NEW YORK – Bill Gross, founder and co-chief investment officer of bond giant PIMCO, said in his October investment outlook that the United States could resemble Greece if it does not cut spending and raise taxes to tackle its debt.
Gross said that the United States must cut spending or raise taxes by 11 percent of gross domestic product over the next five to ten years in order to preserve its role as financial safe haven.
"If we continue to close our eyes to existing 8 percent of GDP deficits, which when including Social Security, Medicaid and Medicare liabilities compose an average estimated 11 percent annual 'fiscal gap,' then we will begin to resemble Greece before the turn of the next decade," Gross wrote.
Gross, who has referred in past outlooks to the unsustainable debt pile the United States continues to accumulate, added that stocks will be "singed" and bonds will be "burned to a crisp" if the United States does not handle its debt, and that "only gold and real assets will thrive."
(Reporting by Sam Forgione; Editing by Kenneth Barry)