Monday, June 13, 2011

Bond King Bill Gross: Canadian, Australian or German Debt Are Safer than U.S. Debt


The headline making the rounds today is:

US Is in Even Worse Shape Financially Than Greece: Gross

But I think the more interesting aspect of Bill Gross' interview with CNBC is the bond king's advice about which countries' bonds are worth buying:

"Why wouldn't an investor buy Canada with a better balance sheet or Australia with a better balance sheet with interest rates at 1 or 2 or 3 percent higher?" he said. "It simply doesn't make any sense."

Should the debt problem in Greece explode into a full-blown crisis—an International Monetary Fund bailout has prevented a full-scale meltdown so far—Gross predicted that German debt, not that of the US, would be the safe-haven of choice for global investors.

As an American, I am sad that our country is so financially unsound. Too bad we didn't follow Iceland's example. Or that of the Founding Fathers. The bottom line - despite Geithner's lame protestations - is that we wouldn't be in this situation today if we had broken up the too big to fail banks.
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2 comments:

  1. CirzeJune 13, 2011 at 12:15 PM

    Amen.

    I said the same thing at my blog!

    S

    Too bad we didn't follow Iceland's example.

    ReplyDelete
  2. hettygreenJune 13, 2011 at 3:56 PM

    I only wish Canadian Government Bonds were offering higher yields than the US. Currently 2yr @ 1.44; 3yr @ 1.73; 5yr @ 2.23; 7yr @ 2.61; 10yr @ 3.01; long bond @ 3.48. The trade is crowded imho and the market is tiny (compared to Treasuries) When, not if, the US Dollar rises and our housing bubble collapses US investors in all things denominated in the commodity driven loonie will suffer and flee. Gross is talking his book and is off side on his bet against US Treasuries. Sour grapes anyone?

    ReplyDelete

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