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Pimcos New Warning, The Future Just Got Much, Much Darker For Investors Stocks Dead, Bonds Deader Until 2022.

Tuesday, November 27, 2012 11:52
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(Before It's News)

from Paul B. Farrell:

Big money managers are warning invertors. They’re now citing the Bible: “Seven lean years.” No recovery till 2016. That was Jeremy Grantham back a few years ago. His GMO firm manages $104 billion.

Now Bill Gross and Mohamed El-Erian, the co-CEOs at the $2 trillion Pimco money managers, are citing the same biblical warning to jar investors awake and prepare for the coming lean years of slow, low growth and austerity. Except in Pimco’s new warning, the future just got much, much darker for investors — no recovery until 2022.

Here’s a summary of 10 points Foroohar picked up from meetings with El-Erian and Gross.

1. America fell in love with a Goldilocks economy

As early as 2005 Pimco warned that investors, voters and politicians had fallen in love with “a Goldilocks economy, the notion that markets were in a long period of growth and stability, neither too hot nor too cold.” El-Erian “never believed the bull” about wise “world’s central bankers and the seemingly endless growth of emerging markets.”

2. Economists predicting 3% to 4% growth are misleading America

Pimco was “quick to see, post-2008, the passing of an era,” says Foroohar. The unthinkable was happening: “The U.S. flirting with default, unlimited central-bank money dumps were suddenly happening.” Worse, today “while most experts (including those within the Obama administration) were plotting how to move from recession back to the trend growth rate of 3% or 4%,” Pimco concluded that a low 2% growth will probably be the New Normal “not for a couple of years but for decades.”

3. Warning: Too many investors, banks, politicians still in denial

Many investors are still disappointed with their nest eggs, in denial, ignoring Pimco’s message, trapped in wishful thinking, hoping for a return of the short-term bull-bear cycles common in recent decades, unwilling to face the harsh reality of the New Normal with slow growth everywhere: consumer spending, jobs, government revenues, corporate earnings, stocks, bonds, commodities, even America’s role in the world.

4. Investing is like surfing and the money wave may soon crash

Surfing is a popular Gross metaphor: Imagine waves of investor opinions moving stock prices. Whether surfing or investing, you “ride the wave,” sense the crest, always knowing that “ultimately a good surfer has to kick out.” Or get wiped out “when the wave crashes. And the money wave, says Gross, may be ready to crash.”

We Are Witnessing The First Great Depression Of The 21th Century: 2013 Will Be A Year of Serious Global Crisis. Austerity, High Tax Rates, Near-Zero Growth Will Last At Least A Decade, Natural Resources Are Running Out At An Alarming Rate, And Many Won’t Survive.

Chart Of The Day – Continued Collapse In Capital Goods New Orders Confirms US Is In Recession

 MORE HERE

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Total 3 comments
  • Ruffcut

    Well the banksters will not make billions as usual, which means that the rest of us will sacrifice and suffer like during the 30′s.

  • Sid

    The industrial age is terminal. Why?

    Because each energy source each mined resource has a cost curve where progressively more energy must be expended to acquire them. In the energy sector, that means that each year the net amount of energy available to fuel the economy is less. This is the low hanging fruit principle which describes the inclination of businesses to pick what is cheapest and most profitable first while leaving the more expensive deposits for later; only later is now.

    One example is oil. In the 1930′s it took only 1% of the energy in a barrel of oil to acquire that barrel. Today it takes 11%. This doubles every 20 to 25 years. Production of cheap oil coming from old wells is in decline. Look at where we are drilling today; deep water ocean deposits, shale oil deposits with fracking, and Canadian tar sands, all very expensive propositions.

    With less net energy to fuel the industrial age, the economy will contract at some rate. Whatever the rate settles out to be, it will produce a halving period. If the contraction rate is 5%, then every 14 years the economic output will be cut in half, rinse and repeat.

    And then there is the fraudulent, predatory, unstable, unsustainable, unconstitutional monetary system centered around the Federal Reserve Bank. This drains about 40% of the GDP into the bankers hands each year, and you can bet that they will demand more as their cut of the economy results in less for them.

    And then there is this fraud we call government which, with the exception of very brief periods in history, has been a ruler/ruled system of plunder and control. Politicians and friends collude to destroy freedom in markets and replace it with a rigged market with the result that most people live like serfs while those in power take most of the wealth.

    We are in for a rough future.

  • HDThoreau

    2022. That’s really hopeful.

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