Interesting read from the Washing Post written by the most important man in the bond market, Bill Gross of PIMCO: http://www.washingtonpost.com/opinions/americas-debt-is-not-its-biggest-problem/2011/08/10/gIQAgYvE7I_story.html. He makes a good point that Washington is focused on deficits when they should be worried about demand growth. He asserts the U.S. economy could be constrained by nearsighted politicians, entitlements and deleveraging baby boomers. As is to be expected of an ENORMOUS bond investor, he quietly pushes his agenda of long-term interest rates slowly moving to zero. Bill Gross’ take on the stock market hasn’t been particularly prescient. He misses the mark by failing to note the importance of thousands of thriving corporations catering to growing demand outside our small nation relative to the globe as a whole.
If we take a break as consumers along with our Western European and Japanese counterparts, it may permit emerging economies to leap ahead with infrastructure projects and education. This can in turn raise billions of human beings’ standard of living.
It would behoove the developed countries to let the emerging world catch up a little to make the race to the economic top more fun. This is not a zero sum game. As the competition catches up, their ascent may offset a lot of populist hatred that gets easily converted to terror by despots and dictators.