Toro
Diamond Member
The head of the world's largest bond fund is telling the politicians to raise the debt limit unconditionally.
Warning to Washington: Don’t mess with the debt ceiling - The Washington Post
To raise or not to raise the debt ceiling; that is the question: Whether tis nobler to suffer the slump and arrows of default today or in some distant future. Oh, bards of Washington, give us your answer.
This Shakespearean financial dilemma hangs in the balance between now and a somewhat theoretical Aug, 2, but I can tell you what an unbiased investment manager thinks: Dont mess with the debt ceiling. Raise it unencumbered if necessary. I say unbiased because my credentials have become very public over the past several months. Pimco owns very few Treasury securities, and its clients would theoretically benefit if yields rose on an under-owned asset class that was technically in default. But default would still be a huge negative for the U.S. and global financial markets, introducing fear and unnecessary volatility into the economy and global trade. The market situation might resemble what happened after Lehman Brothers collapsed in 2008. ...
The answer to our modern-day Hamlets question then, is that there should be no question at all. The debt ceiling must be raised and not be held hostage by budget negotiations. Dont mess with the debt ceiling, Washington. Bond and currency vigilantes will make you pay.
Warning to Washington: Don’t mess with the debt ceiling - The Washington Post