Debt men walking. Bill Gross of PIMCO: Debt deal is sorry joke

PIMCO manages over a trillion in bonds. Emphasis in original. Their website is really sluggish this morning, perhaps because so many want to read this.

Nothing in the Congressional compromise reached over the weekend makes a significant dent in our $1.5 trillion deficit. “Out year” fantasies, as opposed to “current year” realities, is an apt description of the spending cuts that characterize this compromise. The Office of Management and Budget (OMB) estimates that future deficits will be reduced at most by .5%, and if so, it would be welcomed, but that .5% comes with no new taxes and a continuation of the belief that we don’t have to pay for our trespasses.

The combined present cost “payment due” from Medicaid, Medicare and Social Security is over six times our current obligations of Treasury debt. The press and most professional investors are accustomed to measuring “paper” debt as opposed to walking/living liabilities in the form of people. I call these liabilities “debt men walking” because as long as 330 million living Americans require promised entitlements – the $66 trillion that wear shoes are as much of a liability as the $10 trillion on paper.

Plus, any inflation or rise in treasury interest rates will kill any supposed savings because of debt service. The debt ceiling plan is all make-believe, they just kicked the can down the road for someone else to deal with. #fail.

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