Gidoen Osborne's economic strategy has been savaged by the head bond vigilante Bill Gross, branding it "suicide", reports Left Foot Forward's Cormac Hollingsworth.
Remember this headline last year in the Daily Mail?
“Don’t invest in Britain: The UK economy sits ‘on a bed of nitroglycerine’, investors warned”
That was Bill Gross, as co-CEO, co-CIO of Pacific Investment Management (PIMCO) – the world’s biggest bond fund – he’s the biggest bond market vigilante out there.
He’s been a cheerleader for cutting deficits as quick as possible; he said a year ago:
“The UK is a must to avoid. Its gilts are resting on a bed of nitroglycerine.”
And in April this year, Mr Gross took a similar stance to the US bond market, but in addition to selling all his holdings he took the unusual step of selling more and went short.
Since then, growth has collapsed worldwide leading to record low yields in world bond yields. Mr Gross’s view (£) now is that it was a “mistake” to bet so heavily against the US markets.
We’ve been saying that the bond market is making it very clear we should be worried about growth and the deficit; Mr Gross’s language is always more pithy and to the point, telling Bloomberg Radio today:
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“To do it [cut government spending] right now is almost suicidal.”