Dear Pres. Obama...(by Bill Gross)

[Htown Harry]

As a fun read, PIMCO's Bill Gross writes a periodic report that's often as entertaining as Warren Buffett's annual letter to shareholders.

This month, Gross writes a "letter" to Barrack Obama that contains some humor, some insights, a prediction of trillion dollar deficit by 2011 and a whole lot of wisdom.

PIMCO - Investment Outlook - July 2008 "Dear President Obama:"

Some of my favorite passages:

Dear President Obama:

You have inherited a mess. Your predecessor, fixated on emulating a former Republican icon from a far different economic era, chose to emphasize tax cuts for the rich and excessive consumption for all Americans. He promoted deregulation and free markets when, in fact, the markets and their institutions needed tough love...

...But enough about W’s spilt milk. I’ve already ticked off so many readers that they’re questioning my Republican Party voter registration. What do I think you should do as the new President to rectify this mess?...

...But you’ll have your tax bill and your healthcare bill and your housing fix, and somehow it’ll all be paid for by wealthy hedge fund managers, oil companies or, pray tell, a robust economy that’s creating good jobs at home instead of exporting them abroad. Uh, I don’t think so, Mr. President. That’s where the “yes we can” morphs into “no we can’t.” Not that you won’t accomplish most of that – the robust economy and the good jobs notwithstanding. It’s just that you won’t be able to pay for it and it’s better to admit it now as opposed to later...

...In the final analysis I wonder why you or anyone else would want to be President in 2009. But there’s the ego thing and a hope for a better tomorrow and all that. Come to think of it, “President Obama” does have a certain ring to it. When I listen to your speeches, you even have me half convinced!

All the best, and a fist bump to ya!

William H. Gross
Ordinary Citizen

Gross has gone strongly bearish on the U.S. economy, it appears. He's predicting that either of the candidates will be dealing with many serious financial dilemmas.

Read the letter and see if you agree that a "letter to McCain" would need only a few minor edits.

[chinaco]

Gross is right on about GWB and the mess he has created.

The country is in such a poor state, the new president elect (whomever) should be able to improve fairly easily in several areas of policy.

GWB.... started his administration with a recession and a bubble had just burst ended his administration with a recession, a bubble burst, a new bubble growing, high inflation, a war, in massive debt, and on and on. Yes he will leave us worse off than we were before he was elected.

He deserves all the criticism he receives and then some.

[socca]

Mr. Gross, like most old-timers, is wedded to the "growth is good" meme. Unfortunately, if you are 15 people in a lifeboat built for 10, then growth is not a blessing. The "growth is good" meme has served the world well for generations, but it's time for a new paradigm. We need to re-examine the fundamental assumptions upon which our planetary economic systems are built, and engineer entirely new approaches. We can't get there just by fiddling with the systems as they are.

[cashbalancetrouble]

I would disagree. I am significantly better off. As to GWB being at fault, I don't think so. Did he allow those fools to take out the bad loans? In the mid 90's 80% of loans were closer controlled than the 20% of today. It wasn't GWB who changed the rules. Did he send the jobs overseas against Congress's desires? How about the troops, didn't Congress say protect us please, along with the people? Did GWB sell people all those big SUV's? did I see him tell GM, Ford and Chrysler to make them? Who wanted his own Hummer for everyday.. Wasn't that Arnold 'DON'T DRILL OFF MY BEACCH' Swarznegger?

GWB and Congress gave everyone a tax cut. When these expire the next tax cut and a subsidy, 'READ HANDOUT', will go to the low incomes. Why do you think no smart Americans want to be Doctors anymore? It doesn't pay well, requires high cost for education, has long hours.

As someone who lives in Kucinich's home district, I see what a nothing can do in Congress when an overwhelming bunch of fools are pulled by a string to the ballot box.

[BoutDone]

Originally Posted by cashbalancetrouble

I would disagree. I am significantly better off.

Me too. We're much better off.

[BoutDone]

Originally Posted by socca

The "growth is good" meme has served the world well for generations, but it's time for a new paradigm. We need to re-examine the fundamental assumptions upon which our planetary economic systems are built, and engineer entirely new approaches.

In China they limit the number of children a family can have. Is that what you are advocating?

[ziggy29]

Originally Posted by BoutDone

In China they limit the number of children a family can have. Is that what you are advocating?

Hardly necessary. But it seems like politicians want to give larger and larger tax breaks and credits "per child" which is essentially a way to bribe people into growing the population. IMO, that seems reckless in a world that is seemingly on a collision course with serious resource shortages if population and demand keeps growing.

There is a couple in Arkansas expecting their 18th child. I believe there would be at least 16 minor/dependent children, and I once calculated that they wouldn't pay a cent of income tax on their first $170,000 or so of income.

[socca]

Originally Posted by BoutDone

In China they limit the number of children a family can have. Is that what you are advocating?

The lifeboat metaphor was just that - a metaphor. I didn't mean to constrain the problem to merely population - it's broader and deeper than that.

In general, before you can begin solving a problem, you need to admit that you have one. I haven't heard any world leader (current or potential) suggest that merely patching our current economies is not going to be sufficient. So (in the U.S., for example), we're most likely going to get pathetic, half-assed, ineffectual (in the long term) tweaks to our existing system regardless of whether Obama or McCain seizes the throne.

[clifp]

Originally Posted by socca

Mr. Gross, like most old-timers, is wedded to the "growth is good" meme. Unfortunately, if you are 15 people in a lifeboat built for 10, then growth is not a blessing. The "growth is good" meme has served the world well for generations, but it's time for a new paradigm. We need to re-examine the fundamental assumptions upon which our planetary economic systems are built, and engineer entirely new approaches. We can't get there just by fiddling with the systems as they are.

It is pretty hard to pick up an annual report and not see something along these lines of this.

"Are greatest asset is our people" or see the problem of brain drain in 3rd world countries, or negative population growth in places like Italy, Russia, or Japan.

How do you know that 15 of us are living in a lifeboat built vs 10 people vs 100, or 1,000.

[CitricAcid]

People drive innovation, efficiency and progress. The exact same things that are being stated here are similar to what Malthus famously proclaimed (that the world will starve based off of population growth) The more people there are, the more doctors and the more professors and inventors that make it possible for 3 out of every 100 Americans as opposed to 96 out of every 100 Americans to be farmers in only an 100 year timeframe. Population growth and wealth of knowledge/human capital is what almost every developing country (including America, I mean developing as in progressing) NEEDS