Gross: Growth Will Slow, Financials Will Get Hit

Newsmax - by Dan Weil - May 5, 2009

Bill Gross, manager of Pimco Total Return, the world’s biggest bond fund, says investors better get used to the idea of government involvement in the economy.

This year represents a “demarcation point because it represents the beginning of government policy counterpunching,” Gross writes in his monthly commentary.

“A period when the public with government as its proxy decided that private market, laissez-faire, free-market capitalism was history and that a ‘private/public’ partnership yet to gestate and evolve would be the model for years to come.”

How should investors cope with this new environment?

They “should recognize that this grassroots trend signals…an increasing uncertainty of cash flows from financial assets,” Gross says.

“Not only will redistribution and reregulation lead to slower economic growth, but the financial flows from it will be” reduced for stakeholders, he explains.

“In turn, the present value of those flows should reflect an increasing risk premium and a diminishing multiple of annual receipts.”

Translation: prices of financial assets will fall.

As for the economy, Gross predicts “a slower rate of economic growth, not just in the U.S., but worldwide as heretofore libertarian capitalism is bridled, saddled and taught to trot instead of gallop over the investment plains.”

While Gross expresses support for President Obama, Peter Ferrara, director of budget policy at the Institute for Policy Innovation, feels differently.

He writes on FoxNews.com, “How is Obama not a socialist? Under his ‘auto bailout’ policy, the government would be taking GM and Chrysler away from the investors.”

Spending a Trillion? Really!

"[W]hat could possibly be more reckless than spending a trillion dollars you don't have on a plan that you have no evidence will work? What could be more irresponsible than doubling the generational debt for your partisan pet projects in a time of crisis? And what could be more selfish than stifling debate by deploying fear to induce voters into supporting it all?" --columnist David Harsanyi

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It is pretty poor leadership! Think it is based on fear, one that is not really seeking answers and solutions. But IMHO....this is only brought and paid for "leadership" that is for those that will benefit from the grap from the people.