With debt overwhelming the eurozone and investors fleeing or demanding sky-high yields, PIMCO’s Bill Gross says it would cost the European Central Bank some 5 billion euros ($6.6. billion) to lure investors back.
Without concentrated peripheral bond-buying at that rate, says Gross, would-be investors will maintain their “no trust zone” and continue to be skeptical of policy moves designed to woo them back into the bond market.
In his December Investment Outlook, Gross (left) says that with nations bound together in a common currency and Germany pretty much calling the shots, weaker countries can’t print-and-spend their way out of their fiscal woes, as can the “cleaner dirty shirts” like the U.S. and the U.K. Calling the eurozone’s problems global and secular in nature, he warns that growth will be stunted, interest rates will stay low and investors will remain disappointed as returns fail to live up to their expectations.