The
New York Times finds two bond vigilantes who are, strangely, now enough steeped in reality to be
changing their tune.
Austerity? Yes, say Bill Gross, a Republican, and Mohamed El-Erian, a Democrat, the chief investment officers of the giant bond fund Pimco. They support curbs on entitlement spending.
But that is for the long term. Right now, they argue, the government needs to arrest America’s dangerous economic slide.
In fact, their prescriptions are more aggressive than any the White House has proposed or appears to be contemplating for President Obama’s planned speech in September. Among them: direct federal hiring to reduce unemployment and increase lagging demand.
Mr. Gross, a billionaire acclaimed for his early warnings that the dot-com and subprime mortgage bubbles would burst, said, "Capitalism in its raw form can’t pull us out of this hole."
That bit about eventual entitlement cuts almost reads like they just threw it in there to maintain credibility. But it's an astounding wish list of government action, beyond direct hiring, these two are advocating: making mortgage refinancing easier and cheaper; real education reform; job retraining program; fixing the nation's crumbling infrastructures; and raising taxes on the wealthy.