For a vivid display of the current economic conditions, Pimco's Bill Gross harkens back to a 1981 Billy Joel song to assert that we're all living in "Allentown" now.
Joel's paean to the struggling Lehigh Valley community laments that what used to be the heart of American steel production in the Allentown/Bethlehem region is now the home of "the Pennsylvania we never found."
Similarly, Gross told CNBC Thursday, the nation is mired in an economic slump that will be hard to fix considering a mindset that is not looking toward the future.
As a result, investors are going to continue to turn their attention to putting their money in other countries. Equity mutual fund flows have been leaving the US for most of the past six months, while emerging market funds have been growing.
Gross said Pimco is directing its clients to emerging markets in Brazil, China, India and elsewhere.
"Allentown, Bethlehem and to an extent the entire world faces a similar problem that is affecting Allentown (which is) lack of aggregate demand. That simply means our credit cards are maxed out, we can't spend," said the co-CEO of Pimco, which runs the largest bond fund in the world.
"We're simply focusing on consumption as opposed to improving education, infrastructure, the future—the 21st century as opposed to the 20th century," he said.
The auto industry serves as one example of what the US faces: While sales have trended higher lately, they are far below historical norms and likely to stay that way.
As Joel sang, "We'll we're living here in Allentown, and they're closing all the factories down." President Obama spoke in the region a year ago as part of his economic "listening tour."
Gross said the situation is similar "in terms of Bethlehem, Allentown that they've closed plants and that the workers that we're used to employing the past three, four and five years probably aren't going to come back to those levels. That's where I suggest we need a 21st century economy. That's something that President Obama and certainly the Congress failed to address in the past several years."