Submitted by Taps Coogan on the 14th of November 2018 to The Sounding Line.
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Allianz chief economic advisor Mohamed El-Erian recently spoke to BBC’s Hardtalk in an extended interview in which he discussed a wide range of topics including: the state of the global, US, and European economies.
Mohamed El-Erian:
“The most important theme today for the global economy is divergence. Most of the time advanced economies are correlated. They go up at the same time, they slow down. Today we are seeing something very peculiar. The US is accelerating while Europe is slowing down. So, you are seeing a gap evolve which raises two really interesting questions. One is what happens during the divergence and secondly, how does the divergence proceed? Is it the US that’s pulled down by the gravity of the rest of the world or does Europe get its act together and join the US? So if you ask me for Europe, is the probability of a recession 50% next year, I tell you yes. For the US no… They (Europe) are not undertaking the fundamental hand-off which is what economists call going from cyclical growth to secular growth. So, think of a patient that ended up in intensive care. That’s where the Eurozone was in 2012, ’13, ’14. There were major questions whether it would even survive. It came out of intensive care, ended up in a hospital room, and now is out. And the initial reaction is to say ‘wow the patient can now walk’ and you got a lot of confidence that Europe was picking up, but when the patient is structurally impaired, which is what the Eurozone is today, it can’t sustain its walk for a long time.”
There is much much more, so enjoy the interview above.
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“It may happen or it may not happen” … great insight.
I wish there were an organization that racked these modern day charlatans and snake oil salesmen whose primary skill seems to be being believed in spite of saying nothing by way of many words and being wrong when they do.say something.
IMO, anyone who is telling you they know what is going to happen is a charleton. The point is not to make predictions and be right 100% of the time. The point is the know enough about the system to be able to reasonably assess the relative probability of outcomes and in your explanation of why you believe something, help other people understand how things work. In that regard I think El-Erian does a pretty good job. But that’s just how I see it.