PIMCO’s Advice To Policymakers: Support Asset Prices

Bond king Bill Gross, head of PIMCO has a simple message in his February Investment Outloook: support asset prices. According to him, that’s the only way we will make it out of this crisis:

Capitalism at its philosophical and practical center depends on credit, and while new loans can be and are being advanced via the banking system, it’s a much more difficult task to force shadow banks to lend. That lending depends on securitization which in turn depends on stable and eventually higher asset prices than currently exist. The original focus of the TARP was on asset prices, but the prior Administration quickly lost its way or perhaps its nerve. Like his Road Runner nemesis, Wile E. Coyote must now extend some infrequently used figurative wings to avoid the deflationary precipice below. Support asset prices. Beep Beep!