Jul 26, 2008
The Unthinkable Has Become Thinkable
The video above is a great interview between Charlie Rose and Mohammed El-Erian of PIMCO.
El-Erian gives us his views on the a couple of big transformations that are changing our financial system
1. The engine of growth is shifting from the US to the rest of the world.
For a long time the global economy has been fueled by the US consumer, it’s now tapped out. India and China are emerging to take our place along with other economic powers.
2. Poor countries are financing the rich.
He specifically criticizes how Americans spend, using our homes as “ATM” machines to finance our spending and purchase goods beyond our means. Conversely, the countries that emerged from financial crises saved.
One other aspect that I enjoyed is El-Erian’s criticism of the G7 and how because of their bias in favor of western nations, they ignore emerging economic powers like China and India. This is unfortunate because those two countries are shaping up to be important long-term players in our global economy and should be included when coordinating changes in policy.
Recent Comments