Pimco: Get out of US, Europe. Buy Emerging Market Debt.

The long term consequences of this whole financial crisis, will be a fiscal crisis at the sovereign level.  There is already indications that this is leading to a great money shift.  Investing in emerging markets is a no brainer.  In the emerging market debt, there is higher growth, lower debt to GDP levels, lower budget deficits and much lower unfunded liabilities, which in the US alone is up to 104Trillion per the Dallas Fed. 

This is leading to a Great Money Shift away from the developed countries and into emerging countries.  Pimco is the latest to publicly support the Great Money Shift, via Bloomberg:

Investors should buy emerging- market debt rather than bonds of developed countries because advanced economies are poised for a period of slower growth, according to Pacific Investment Management Co.

Increased taxation, regulation and government intervention in business combined with financial companies’ efforts to reduce risk after the credit crisis will drive investors from developed economies, Brian Baker, Pimco Asia Ltd.’s chief executive officer, said in Hong Kong yesterday.

“This all leads to a shift away from growth being driven by the G3 countries to a more balanced economic world,” Baker said at the FundForum Asia conference. “Investors need to recognize that the investment opportunities are not going to necessarily be in the U.S., the U.K and Europe any longer.”


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