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August 12, 2011 at 06:45 AM
The Dow Jones industrial average moved more than 400 points in five out of the last six trading days through Thursday as investors reacted to news from the debt ceiling debacle, the Fed and interest rates, fiscal troubles in the United States and Europe, and the Standard & Poor’s downgrade of U.S. debt.
Experts, like Bill Gross and Jeremy Grantham, of course, have been weighing in on what’s behind such swings and how to view the underlying issues in the longer term. Here are the five best quotes from a wild ride in the markets so far this month.
‘Debt Men Walking’
Future liabilities facing the U.S. government are staggering, said Bill Gross, PIMCO managing director, in his early August outlook “Kings of the Wild Frontier.”
“In addition to an existing nearly $10 trillion of outstanding Treasury debt, the U.S. has a near-unfathomable $66 trillion of future liabilities at ‘net present cost’ … I call these liabilities ‘debt men walking,’ because as long as 330 million living Americans require promised entitlements, the $66 trillion that wear shoes are as much of a liability as the $10 trillion on paper.”
‘The U.S. Is Bankrupt’
The country can’t kid itself about its debt anymore, investor Jim Rogers said on CNBC on Tuesday, after expressing similar comments to the Economic Times of India a day earlier.
“It seems to me it’s physically, humanly impossible for the U.S. to ever pay off its debt. They can roll it over and continue to play the charade, but the U.S. is bankrupt.”
U.S. ‘Looking Like a Banana Republic’
Congress—[had] to decide between two of the ugliest choices seen in a long time. Should they cut government expenditures and therefore cut aggregate demand at a time of a critically weak economy on the cusp, perhaps, of a double dip? Or should they do nothing and allow a technical default … Come to think of it, the choice was between technical default and looking like a Banana Republic, and technical blackmail and looking like a Banana Republic! Just different bananas perhaps?”
‘Debt Dramas and Crises Will Not Go Away Any Time Soon’
Two More Years of Interest Rate Heaven