Investment Outlook Bill Gross | March 2009 http://www.pimco.com/LeftNav/Featur...ll+Gross+March+2009+Hairy+Lips+Sink+Ships.htm Question: What do you think about nationalizing the banks? Answer: I think Roubini, Dodd and Greenspan havenât thought this one through. The U.S. isnât Sweden, and not just because our blondes arenât au naturel. Their successful approach revolved around a handful of banks but we have 7,500, as well as many S&Ls and credit unions, which would have to be flushed into government hands. Regulators are overwhelmed as it is, and if you thought Lehman Brothers was a mistake, just standby and see what nationalizing Citi or BofA would do. Our banks remain at the heart of domestic/global financial transactions and daily clearing, while those Scandinavian banks were not. PIMCO would not dispute the need to further capitalize systemically important banks via convertible bonds held by the government, which unfortunately dilute shareholdersâ interests. To go further, however, and âhaircutâ senior debt or even existing preferred stock similar to that issued via the TARP would create an instability policymakers should not want to risk. In turn, forcing creditors to take haircuts would undermine other financial sectors such as insurance companies and credit unions. The goal of future policy should be to recapitalize lending institutions while maintaining the basic infrastructure of credit markets. Outright nationalization and haircutting of creditors will do just the opposite. Question: Enough already about this still confusing crisis â how should I invest my own money? Answer: Iâd give you an invitation to our PIMCO client conference next month in Newport Beach if you werenât so busy here in Washington. Its theme is titled âEvolution or Revolution â The Future of Investing.â No golf or vintage wines though â just cheeseburgers and interesting conversation. But come on out if you care. Iâm sure weâll stress our current theme of âshake hands with Uncle Samâ â buying agency mortgages, and other developing areas of government policy support in the credit markets. But weâll talk about the future of stocks too, leveraging and deleveraging, globalization and deglobalization, and why safe secure income may be the most desirable investment in this evolving economic and financial crisis. Tell you what, Madame Congresswoman, if you canât make it Iâll write it up in next monthâs Investment Outlook.