Tags: El-Erian | US | Economy | Stall

Pimco's El-Erian: US Economy Runs Risk of Hitting Stall Speed

Friday, 21 Oct 2011 03:05 PM

The U.S. economy is moving so slowly that it's running the risk of hitting stall speed, where like an airplane, it's moving too slowly to generate enough lift to keep it aloft and ends up stalling and plummeting, says Mohamed El-Erian, CEO of Pimco, the world's largest bond fund.

Policymakers, meanwhile, would serve the country better by emulating the late Steve Jobs and find multiple ways to solve problems instead of wasting time finger pointing and bickering.

"The private sector alone cannot and will not counter the risk of stall speed. What is desperately needed is better policymaking. Specifically, policymakers must be open and willing to understand the unusual challenges facing the US economy, react accordingly, and possess sufficiently potent policy instruments," El-Erian writes in a Project Syndicate column.
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"This is where the insights of Steve Jobs, one of the world’s best innovators and entrepreneurs, come in. Jobs did more than navigate paradigm shifts; he essentially created them," El-Erian said.

MohamedEl-Erian200ap-.jpg
Mohamed El-Erian
(Associated Press photo)
"He was a master at converting the complicated into the simple; and, rather than being paralyzed by complexity, he found new ways to deconstruct and overcome it. Teamwork was an obligation, not a choice. And he eschewed the search for the single 'big bang' in favor of aiming for multiple breakthroughs."

Otherwise, a bad economy is going to get even worse.

"The longer the policymaking impasse persists, the greater the stall-speed risk for an economy that already has an unemployment crisis, a large budget deficit, many underwater mortgages, and policy interest rates floored at zero."

One policymaker, however, says the economy will pull through.

"Let's not talk ourselves into believing that enduring weakness or recession is inevitable," says Atlanta Federal Reserve Bank President Dennis Lockhart, according to Reuters.

"Much of the incoming data have exceeded most forecasters' low expectations."

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The U.S. economy is moving so slowly that it's running the risk of hitting stall speed, where like an airplane, it's moving too slowly to generate enough lift to keep it aloft and ends up stalling and plummeting, says Mohamed El-Erian, CEO of Pimco, the world's largest bond...
El-Erian,US,Economy,Stall
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2011-05-21
Friday, 21 Oct 2011 03:05 PM
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