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Bill Gross On "New Normal" Investing As A Failed Marriage: "What To Do When A Love Affair Goes Bad?"

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Tue, 08/30/2011 - 08:50 | 1614344 KlausK
KlausK's picture

Rags to riches, bitchez

Tue, 08/30/2011 - 08:51 | 1614348 russki standart
russki standart's picture

Bill Gross has too much time on on his hands. 

Tue, 08/30/2011 - 08:59 | 1614378 augie
augie's picture

playing both sides requires such an impression. 

Tue, 08/30/2011 - 14:17 | 1615848 TheFourthStooge-ing
TheFourthStooge-ing's picture

That ain't the way to have fun, son.



Tue, 08/30/2011 - 09:06 | 1614410 slaughterer
slaughterer's picture

Gross should look to the film "Fatal Attraction" as a better metaphor for the future relation of rich and poor.  Not just a legally regulated "matrimonial discord" but an all-out jealous, homicidal obsessive compulsive that boils your kids rabbit, comes at you with a kitchen knife, stalks you at work, and tries to murder your wife.   Once again, Bill errs on the side of levity.   

Tue, 08/30/2011 - 08:54 | 1614360 Irish66
Irish66's picture

True love, divorce, dear abbey...ohhhhh crap we are .....

Tue, 08/30/2011 - 08:54 | 1614361 Tense INDIAN
Tense INDIAN's picture

Love Money ...nothing would go bad in that one....

Tue, 08/30/2011 - 08:55 | 1614366 Dapper Dan
Dapper Dan's picture

China should have had the "Massey Pre-nup"  it's impenetrable!

Tue, 08/30/2011 - 08:58 | 1614373 Yamaha
Yamaha's picture

A master of the obvious! Once again.

Tue, 08/30/2011 - 08:58 | 1614375 Shineola
Shineola's picture

In the Austrian view, money = labor.   Money becomes overly important to some, when they are permitted to steal the labor of others.  What do they do with this stolen labor?   They just squander it on thier own fancy.  

"On a long enough time-line......"    Well, stealing just doesn't make much sense.

Tue, 08/30/2011 - 08:58 | 1614376 RSloane
RSloane's picture

This must be Gross's August Investment Outlook missive. I enjoy reading all of them.


Tue, 08/30/2011 - 08:59 | 1614379 jimijon
jimijon's picture

And here is my song for this love triangle gone bad...

Not A Protest Song; A Love Song!

Tue, 08/30/2011 - 09:00 | 1614383 misterc
misterc's picture

Here in Germany we get 2.6% yield on the best CD available (still questionable as it's from Bank of Scotland - Lloyds- insured up to 50.000 EUR only and court would be in Great Britain). Plus I have to pay 26% tax on my yield returns.

At the same time my living expenses are up at least, honestly and not exaggerating, 7% (heating, gas, subway fare, restaurants, food, stamps, etc.).
How anybody can still fantasize about CD or "Total Return"-investment strategies is beyond me. People must be really NOOB to hand their money to Pimco who take on Italian debt to get yields up.
Totally broken, corrupt FIAT-system. Rename Merkel to Merkelowa and Brussels to Brusscow. And put your savings in something tangible.

Tue, 08/30/2011 - 09:10 | 1614417 slaughterer
slaughterer's picture

Can't you better yields on CDs in Germany from Greek, Irish and Portugese banks with foreign court jurisdiction?  Would any Germans buy those?  (I guess I answered my own question.)

Tue, 08/30/2011 - 09:14 | 1614429 misterc
misterc's picture

I actually moved my small business-liquidity-money away from Bank of Scotland to a German bank with an even lower yield, just to enjoy German CD insurance. I got a little nervous about Lloyd's CDS lately.
I might be an alarmist, but as they say, if panic, panic first.

Tue, 08/30/2011 - 09:24 | 1614460 slaughterer
slaughterer's picture

After having redemption problems with a French bank, I also did the same.  Filling out court forms in French got to be too much over the two years it took to get my money back.  It was obvious to me at the end that the bank in question was a major Ponzi scheme.  Despite alerts to Brussels, it is still in business. 

Tue, 08/30/2011 - 09:00 | 1614384 DK Delta
DK Delta's picture

In light of all the new "policy options" for the Fed being advocated since QE3 has not been announced, i thougth I would address the real question of whether or not the Federal Reserve CAN ACTUALLY AFFORD for banks to start lendign again. The short answer is no, and here is why:



Tue, 08/30/2011 - 09:35 | 1614496 topcallingtroll
topcallingtroll's picture

Excellent article from covering delta.

Has quantitative definition of zombie banks and explains why a system reset is better than global serfdom.

(Of course if there has to be serfs and lords then you need to be a lord)

Tue, 08/30/2011 - 09:43 | 1614515 tarsubil
tarsubil's picture

Doesn't mean much coming from me but that may be one of the best summaries of our current situation I've read. Thanks.

Tue, 08/30/2011 - 10:05 | 1614577 DK Delta
DK Delta's picture

Thanks. I try to keep it simple :)

Tue, 08/30/2011 - 10:31 | 1614727 Greater Fool
Greater Fool's picture

Yes, thanks, a very good explanation of a key aspect of the liquidity trap we're in. What it means to me is that the only safe way to wind down those excess reserves is to set them against loan losses--i.e., force banks to recognize losses, ideally by disgorging the bad assets.

Unfortunately, I think you need a lot of yield-hungry investors and a functioning system of structured finance to accomplish these objectives, and at present we have neither. Funds seem to be liquidity-obsessed, which leads to outrageous malinvestment: Treasuries yielding less than inflation while real assets crumble or are destroyed by the homeless squatting in their ruins. A still-life of missed opportunity and failed resource allocation.

Tue, 08/30/2011 - 10:37 | 1614765 DK Delta
DK Delta's picture

Yes, but that would have go be accompanied by nationalizations. If they are going to expand the money supply in order to fill the vaccum of debt created by reckless lending and speculation, then all those executives need to lose their equity stake for starters. 

Tue, 08/30/2011 - 11:28 | 1615007 Greater Fool
Greater Fool's picture

Right, but that should be the effect. Now, many banks have huge stores of illusionary equity as a consequence of unreasonably optimistic asset marks, in addition to the reserves. Forcing price discovery on the bad assets would of course vaporize a lot of this "equity," but banks that haven't accumulated enough of a cash cushion in the past 3 years to handle this eventuality likely won't and ought to be broken up.

As to what mechanism can force this sort of a change...I think a single grain of sand dropped on this pile will start the avalanche. Since it's essentially under Treasury control, Citi should go first. This would likely lead to the death of Citi as such, which is what pretty much everyone has said was necessary since 2008.

Anyway, perhaps it's politically impossible but this is the only path I see whereby those excess reserves don't cause a huge problem in the money supply. The alternative--deflation--is pain we will experience either in a series of shocks or as a steady ache for the next 20 years (see Japan). I'd like to think that we can find the kind of leadership somewhere not to follow our friends on the Pacific Rim down that road.

Tue, 08/30/2011 - 09:00 | 1614388 Everybodys All ...
Everybodys All American's picture

The US is becoming investor unfriendly. The markets are more or less a centrally planned system now and so anyone who is looking to invest here is simply looking at a rigged outcome.

Tue, 08/30/2011 - 11:14 | 1614968 weinerdog43
weinerdog43's picture

Beginning!   Where ya been son?  The Wall St. casino has been rigged for decades.

Tue, 08/30/2011 - 09:06 | 1614409 Cognitive Dissonance
Cognitive Dissonance's picture

"What To Do When A Love Affair Goes Bad?"

D I V O R C E the Fed.

Now. Uncontested. Just cut the ties that bind us to the slavery.

Tue, 08/30/2011 - 09:19 | 1614445 Max Hunter
Max Hunter's picture

Is it true that they have a 100 year charter? If so, it would be interesting that for the first time (that I know of) there will be debates next year with a candidate running on the platform of killing the bank like Andrew Jackson.  If RP is elected, based on his position, is it conceivable that the charter not be renewed and debt to FED expunged?

Tue, 08/30/2011 - 09:26 | 1614466 Cognitive Dissonance
Cognitive Dissonance's picture

I don't know for a fact about the 100 year charter, but it has been widely reported that something is coming up for renewal.

I wonder if this is the root reason Ron Paul has decided not to run again for his house seat and concentrate instead on the Presidency. Because he no longer needs to speak carefully for fear of upsetting his constituency, which has recently been gerrymandered to make it more difficult for him, he can be much more outspoken......if that's even possible for Paul. 

Tue, 08/30/2011 - 09:49 | 1614534 Max Hunter
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I was thinking the same thing about his not running for a House seat but for another reason that somewhat ties in.  If he does not get the Rep Nom, he would certainly be free to run as an Independent.  Most say this spells troubles for the Rep and hands the election to the Dems, I couldn't disagree more. IMO, he would maintain his 40-45% while the Dems and Rep fight for the remaining 55-60%... With his stance on wars, he would pull at least 10% away from the Dem base..  Funny how all the peace loving Dems fell silent in the past few years..

Tue, 08/30/2011 - 09:54 | 1614551 Cognitive Dissonance
Cognitive Dissonance's picture

Interesting. I hadn't considered the Independent angle.

Is it me or have Presidential election runs escalated into nearly two year long affairs? This started with the 2008 cycle when attention needed to be diverted from the economy stupid. They have always been 12 to 14 month affairs. But it has become the theater of the absurd.

Tue, 08/30/2011 - 10:08 | 1614590 Max Hunter
Max Hunter's picture

No, it's not you... Everything seems to be doing that.. Christmas comes earlier every year as well..

The election cycle is now constant.. Like lighting a cig with the butt of another..

Tue, 08/30/2011 - 10:19 | 1614648 Cognitive Dissonance
Cognitive Dissonance's picture

That is a great connecting observation Max Hunter. While I am very aware of the Christmas shopping season now starting well before Thanksgiving, your comment fired up the brain cells. There are many other consumer cycles that are now running into each other. Back to school shopping in June, Easter sales beginning directly after President's day sales in Feb etc.

The consumer culture tachometer is now firmly in the red.

Tue, 08/30/2011 - 10:07 | 1614582 tarsubil
tarsubil's picture

I can think of two ways to break the Fed: bring the troops home (international rejection of the dollar) or end the Federal income tax (domestic rejection of the dollar).

Tue, 08/30/2011 - 14:57 | 1616041 DoneThis2Long
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D I V O R C E the Fed.

Now. Uncontested. Just cut the ties that bind us to the slavery.


but then the idiots in congress, and the "Current Resident" on 1600 Penn Ave, would have full control, in which case, the skids would be greased even more. Well, that might not be entirely true, since most of those bastards are nothing but mere marionettes, with their strings being yanked at every move, by the likes of soros et al, you know the ones ...."new world order" lovers who are aiding in the dismantling of the once Great US, and serving it piece by piece to china, however, the same zealous ideologues and true enemies of the US, fail to notice that that marvel called EU is crapping out, approaching the full blow-out point, at which time most of their 'contents' gleefully ingested as ingredients of the delicious EU, will be excreted, and when the end result will hit the proverbial fan .... duck and cover.

Unfortunately, what Gross has become is a splendid specimen of the 'grownup hippies' who in the 60's and 70s were raising hell, in the name of a better America, while now, a decent number of them, to varying degrees, having become 'fat cats', forgot how they were able to amass their fortunes, and instead of uniting and contributing however possible to returning the country on the path to prosperity, are now, continuing to chase an easy buck, by financing our adversaries, and most likely our enemies, based on their propaganda they already consider us their enemy - all to the detriment of the quality of life during the 'golden years' for some of us, as well as the quality of life (or lack thereof) for our children and future generations.

Once Heli-Ben got rates to 4% yet the economy continued its tanking trajectory, the politicians should have pulled their heads out of their asses, and begin serious work on policy intervention aimed entirely at rebuilding the domestic manufacturing base, which is all but gone, as well as ensuring that any fed provided liquidity remains 100% - or close to it - in the US.

Given the facts revealed by the Bloomberg recently released Fed back-door loans, makes me wonder if Uncle Ben himself is not among the facilitators of the "new world order"?!

So me thinks anyway.

Duck 'n cover everyone.

Tue, 08/30/2011 - 09:10 | 1614420 Manthong
Manthong's picture

"Republican orthodoxies favoring tax cuts for the rich and Democratic orthodoxies promoting entitlements for the poor"

Not that I am a Republican, but my read is that only one half of that statement is true. Republicans appear to favor most all tax cuts.

"Tax cuts for the rich" is a hackneyed expression, and a class warfare propaganda term designed to include anyone that makes over an average wage a tax target.

Regardless, Gross is just another player in the same sandbox digging his own style of hole.

Tue, 08/30/2011 - 11:09 | 1614956 weinerdog43
weinerdog43's picture

Sorry, but the practical effect is tax cuts for the rich no matter what they currently call them.  I don't recall any Republic in favor of the earned income tax credit.  The Republics and the rich have been waging class war against the rest of us for decades.  Nice try though.

Tue, 08/30/2011 - 09:14 | 1614430 Jim in MN
Jim in MN's picture

Indoor fireworks

Can still burn your fingers

Indoor fireworks

We thought were safe as houses

They're not so spectacular

They don't light up in the sky

They can dazzle or delight

Or bring a tear

When the smoke gets in your eye

...sniff...zero real returns for 30 years because of treasonous, insane bond protection rackets from Ben&Timco, AKA the American Yakuza.  Bummer for Bill Gross.  Wonder if he's told his clients they have to reduce consumption and increase savings to reach any kind of goals?  Or if he just whines in public.  Mustn't hazard one's privileged position in information/leak queue...

Tue, 08/30/2011 - 09:14 | 1614433 virgilcaine
virgilcaine's picture

This could only be better if read aloud by M El Erian.. Bravo Mr Gross.

Tue, 08/30/2011 - 09:15 | 1614434 Johnny Lawrence
Johnny Lawrence's picture

Is Gross still short Treasuries, because he must be getting killed on that?

Tue, 08/30/2011 - 09:50 | 1614532 Rainman
Rainman's picture

PTTRX trailing 70% of peers. Mea culpas are in order for underestimating the temporary power of the ponzi.

Tue, 08/30/2011 - 09:15 | 1614435 adeptus
adeptus's picture

"Pimco's advice? Run"

Yeah, run to GOLD!

Tue, 08/30/2011 - 09:17 | 1614440 buzzsaw99
buzzsaw99's picture

And yet so smug a mere six months ago.

Tue, 08/30/2011 - 09:17 | 1614441 TooBearish
TooBearish's picture

luv the New Normal = inflationary depression Billy thanks so much for sugar coating it just a tad

Tue, 08/30/2011 - 09:25 | 1614446 PulauHantu29
PulauHantu29's picture

Billionaire bankers have lots of spare time to tell stories...while the average saver is trying to survive on 0.0001 interest rate from Bernank. However, it is always interesting to read what someone NOT from Wall Street is saying.

Tue, 08/30/2011 - 09:25 | 1614463 sbenard
sbenard's picture

I will never understand or agree with the acrimony toward wealthy people solely because of their income. They already pay the overwhelming majority of the taxes. We need them to use their talents to invest and grow our economy! What's the alternative? Coveting and stealing on a societal scale! That's just equal misery for all!

That said, it's time to end the Fed heroin that fuels Wall St's endless entitlement and Pollyanna Party. We need to get back to investing, not just betting on the Fed's roulette wheel!

Tue, 08/30/2011 - 09:42 | 1614514 Caviar Emptor
Caviar Emptor's picture

They already pay the overwhelming majority of the taxes

Not exactly. The "rich" are a very small % of the populaiton. So the total taxes collected on the overwhelming majority of people is higher through real estate tax, gasoline tax, sales tax (on every restaurant meal and every retail transaction in most states, for ex), phone/wireless/cable tax, road and bridge tolls, parking tax, airport tax, license and permit fees...and on and on...

It's higher not only by total, but by %. Taxes in the US are regressive, higher on lower income. 

Tue, 08/30/2011 - 10:44 | 1614805 topcallingtroll
topcallingtroll's picture

Since lower income people use more government services they should pay a higher proportion of taxes. They still dont pay enough.

Notice how the Bastard of Omaha said we should tax billionaires more, but the talk and proposals quickly focused on the " top one percent" but in reality included the top three percent.

They lie when they say they only want to tax the rich. 97 percentile is not rich. Not even close.

Tue, 08/30/2011 - 09:28 | 1614474 Caviar Emptor
Caviar Emptor's picture

It's a lot more serious than "divorce, Italian style"

There's disagreement on everything from QE to monetary and fiscal policy, taxes, entitlements, pensions, unemployment, housing, infrastructure, military expenses, foreign policy.....

Heck, we can't even agree on whether it's deflation or inflation. 

Or whether we're in a capitalist, socialist or centrally planned fascio-communisitc autocracy. 


Been sayin it for a while. Look for further discord. There are no easy answers or quick fixes anymore. And more QE is a sure way to accelerate destruction of the economy when we should be looking to cut losses. But when things get desperate, people do desperate things. Gold is your only friend

Tue, 08/30/2011 - 09:47 | 1614528 Jim in MN
Jim in MN's picture

Indeed...the only thing the Republicans and Democrats can agree on is to not discuss the FLAGRANT CRIMINAL CORRUPTION at the senior levels of the government and financial/corporate sector.

Corruption is eroding the legitimacy of the system, without which there can be no market-based economy.  Or democracy...incidentally.

Illegitimate authority is simply corrosive acid for property rights and capital formation.  A revolving door to Treasury/WH and trillion-dollar sweetheart deals spells E-N-D.  Yet it is ***never*** discussed.

Tue, 08/30/2011 - 09:34 | 1614492 Josh Randall
Josh Randall's picture

"We prefer investing in the “cleaner” dirty shirt countries of Canada, Australia, Mexico and Brazil, along with non-dollar currencies that have strong trade ties with the Asian continent."

And so we in the US have out lived our uselfulness ? Great - tell that to Walmart - when the American consumer goes, the world goes  

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