Outside the Box

What Do They Know?

John Mauldin

October 1, 2007

We are in a world far different than the one I learned about in economic text books. As I have written, the shadow banking system of hedge funds and CDOs, CLOs, PIPES, etc. have created a new financing economic reality far different than the traditional banking system was just 20 years ago. Does the Fed have the tools in its toolkit to deal with the new reality?

This week, Bill Gross of Pimco fame looks at the problem in a manner that is truly Outside the Box. Bill Gross has been called "the nation's most prominent bond investor," by the New York times, managing Pimco's Total Return Fund, the world's largest bond fund.

Enjoy your week.

John Mauldin, Editor
Outside the Box

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What Do They Know?

By Bill Gross

If you're struggling to find something that symbolizes the transition from the old-fashioned markets of yesteryear to the seemingly inexplicable wildness of today's derivative-driven, conduit-imploding financial complex, you need look no further than the contrast between old television's Louis Rukeyser and thoroughly modern Jim Cramer. Calm, stately, with deep-throated baritone certainty, Rukeyser was the spokesman for aging boomers who wanted assurance that a nostril-snorting bull market would…

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