So when we look at the U.S., yes, there was a public finance issue, but it’s certainly nothing like Greece.So when PIMCO looks at this situation, do you – are you short of U.S. treasuries? Are you selling U.S. treasuries because you worry that the U.S. does not have the political will?As you say, in our case, there are many solutions. I mean Greece’s case, there really isn’t a solution – there isn’t a good solution.Ugg evanna We have many solutions, just no political will, at least, nor apparent political will to deal with it. Does that make you despair enough that you guys are selling U.S treasuries? We find better value in government bonds outside the U.S. right now, so it’s an issue of valuation. You should buy or sell based on price. U.S. bonds have benefited enormously from the Federal Reserve buying them under the QE-2 program, which ends at the end of June.
Put another way, the Fed has been buying about 70 percent of how much of treasury issues. A basic rule as an investor is don’t buy something unless you know who else is going to be buying.Ugg evanna So when we look at treasuries, we see the big buyer stepping away from the market for certain. And we ask the question who else is going to be buying at these levels and we can’t identify another buyer of the size of the Fed.How much time do you think the U.S. has to put its house in order?I think the U.S. – in terms of immediate valuations – I think the end of the QE-2 program is a major event that the market is underestimating. Longer term, I think we have two to three years.Fareed, as an investor, it’s very important to recognize what your alarm clock is.
You know, all of us would like to wake up just as the alarm clock is going off, but a lot of us cannot.Ugg evanna A lot of us have type one and type two errors.Type one is you wake up before your alarm clock and you just sit there and you’re early, but at least you don’t miss the alarm clock.The other alternative is you oversleep and you sleep through your alarm clock. Our preference has always been wake up earlier than later.Do you think that a default, even if it is temporary and does a six-month extension, but an actual default on the debt limit would be a big event for the markets? It would be and simply because of the technical linkages. So if the U.S. would not only fail to get agreement on the debt ceiling, but end up cutting more than just expenditures on transfers and expenditures on federal workers, but actually not meet a debt payment, then we would be in the land of the unpredictable.