The economic outlook for 2013 remains clouded by the on-going fiscal cliff talks in Washington and overall government debt levels here and abroad, Loomis Sayles Vice Chairman Dan Fuss, said in a recent P&I interview.
"The problem is real, it is big, it is growing and it is understated,” he said.
There are sizable side effects from the government's borrowing, Mr. Fuss warned. His biggest concern is inflation, but he doesn't expect hyperinflation.
Although inflation is a concern, Mr. Fuss said not to worry about the issue of currency depreciation because other reserve currency nations are having similar issues as the U.S.
His concerns over government borrowing extend to the debt of other developed countries, however, Mr. Fuss said he remains open to investing abroad so long as a country's debt is denominated in its own currency.
He's particularly bullish on debt from Australia, Canada and the Scandinavian nations.
When it comes to Europe, Mr. Fuss said he prefers European corporate debt to sovereign debt.
"It's not the bottom" in Europe, Mr. Fuss concluded.