'New normal' doesn't feel so good

In his latest newsletter, Pimco's Bill Gross expects those paltry investment returns to be with us for quite a while - even if not all investors have accepted that glum reality.

They are faced with 2.5% yielding bonds and stocks staring straight into new normal real growth rates of 2% or less. There is no 8% there for pension funds. There are no stocks for the long run at 12% returns. And the most likely consequence of stimulative government policies that strain to get us there will be a declining dollar and a lower standard of living.

The reference to pension funds is important because most all the plans (including those for the city of L.A.) continue to base future returns on that 8 percent level. If they turn out to be well below that percentage, as is likely, the city could be stuck for the balance.