WHEN: TODAY, MONDAY, AUGUST 8TH
WHERE: CNBC’S “SQUAWK BOX”
Following are excerpts from the unofficial transcript of a CNBC interview with PIMCO Managing Director Neel Kashkari. All references must be sourced to CNBC.
KASHKARI ON THE U.S. GOVERNMENT’S BORROWING COST:
"IF YOU LOOK AT THE U.S. DEBT DOWNGRADE IT IS GOING TO TAKE WEEKS OR MONTHS, EVEN IN THE YEARS TO FULLY UNDERSTAND WHAT IT MEANS IN THE MOST EXTREME CASE FOR EXAMPLE HOW SOVEREIGN DEBT HOLDERS CHANGE THEIR BEHAVIORS AND START DIVERSIFYING AND START INCREASING THEIR DIVERSIFICATION AWAY FROM TREASURUIES AND WHAT THAT DOES TO THE U.S. GOVERNMENT'S BORROWING COST."
KASHKARI ON THE U.S. NOT BEING AAA TODAY:
"IT IS JUST A MATTER OF TIME THAT MOODY'S AND FITCH FOLLOW S&P'S LEAD. I THINK ANYBODY THAT ANALYZES THE U.S. DEFICIT SITUATION AND OUR TRAJECTORY HAS TO CONDCLUDE THAT WE ARE NOT TRULY AAA TODAY."
KASHKARI ON THE DEMOCRATS AND REPUBLICANS:
"UNTIL REPUBLICANS AND DEMOCRATS SHOW AN OUNCE OF BACKBONE AND ACTUALLY DO WHAT IS IN THE INTEREST OF THE AMERICAN PEOPLE RATHER THAN WHAT IS IN THEIR OWN IMMEDIATE POLITICAL INTERESTS. I CAN'T ARGUE WITH S&P'S CONCLUSION."
KASHKARI ON CHINA:
IT ALMOST CERTAINLY IS A WAKEUP CALL TO THE MAJOR HOLDERS OF TREASURY DEBT. THE CHINESE ARE LOOKING AT THEMSELVS IN THE MIRROR TODAY AND SAYING 'OH MY GOD WE ARE TAKING MUCH MORE RISK THAT WE DIDN'T REALLY APPRECIATE, MAYBE WE NEED TO DIVERSIFY AWAY FROM TREASURIES' MAYBE WE NEED TO DO THAT MORE QUICKLY"
KASHKARI ON SPREADING RISK:
"WHY DO YOU WANT TO MAKE AN UNDIVERSIFIED BET JUST ON THE DOLLAR, WHEN YOU CAN SPREAD THE RISK AROUND AND THAT WAY NO ONE CURRENCY IS GOING TO DOMINATE YOUR RETURNS."
KASHKARI ON THE EURO:
"THE GOOD NEWS IS THAT THE ECB IS NOW USING THEIR BALANCE SHEET TO SUPPORT SPAIN AND ITALY, SUGGESTING THAT THEY ARE WILLING TO BE THE LENDER OF FIRST AND LAST RESORT IF THAT IS WHAT IT TAKES TO PRESERVE THE INTEGRITY OF THE EURO, THATS A GOOD THING."
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