which includes the United States and euro zone, may lie ahead, according to Bill Gross.
In his monthly investment outlook, the founder and co-CIO of PIMCO shared his dire economic forecast for the world’s developed nations. Gross’ predictions were based in large part on the escalating sovereign debt crisis in Europe, as well as “a lack of policy options and cooperation” amongst politicians in the U.S.
Highlights from Gross’ comments are below:
Last week Angela Merkel and France’s Sarkozy sort of got engaged for at least the second time, nixing expanded funding for their Southern neighbors and placing the burden even more on the ECB. Who knows where it goes now, but let’s put it this way – Germany and France are sleeping in a king-size bed while the rest of its EU family are sleeping in separate bedrooms. As a result Euroland faces economic contraction.
During this country’s (U.S.) recent economic “recovery,” real corporate profits increased by four times the amount of working wages in dollar terms, and, as the chart below shows, are 50% higher than at the turn of the century while wages remain relatively unchanged, something that has not occurred since this country’s nuptials were concluded over three centuries ago. Is it any wonder that preliminary battlefield skirmishes in Wisconsin and Ohio between labor and capital promise to spread across every state of this land? (Not Texas!) Is it any wonder that Republican orthodoxies favoring tax cuts for the rich and Democratic orthodoxies promoting entitlements for the poor threaten to hamstring any constructive efforts to reduce unemployment over the foreseeable future?We are witnessing romantic love turning into a spiteful, bitter clash between partners in name only.
The full version of Gross’ commentary is available here:
http://www.pimco.com/EN/Insights/Pages/New-Fangled-Love-Songs.aspx
San Gold Posts Record Gold Production
