Neel Kashkari, managing director and head of global equities with PIMCO, delivered the closing keynote address of the 2012 FPA Experience on Monday afternoon. Kashkari, who served as senior advisor to then-U.S. Treasury Secretary Henry Paulson and later as assistant treasury secretary overseeing the Troubled Asset Relief Program (TARP), clearly had his work cut out for him with his presentation, "The Economic, Political and Investment Outlook."
He began by noting the four questions he would, in part, answer:
- Where did we come from (economically speaking)?
- Where are we now?
- What is the outlook?
- What does it mean for investors?
"Who could make a bad investment when we were going through the leveraged buyout of the U.S. economy through 30 years of adding debt?" he rhetorically asked. "We were all living large."
Comparing debt with gaining weight, Kashkari noted that if you add enough weight the heart eventually gives out.
"We had a financial heart attack. We saved and stabilized the heart but we're still laying on the gurney and we're still obese."
Investors, he noted, are beginning to pay down debt, as are businesses, yet government continues to add debt.
