Gross: QE could be a 'colossal flop'

Bill Gross, manager of the world's largest bond fund, says QE could 'flop' if the private sector fails to pick up the slack when the government stimulus is removed.

Gross, founder of PIMCO, says in his latest commentary a successful handover from the government to the public has yet to be accomplished, and he questions who will buy up treasuries when the Federal Reserve eventually steps back. He says: "If on 30 June 2011 (the assumed termination date of QE2), the private sector cannot stand on its own two legs - then the QEs will have been a colossal flop.' He also warns both bond yields and share prices are at risk because of the artificial support being provided by the Fed. "Bond yields and stock prices are resting on an artificial foundatio...