Tags: Pimco | Gross | US | Must | Revive | Manufacturing | Thrive

Pimco's Gross: US Must Revive Manufacturing to Thrive

Thursday, 02 Dec 2010 02:12 PM

The United States must reclaim its position as a manufacturer of goods that meet global demand in order to restore the country's economic health, says Bill Gross, co-chief investment officer of Pimco.

Both politicians and voters are failing to address the key problems facing the U.S. economy, said Gross, who oversees more than $1 trillion in assets at Pimco, operator of the world's biggest bond fund.

"Politicians and respective electorates focus on taxes or healthcare when the ultimate demon is a lack of global demand and the international competitiveness to thrive," Gross said in his monthly investment outlook note to clients, which was posted on Pimco's website.

Gross offered simple advice to restore the U.S. economy's long-term health: "Stop making paper and start making things," by replacing U.S. government bonds with American cars, steel, iPads, airplanes, or corn — "whatever the world wants that we can make better and/or cheaper."

Economies around the world are competing for a share of a "diminishing growth pie," said Gross, who added that the policies of developing nations "are oriented toward export to debt-laden developed nations instead of internal consumption."

Gross said developed economies — both the United States and Europe — are failing to address a fundamental problem: Job growth is moving inexorably to developing economies because they are more competitive.

He added that "free trade and open competition, like a stretched rubber band, have snapped the U.S. and many of its Euroland counterparts in the face."

Gross said he expects the United States to increasingly rely on currency devaluation, trade barriers and immigration, "as opposed to constructive policies to make this country more competitive in the global marketplace."

"Unless developed economies learn to compete the old-fashioned way — by making more goods and making them better — the smart money will continue to move offshore to Asia, Brazil and other developing economies, both in asset and in currency space," Gross said.

Also investments in infrastructure and 21st century education and research are necessary as is a withdrawal from resource-draining foreign wars, he said.

© 2017 Thomson/Reuters. All rights reserved.

   
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The United States must reclaim its position as a manufacturer of goods that meet global demand in order to restore the country's economic health, says Bill Gross, co-chief investment officer of Pimco. Both politicians and voters are failing to address the key problems...
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2010-12-02
Thursday, 02 Dec 2010 02:12 PM
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