Bill Gross: "Ours Is A Country Of The SuperPAC, By The SuperPAC, And For The SuperPAC"

Tyler Durden's picture

Curious why we dedicate precious virtual real estate to periodically bring to you the "billionaires behind the best presidents money can buy"? Bill Gross explains why?

Time To Vote, from PIMCO's Bill Gross

So I pulled out my magic lamp that for some reason works only every October 22nd, and rubbed until the Genie appeared in his red and white checkered cloak with a 10-inch diameter Flavor Flav clock hanging ceremoniously around his neck. Being a rather forward, although not disrespectful Genie, he immediately said, “Mr. G, instead of the yield on the 10-year Treasury, perhaps this year you should wish to know who is going to win the Presidential election?” After some thought I replied, “Nah, I need some breaking news, Mr. Genie, something that will make a difference, something that will shock the world, like when does the iPhone 6 come out?” Obama/Romney, Romney/Obama – the most important election of our lifetime? Fact is they’re all the same – bought and paid for with the same money. Ours is a country of the SuperPAC, by the SuperPAC, and for the SuperPAC. The “people” are merely election-day pawns, pulling a Democratic or Republican lever that will deliver the same results every four years. “Change you can believe in?” I bought that one hook, line and sinker in 2008 during the last vestige of my disappearing middle age optimism. We got a more intelligent President, but we hardly got change. Healthcare dominated by corporate interests – what’s new? Financial regulation dominated by Wall Street – what’s new? Continuing pointless foreign wars – what’s new?

I’ll tell you what isn’t new. Our two-party system continues to play ping pong with the American people, and the electorate is that white little ball going back and forth over the net. This side’s better – no, that one looks best. Elephants/Donkeys, Donkeys/Elephants. Perhaps the most farcical aspect of it all is that the choice between the two seems to occupy most of our time. Instead of digging in and digging out of this mess on a community level, we sit in front of our flat screens and watch endless debates about red and blue state theologies or listen to demagogues like Rush Limbaugh or his ex-cable counterpart Keith Olbermann. To express my discontent, Genie, along with my continuing patriotism, I’ve created a modern-day version of our Pledge of Allegiance. Place your hand over your clock and recite after me:

I pledge allegiance to the flag of
the fragmented state of America,
and to the plutocracy for which now it stands,
a red and blue nation,
under financial gods
with liberty and justice for the 1(%).
“Well,” said the Genie, with a little bit less respect in his voice, “you sound a little discouraged Mr. G – a tad cranky perhaps and showing all of your 68 years.” I suppose, I agreed. But during all those years, I’ve liked Ike and despised Bush Junior, been enraptured with Kennedy and enraged by Johnson, been put to sleep by both Ford and Carter and then invigorated by Reagan. And now – well, we’ve got the best government that money can buy, but I ain’t buying it. Now get back in your lamp and come up with something meaningful I can use this time come October 2013. And don’t fake me out with a picture of a skinnier but faster iPhone 6. I’m still trying to buy the “5” with the .01% interest on my money market account.

Perhaps I should have asked Flavor Flav something more important. iPhones and next year’s 10-year Treasury yield aside, the biggest bet being wagered in financial markets these days is the bet on “financial repression,” “quantitative easing,” and the ultimate effect of both on the real economy. Of course even a genie couldn’t come up with a simple answer to that complex question. Sounds like something to be asked of a shrink from a couch, as opposed to a genie in a bottle. Whatever. But let me try and answer the repression and QE question with a little anecdote that I tell visiting clients.

About four years ago I opened up our family brokerage statement and searched with some effort to find the yield on our money market account. Interest rates, as I knew from my desk in Newport Beach, were plunging and I wondered just how much of a penalty we were being charged for the privilege of holding cash. My eyes finally fixed on the appropriate disclosure – hidden though it was – and it said “.01%.” Impossible! I thought. There must be a mistake here. Surely the decimal point was misplaced. Wasn’t “.01%” really 1% or even .1%, but definitely not “.01%.” That was close to nothing! Having counted cards at the blackjack table in my youth, I quickly calculated that over the next 12 months, our $10,000 balance would earn exactly $1.00. “Buy yourself a pair of shoes,” I said to Sue standing near my shoulder, “a pair of sandals at the weekend garage sale.” The remark was not well received. It seemed Sue was as sensitive about shoes as I was about interest rates. Note to self: Do not mention shoes with Sue except in the phrase “what a cute pair of shoes.”

Financial repression
Anyway, I quickly drifted back to my childhood days when I had a passbook at the local bank. Deposit rates were usually 4% or so back then, so I wondered how much money I would have needed then to produce the same $1.00 of interest I was receiving now. Twenty-five bucks! Whoa, $25 vs. $10,000! Seems like it was much better to be a saver back in 1958 and much better to be a spender in 2012. I could now take the $9,975 difference, spend it, and still have the same $1.00 of interest that I had back then! And that, Mr. Genie, with the Flavor Flav clock, is what is known as “financial repression.” By lowering interest rates to near zero through Fed Funds policy and quantitative easing, Ben Bernanke and his fellow central bankers are trying to force all of us to spend money.

Admittedly, the Fed’s theoretical foundation takes a different route to the same destination than does mine. Chairman Bernanke would say that by lowering yields, investors would logically sell their bonds to the Fed (QE I, II and III) and invest in something riskier and higher returning (high yield bonds, stocks and real estate). My $10,000 then, would do what capital has always done – gravitate to the highest reward/risk ratio available and in the process, stimulate investment and create jobs. The theoretical $9,975 that I might have chosen to “spend” in my first example would in the Chairman’s construct be eventually spent as well but in this case via investment and job creation, which in turn would lead to a virtuous cycle resembling the “old” as opposed to the “new” normal.

The difference between these two hypothetical models is critical. Is the money that is being made “available” through zero-based interest rates and quantitative easing being “spent” – or is it being “invested?” If it’s being spent, then at some point the game will come to an end – my $9,975 will have provided me and the economy some breathing room and some time to kick the future “big R” or “little d” down the road; but it will end. If it is being invested and invested productively, then we might eventually see the Old Normal on the horizon, reduce unemployment to less than 6% and return prosperity to the middle class.

Well, as President Obama might tell Governor Romney – “just do the math.” Or as Chris Berman might say on ESPN – “let’s go to the tape.” In the past three years of quantitative easing and financial repression, can we see a noticeable effect on investment as opposed to consumption? Is the Bernanke model working or is the $9,975 being spent on consumption? At first blush, an observer might vote for the Bernanke model. After all, the stock market has doubled in three-plus years, risk spreads are at historical lows, and housing prices are moving up – 10% higher in Southern California alone. Yet the real economy itself seems no different – still in New Normal gear. Surely by now, if the Bernanke model was as advertised, we would be seeing a pickup in investment as a percentage of GDP and a willingness to start saving “seed corn” as opposed to eating “caramel corn.” As Chart 1 points out – we are not. At the same time, we continue to consume at an “Old Normal” pace as shown in Chart 1 as well.

To confirm the point, let me introduce additional evidence for the prosecution, a chart that is periodically presented to our investment committee by PIMCO’s Saumil Parikh, who is turning out to be potentially a Pro Bowl replacement for recently retired All-Star Paul McCulley. It’s a little complicated sounding – “net national savings rate,” but it really speaks to the heart of the question. Net national savings is the amount of government, household and corporate savings that is left over after our existing investment stock is depreciated. Think of a building decaying and depreciating over 30 years so that you’d need to save each and every year to build and pay for a new one three decades down the road. If you don’t save, you can’t buy one: Net national savings.

Well, Chart 2 confirms the evidence. Over the past three years, our net national savings rate has been negative, and lower than it has ever been in modern history. The last time this occurred was in the Great Depression.

Aside from a little squiggle back close to 0% over the last year or so, there is no evidence that investment is being incented by quantitative easing. All of the money being created and freed up is elevating asset prices, but those prices are not causing corporations to invest in future production. Admittedly, the chart shows this downward spiral has been underway for decades, but financial repression and quantitative easing were supposed to be the extraordinary monetary policies that kick-started the real economy in the other direction. They have not. We have been using the lower interest rates, the $9,975 of free money, to consume as opposed to invest.
To be fair, Ben Bernanke has been operating with one arm behind his back and has been calling for cooperative stimulation from the fiscal side of this government. He has received little response – not from Democrats, not from Republicans. They have all focused on re-electing themselves as opposed to constructively plotting a way forward. That is why Election Day seems like such a futile gesture to me. Red/Blue; Republican/Democrat. What kind of choice do we have when we pull the lever? If monetary policy has shown its impotent limits, can we now trust Washington to constructively reverse a downward slide in our net national savings rate? I suspect not. I doubt if either Obama, Romney, or many of their economic advisors even know what the definition is, let alone how to reverse it.
Investment strategy
Investors should recognize that asset and currency prices ultimately rest on the ability of a real economy to grow. If growth cannot be boosted by monetary policy, and fiscal policy is in the hands of a plutocracy more concerned about immediate profits as opposed to long-term vitality, then no Genie or Flavor Flav with a magic clock can make a difference. If, therefore, real economic growth is stunted in the United States and globally, then portfolio strategies should acknowledge bite-sized future returns and the growing risk that the negative consequences of misguided monetary and fiscal policy might lead to disruptive financial markets at some future point. The approaching fiscal cliff might be the first of a series of future disruptions. Although PIMCO expects a middle ground fiscal compromise from Washington, when that is combined with the fading influence of QE monetary policies, it leads only temporarily to 2% real growth in the U.S. at best – growth that is clearly not “Old Normal.” We are in a “New Normal” world where the negative effects of private sector deleveraging are only being weakly addressed by monetary and fiscal authorities. If so, then Treasury yields should stay low and my money market fund should continue to read “.01%.” The “cult” of equity – or better yet the cult of “total return” – for both bonds and stocks – is over, if that definition presumes a resumption of historical patterns anywhere close to double digits. The era of financial repression continues.
I must explain these things to my Genie, I fear. Despite his New Age appearance, his forecasts seem to be a bit old-fashioned and out-of-date.
William H. Gross
Managing Director
P.S. Flavor Flav just made an extraordinary appearance on October 31st. He told me to write that no matter who is elected, you can’t keep the U.S. down for long, and that while Sandy was a monster storm, America is a gigantic positive force whether Red or Blue.

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damage's picture

I personally don't think SuperPACs are even the issue... so I'm already thinking this post is going to be dumb before even reading it, but maybe I'll be pleasantly surprised otherwise.

Zer0head's picture

SuperPAC is nothing compared to the MSM (of which Mr. Gross is a part)

 to wit, the closing comments above, which is part of the  meme that this storm was twice as bad as Katrina as Tom Keene has postulated this morning

PS ask Billy boy when he got religion as he was a big supporter of Barack last time around

not to  mention the billions taken from the taxpayer and transferred to Pimpco by way of the Fannie and Freddie bailout, and it keeps going on now with MBS

I hear that Disney is looking for a new Palpatine, give Bob a call Billy you're made for the role

malikai's picture

I pledge allegience to the flag of the United Corporations of Umerica.

And to the republic, for which it once stood.

One nation, forsaken by god, with liberty and justice for none.

GetZeeGold's picture



2nd amendment?


Not just yet....gettin close though.

new game's picture

in the crosshairs...

freedom done gone.

economics9698's picture

Yea I do see a pattern.

Mitt Romney (R)

1 Goldman Sachs



2 Bank of America



3 Morgan Stanley



4 JPMorgan Chase & Co



5 Credit Suisse Group



GetZeeGold's picture



Screw it....Bush will probably just declare martial law and take a third term.


Don't tell me you didn't see it coming.

Big Slick's picture

"We got a more intelligent President, but we hardly got change."

Middle-age optimism replaced by old-age lunacy.   I stopped reading right there.  No need to waste my time.


ceilidh_trail's picture

Jimmy kimmel,david letterhead, oprah, whoopie.billy G- intellectuals all. "We got a more intelligent president". Really? How does this anal fistula know this? Did mr O release his college transcripts finally? Bush did. Higher GPA than kerry the ketchup man, gore the fraud, etc. The MSM spouts how smart this clown is just because he can read a teleprompter. The fact that he can't speak sans one? BFD. Gross the pimpco man is just one more K street ho. Anyone see kimmel in the black barbershop last night? When asked, every single one of 'em voting for the Bamster- no racist element there at all- nah, move on... God save us from ourselves.

Bananamerican's picture

Obama is unequivocably, undeniably, more intelligent than Bush....Hands down.

(only a FOXTARD would say otherwise)

O is as feckless, corrupt and complicit as W though....and as immoral, when push comes to shove....

If Gross wrore this piece he was reading/transcribing my mind

ceilidh_trail's picture

Babyish name calling doesn't cut it. Show me data or stfu. Oh, by the way, bring me another coffee.

Cathartes Aura's picture

Dubya is hella smart, he managed to earn the title "Vacation President" while (not) hangin' out in (his) office,

    A direct comparison places Obama squarely on middle ground of presidential vacation days used. Of the past five presidents, during their first year in office, only two, Jimmy Carter and Bill Clinton took less time off than Obama. Ronald Reagan, George HW Bush and his son all spent much more time away from the White House than the current occupant. Obama's retreat to Martha's Vinyard in August 2011 sparked a particularly high number of criticisms, however at that point in his presidency he had only taken a total of 61 days off. Compared to that same time in office Ronald Reagan had spent 112 days on vacation and George W Bush had been away for a total of 180 days. Bill Clinton, at 28 days, had the least time off of recent presidents. Reagan held the total vacation day record of 436 until the younger Bush left office with a grand total of 977 days away from Washington, representing 1/3 of his presidency.

repub team rules in va-cay-days, go team!!  *waves bye*

Ident 7777 economy's picture





Reason: Incomplete back-story presented re: time away from Washington.


(Citing a blog post doesn't help ... you think salon et al are a balanced source of info and opinion?)



Hugh_Jorgan's picture

Seems smarter maybe. But Obama doesn't solve the problems any better than Bush. Liberals know how to do two things well; stir up trouble with the ignorant and run a political campaign/social deception (they are the same thing). Libs cannot solve real-world problems in sustainable ways, because they tend to focus on the surface appearances and minutiae of things and rarely willing to look beyond step 1 of a policy idea. Obama is the poster child for the sucking vortex of debt and the empty promises of a Liberal Progressive policies.

It just so happens that Bush is a RINO (Progressive Globalist Republican), so he sold us out and spent money at a slower rate than Obama but was generally pointing us in the same destructive direction that every President is forced into (if they want to keep on living).

Buckaroo Banzai's picture

Agreed. Obama might seem smarter than Bush, but he's so loaded up on weed and coke that it doesn't matter anyway. At least Bush had the common courtesy to quit using drugs before he took office.

Hugh_Jorgan's picture

Indeed. More intelligent? How about more educated by radical globalist ex-hippes, maybe. Liberals are great at making noise and stirring up trouble, but they are wildly incompetent when trying to solve problems.

JimBowie1958's picture

Guess Bushes ranch in Texas will be the new White House then?

Or do you forget that President Obama will probably not allow Bush to declare martial law?

viahj's picture

his point, you missed.  Obama is simply Bush's third change, only doubling down on failed policies.

JimBowie1958's picture

Then his point is false.

Obama is owned by Wall Street.

Bush was/is owned by Big Oil. 

Big Diff.

Ident 7777 economy's picture






" Bush was/is owned by Big Oil. "


No, Bucky, ya got it wrong ... that should be Big Baseball.


Where do you clowns get this 'Big Oil' shit anyway?

JimBowie1958's picture

Lol, thats funny.

Everyone back in Texas knew who owned W. It's only people outside Texas that seemed to think he was anything else.

And what happened to oil prices? Went up alot then back down almost as far just before the 2008 elections.

Big Oil tried to leave him looking good for the most part.

akak's picture


Big Oil tried to leave him looking good for the most part.


cirrus's picture

I would change "forsaken by God" to "who has forsaken God"....then it would be perfect.

jonan's picture



"with liberty and justice for none"




"sans liberty and justice for all"

MsCreant's picture

I did not read your comment, but wrote something saying it would be dumb any way. I like spending time posting so I can look like an ass.

dark pools of soros's picture

Long time caller, first time listener

JPM Hater001's picture

This is sad when I have to remind a Zerohedge reader not to judge a book by it's cover.

overbet's picture

New rule: Read before posting your worthless opinions.

Ghordius's picture

Oha! Wasn't expecting this.  "I’ll tell you what isn’t new. Our two-party system continues to play ping pong with the American people...." What's that? I thought that if there was any consensus in the US then that the first-past-the-post electoral system is the best? Heretic

JPM Hater001's picture

Actually I think they are playing beer pong.

Dr Benway's picture

They are playing pocket ping pong.

taxpayer102's picture


@JPM Hater001

Bill G. is saying that America's top 5-10% accustomed to making money in the USA have become victims of the 1%.  He forsees his own demise at the hands of international bankers who stole trillions from the U.S. Treasury.  He knows he's going down with America's middle class.

Carl Spackler's picture

Bill Gross is the 1% but trying to sound like some everyday guy.

Heck, Gross has a stamp collection worth 5 million dollars...yes, a stamp collection!

He's whining because he sees his Democrats losing the White House next week.

Pulling out the old straw man argument (i.e., it's the Super Pacs fault) is his way to whine, when he sees he is not going to get his utopian way.

He should be focusing on  why Obama failed to do anything he said he would do.

GetZeeGold's picture



Keep your UN electoral observers in Euroland Gordo.....they will be shot on sight.

Ghordius's picture

LOL - do you care to explain with your own words why UN electoral observers are being banned in a number of US States? I'd be thrilled

GetZeeGold's picture



Because you're a bunch of fuck-ups. If we have a problem....we'll take care of it ourselves.


Any other questions?

Ghordius's picture

yes? what's the prob? seriously. here is the list of the partecipants of the "limited observation" planned:

The incredible number of 44 observers, i.e. 22 pairs. For Texas, Ms Conny Jensen from Denmark and Ms Melanie Leathers from the UK. Scary gals, those two, the equivalent of two SS-Panzer Divisions.

Meanwhile I find breathless reports about how citizens are scared by UN Troops in full combat rig with rifles and tasers, all bent to make millions of peaceful American voters vote the "internationalist" way.

And the Texas is saying that they will be arrested on sight while StateSec is saying this is against federal law and international treaties.

so again, where is the problem? seriously, for once

GetZeeGold's picture



Don't need your help Gordo.....if someone decides to kill millions of people in your backyard again give us a call.


We might help.....if we feel like it.


Ghordius's picture

so those two ladies, one Danish, one British, sent to have a cursory look at the voting going on in 8'500 polling places in Texas are a problem?

GetZeeGold's picture



Are you from Texas mind your own business.


No one invited you to our party.

new game's picture

chime in time; glad to see someone is following the un mandate to control small arms worldwide and superseed our constitution.  nice work hillary for your hard treasonis work for the gorg soros and pals nwo.  can't use enuf f'g adj f's to state how f'd up this is.

helplessness is not a plausable defense

GetZeeGold's picture



A good offense is the best defense. This might sting a tad.

new game's picture

not at all as open minded, out the back door to the safety of home turf-d and ready to observe and think clearly as i am robbed but safe and sound. but then the fun begins with no bodily harm but terror unlimited :D; just some skills vested...

Ghordius's picture

lol - Mr. Ron Paul, a Texan Congressman, btw, would probably just remind you that Texas is noted for it's relaxed hospitality and gentleman ways. he would further probably remind you that you should not treathen two unarmed ladies and that the US has 900 military bases in 130 countries around the world.

GetZeeGold's picture



I'm not from Texas if but you send a couple of UN ladies packing bad attitudes.....we'll smokem here.


A very big pond seperates us.......take care of your own crap over there.

Roscoe's picture

Mr. Ron Paul might more likely tell you that it is not going to end well for anyone who 'messes with Texas', and further, that it would behoove anyone who has intentions of interferring with our hard-fought and hard-won republic's sovereign operations, would do well to remember the Alamo. Your intellectual grasp of American culture is far more flacco than gordo.

Ghordius's picture

"interfering with..."? WTF are you talking about? one team of 2 unarmed civilian women for 8'500 polling stations and millions of Texan voters? do you have any sense of proportion? or do you claim this is this part of American culture?

GetZeeGold's picture



If they're American citizens they can stay. Otherwise they have to go....or they might get shot.


Butt the hell out amigo. Who elected you Pope sport?

Ghordius's picture

"Who elected you Pope" - you did. I was about Bill Gross's comment on electoral systems and you replied to me asking to call back UN observers or "they will get shot"...

I was not ever aware of the spat