Rise of the Deflationists! Pimco’s Bill Gross Joins Bullard and Krugman

Bond fund manager Bill Gross, a man who does some of the country’s most influential financial thinking in darkened conference rooms, and while standing on his head doing yoga, has added his name to the list of smart people who are a bit panicked about deflation. The Journal reports that the head of the gargantuan Pimco Total Return Fund, which commands about $237 billion, is now firmly in the Paul Krugman camp, along with heavyweights like GMO’s Jeremy Grantham, Appaloosa’s David Tepper and Pennant’s Alan Fournier.

“Deflation isn’t just a topic of intellectual curiosity, it’s happening,” he said. “It’s an uncertain world that’s tipping toward deflation.” To prepare for a price slump, Mr. Gross has bought so much government debt that Treasury bonds now make up more than half of his Pimco portfolio, compared to about a third at the end of March.

Alan Greenspan is getting a little anxious, too! On NBC’s Meet the Press yesterday, he said the job market is doomed. “There’s nothing out there that I can see which will alter the trend or the level of unemployment,” he said. Mr. Greenspan’s dark words followed some stormy ideas from the St. Louis Fed president. (Barney Frank, meanwhile, is more relaxed.)

Mr. Krugman is trying not to gloat.