Mohammad El-Erian, the co-CEO of the world’s largest bond fund PIMCO (which benefited tremendously from taxpayer largess during the crisis), has some unsettling thoughts about the health of the US government market.
Specifically, he tells Reuters, he’d rather own German Bunds (bonds) than their US equivalent, given the amount of debt the US is taken on.
(Remember, Germany sits in the centre of a massive Eurozone storm, and arguably the debts of Greece, Portugal, Spain et. al. could soon find their way onto the Deutsch national balance sheet)
El-Erian: “As we stand today, we prefer to take interest rate risk like government bonds in Germany which has much better conditions than in the United States… When it comes to currency risk, we like to take it in places which have the strongest fundamentals. What we are focusing now on is to see where the strongest fundamentals,”