2009 Critical Issues Forum

I've been thinking about... delevering, deglobalisation and reregulation in the new reality




Despite early signs that some asset classes are beginning to show signs of recovery, any suggestion that asset markets are returning to "normal" must be met with the question "What’s normal?" PIMCO’s view is that the "new normal" will be dominated by three key elements: delevering; deglobalisation; and, reregulation. The impact for investors of these elements is an across the board rise in risk premiums, higher volatility and therefore lower asset prices for a majority of asset classes. Historical axioms - such as "shares for the long run," "house prices cannot go down" and the levering of asset structures to double or quadruple returns - must now be questioned. In short, our stereotyped conceptions of what makes money will continue to be seriously challenged .



Bill Gross

Managing Director