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Strategies & Market Trends : Mish's Global Economic Trend Analysis
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To: mishedlo who wrote (19565)12/27/2004 6:47:05 AM
From: Crimson Ghost  Read Replies (7) of 116555
 
PIMCO director pushes for DRASTIC policy changes to deal with global and domestic imbalances including the partial repudiation of US debts owed to foreigners.

10:42p ET Sunday, December 26, 2004

Dear Friend of GATA and Gold:

Chris P. Dialynas, managing director of Pacific Investment
Management Co. (PIMCO), the big bond house, has just
written a comprehensive study of the international financial
situation, "Trouble Ahead, Trouble Behind." It purports to
outline a remedy to the explosive imbalances in the world
economy.

Dialynas' program includes:

1. Cut by 15 percent across the board all U.S. social
spending programs.

2. Increase U.S. tax rates.

3. Increase incentives to save in the United States:
consumption taxes.

4. Devise capital controls such that capital cannot be
exported out of the United States.

5. Debt renegotiation/forgiveness by countries with
cumulative high trade surplus with the United States.

6. Change the Federal Reserve Board's objective
function to include a constraint on the trade deficit.

7. Prohibit the sale of highly sensitive technology and
defense to all foreign countries.

8. Revalue China's currency to U.S. dollar by 40
percent.

9. Enact targeted protective tariffs if needed.

10. Renegotiate the World Trade Organization.

11. Prohibit the Fed from purchasing bonds from
foreign holders of U.S. debt.

Conscientious as Dialynas is, he may succeed mainly
in demonstrating the likely political impossibility
of any escape from disaster -- and in raising once
more the question of why Pimco, which repeatedly
generates analysis like this, arguing that U.S. debt
renegotiation/repudiation is inevitable, should be
so heavily invested in, of all things, U.S.
government bonds.

You can find Dialynas' study at the Pimco site here:

pimco.com
tm

Or try this abbreviated link:

tinyurl.com
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