In his October Investment Outlook, PIMCO's Bill Gross offers a helpful analogy to understand today's credit markets:
"Credit markets are based on trust and when there is no trust, markets can freeze up. My Co-CIO Mohamed El-Eiran has a great everyday example. Imagine yourself at the drive-thru ordering a Big Mac. At one window you order and pay, at the other -- 20 feet ahead -- you pick up your lunch. What if you thought that after paying at the first window, your 1000 calorie sandwich might not be waiting for you a few seconds later. You might not pay; business as usual might not take place. That is what is happening in the credit markets. They are frozen in 'McFear.'"
For additional insights from PIMCO on the capital markets, please click here.