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PIMCO's El-Erian On The Inability To Grasp The Seismic Changes Currently Occurring In The Developed World
We have now reached a point when a Senator has to write a well-intentioned letter to the very administration he serves, (whose sworn duty is to preserve the wealth of all of its constituents, not just Goldman Sachs), with a cautionary tale that continued lying to the general population combined with a culture of opacity and persistent fraud, will lead to a disastrous effect to the economy and to the very fabric of American society. Alas, in a society in which those being lied to extract a satisfaction as great, if not greater, from this process, than those doing the actual lying, this is not too surprising. Sticking our collective heads in the sand has traditionally worked miracles for resolving the bulk of this nation's problems. And with the public sector now demonstrating a preferential treatment for the financial space, at the expense of 99% of the remaining population, it has become obvious US citizens can no longer rely on the US government for procuring the truth. Furthermore, with China now a vassal owner of America via its undisputed creditor status, we may soon lose the protection the government is entrusted with affording its citizens in other realms, from enemies certainly domestic (mostly located in south Manhattan), and very possibly foreign. Yet, another voice of caution that has recently emerged, and whose message is critical to all, is that of Pimco's Mohamed El-Erian. The Pimco executive has written another very relevant Op-Ed in the Financial Times, "How to handle the sovereign debt explosion" which does not so much disclose new things, as capture the essence of the groundbreaking transformation that is currently occurring within the entire "developed" world, and more specifically, the denial that the vast majority of "experts" are exhibiting when faced with a previously unseen process of unprecedented significance.
While we recommend reading the entire article, the following section is of particular note:
We should expect (rather than be surprised by)
damaging recognition lags in both the public and private sectors.
Playbooks are not readily available when it comes to new systemic
themes. This leads many to revert to backward-looking analytical
models, the thrust of which is essentially to assume away the relevance
of the new systemic phenomena.
There is a further complication. Timely recognition
is necessary but not sufficient. It must be followed by the correct
response. Here, history suggests that it is not easy for companies and
governments to overcome the tyranny of backward-looking internal
commitments.
Where does all this leave us? Our sense is that the
importance of the shock to public finances in advanced economies is not
yet sufficiently appreciated and understood. Yet, with time, it will
prove to be highly consequential. The sooner this is recognised, the
greater the probability of being able to stay ahead of the disruptions
rather than be hurt by them.
Precisely the same argument can be brought against Ben Bernanke who in numerous public appearances saw no threat of the bubble bursting in 2005-6, and who, unfathomably, sees no threat of a massive-liquidity bubble explosion currently.
The question we need to ask is shy are we getting this critical insight from a member of the private sector? Why is nobody in government addressing this critical issue and bringing the population's attention to this most material of systemic patterns. Instead we bicker over the end of civilization as we know it should Goldman collapse (it won't: it will simply mean that Goldman's 23,500 staffers will finally have to do an honest day's work for once in their lives if they want to get paid), or how many quadrillion it will cost for the government to nationalize healthcare, and every other industry. Yes- we should be getting this warning from the Federal Reserve, and from those who hope to become the Fed's new members - a position which once upon a time was considered an admirable accomplishment yet now puts you roughly in line with the lepers, hookers, wifebeaters and prison rats in the social hierarchy. We should but we don't - all we get from this government is silence. Instead we get a daily barrage from government bought cheerleaders who preach that all is well, and that precisely the warnings of El-Erian and so many others are to be ignored. And the crowning glory of how far our society has fallen is that the vast majority among us chose to believe these lies, and gladly hand over money to buy another share of Lehman brothers which is in liquidation yet still trades.
And somehow Bernie Madoff is in jail for doing just what the government does to us every single day.
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Why do you report this "noise" when one of the greatest actors of our generation has tragically died? Priorities. Get them.
very true. When the entire global economic system collapses, it probably wouldn't even make Twitter's trending topics.
exactly! I doubt we'll see "default" anytime soon on Twitter trending topics!
Based on all the headlines, Lost Boys was the zenith of his career and the role that history shall remember him by.
Fitting that a movie about a sinister vampire interjecting himself into the family of a single mother new to town is such a timeless plot.
you sir are not genX... you are taking it literally... go watch The Crow and Heathers and report back
Have you tried the fabulous new Organic Wholemeal?
Look a Clown!
It's okay for the cops to lie to you, but if you lie to the cops, it's a felony.
It's okay for the State to take money from you by force (under the threat of kidnapping [i.e., imprisonment]), but if we kidnap and rob someone, it's somehow "wrong."
It's okay for the cops to see kiddy porn, but if your computer becomes infected with a virus that does the same, you're the one who's going to prison.
As my lawyer said, "The law isn't about justice."
It is not a felony (or a misdemeanor or a citation) to lie to a cop.
They can get you for giving a false statement to police...
I believe it is your obligation to lie to the police, the government, and all the rest...said Jesus, render Caesar's things unto Caesar
trav....as long as you don't sign anything attesting to the truth of what you say you have nothing to fear from Caesar.
FLASH !
It's 2010 you don't say anything to any law enforcement officer anywhere, for any reason, ever.
You hand him a card along with your ID that says;
"If it is your intention to question , detain or arrest me, please allow me to call an attorney immediatly."
No change in facial expression, no eratic behaviour ,no comments ....NOTHING.
You live in a police state..act like it.
woah man thats some cold, hard shit, but so unfortunately true and necessary in todays america.
tasering 90 yr old grannies and 6 yr old kids, for fux sake.
i have a family friend went to the US 2 months ago, with a letter from an aussie doctor saying please inject drug xyz into him every 2 weeks.this is to prevent his paranoid schitzophrenia from returning.
a US doctor administered him the drug in his office (the guy doesnt even carry this drug on him), then the police put my family friend in jail for not declaring at customes that he uses this drug. Theyve put him in prison - and are denying him the very drug that he needs.
He's going to go insane again in a very short time
A paranoid schizophrenic? There are two or three openings at the FED that need to be filled.
Uh, yes, it is: Lying to a cop is either "interfering with the duties of a peace officer"--a misdemeanor, or "obstruction of justice"--a felony. Making ANY false statement to the police is a crime. This is one of the biggest problems in criminal justice: Even if you answer honestly, they can accuse you of lying, and now you're facing a felony charge--not for an "actual" felony, but for "lying" about it.
As one example, Martha Stewart wasn't convicted of securities fraud, she was convicted for lying to authorities investigating her securities activities.
CNBC Breaking News:
Obama declares US bancrupt, heading to Kenya for unscheduled state visit
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In Europe we call it broken.
Make your case,if not be easy.
You are amazing stay there!
But do not
go CNBC etc. Do not react on the wire!
Be Zerohedge.
p.s. Who the fuck is eljirain?
Like a rolling stone!
Keep your compass.
You may want to read this. Upcoming politics in New York...
http://www.dunwalke.com/sidebars/andrew_cuomo.htm
"My recommendation, to both New Yorkers and members of the US financial and legal establishment concerned with America’s ability to attract capital in global markets, is that they ensure that the unanswered questions relating to Andrew Cuomo’s dealings with Andrew Farkas and Insignia and any other HUD-related
special interests that have financed him and his campaigns be investigated and answered before Andrew Cuomo is permitted to hold public office again."
true dat
China just posted higher than expected CPI number at 2.7%. What a shocker. Here comes the tightening. When China says there are going to tighten, they phucking tighten. Its not like this token 100 mil reverse repo bs here.
POINT OF ORDER HERE FOR A FUCKING SECOND...
Tyler, et al., and that wonderful whore Marla...
Do you not find it odd that PIMCO, the very "institution" that would have likely gone bk if the debt of FNM and FRE was not backstopped AT PAR by the federal government, all of a sudden expresses concern at public debt levels.
Well here's my suggestion Mohammed, when you leave your mansion in the morning, walk down to the limo, say hello to your f'ing driver, and then, when perusing the six newspapers at the back of the stretch, call up Uncle Sam and tell him that you don't need the government to guarantee all that debt, mark FNM's and FRE's books to market TRUE MARKET and then let's see where we stand.
TD, in your endless wit, let's take some well-deserved jabs at one of the biggest whores of the govt. tit, PIMPCO itself.
It's akin to the whore receiving antibiotics for her STD preaching to the other whores that eventually they're going to suffer for their sinful ways.
GET OFF THE F'ING CRUTCH AND THEN PREACH.
Otherwise, he is exactly right.
Absolutely!
But I'd go further... give back the gains you took from productive members of society when YOUR bad bets went wrong, and then you may speak. Until then, do us a favor and keep your mouth shut, and crawl back into a hole in the ground suitable for vermin like you.
Am I missing something? Didn't Bill Gross just pen an article that he sold all of his MBS to the Fed and purchased Treasuries? Sounds like smart business to me if the Fed is stupid enought to pay par who wouldn't unload the worthless pieces of Sh!t. I think what they are saying now is they are going to be unloading the pieces of Sh!t Treasuries and buying emerging market bonds, you know from the likes of Brasil and such, I guess they run a tighter ship than the US.
Amen, I'm sick of hearing this guy.
TD, in your endless wit, let's take some well-deserved jabs at one of the biggest whores of the govt. tit, PIMPCO itself
Write it and source it well then... Perhaps you might be able to provide some insights others would find worthy of exploring, but I doubt it since your commentary is seriously lacking in this and many other qualities.
There may always be "new systemic phenomena", but capitalism has a long and dubious history involving run-amok credit, its handmaidens greed & corruption, and the subsequent crashes. And without fail, when the bubble bursts its effects are devastating and this time will be no different. And what to do when the hyperinflationary depressions take hold in many economies? Gold & guns my friends, gold & guns.
"continued lying to the general population" is Propaganda
This strategy, of relying on propaganda to mask their true intent, has become inevitable, given the strategic corner the Obama Adminstration has painted itself in. And this campaign has become increasingly desperate as the inconsistency between the Adminsitration’s “product positioning” and observable reality become increasingly evident.
http://www.nakedcapitalism.com/2010/03/the-empire-continues-to-strike-ba...
DAmn it, where's my comment.
It was funny and true.
just like your lost wealth!! gone!!
The reason is obvious. The Obama administration wants his healthcare bill to pass. If they were to admit just how broke we are, and just how precarious our position is, the already unpopular bill's chances would plummet to zero. They have to get control before they admit there are deep, structural problems. But control, by them, always comes first.
El-Erian takes a moment to hold the mirror so it can be said later that PIMCO warned about these outcomes thereby retaining a seat at the table. Amazing that this article wasn't published a year and a half ago. The fact is more and more among the well connected are starting to sing from the same hymnal......
The very definition of the Black Swan is what is obvious in retrospect. This is an article written in retrospect. it also emits from a business that has dumped US assets and gone long EM. I'm not saying he is wrong, merely that he's got an interest in having us all sign up to his way of thinking.
I think it would be helpful to summarise the positioning of people like this when quoting them. After all, we all know Soros described gold as a bubble one day and bought the next.
So are such articles market manipulation? No, because we all have brains to think for ourselves right? Right....?
So where is PIMCO investing now? Detroit Property Tax Auctions? There is something a little sideways about Bill Gross and Co., I will listen with a grain of salt.
Ya, he is really afraid now, becoz pimco and parent Allianz bought a ton of european (esp cherman) sovereign debt and UST in part 1 of the crisis. Not long ago, Gross was singing praises of european soveriegn papers. They even bought some Abu Dhabi papers during the dubai part 2 crisis and some greek papers. Now they are starring at a black hole if this crisis enter the eye of the storm of sovereign defaults. So when a firm faces certain death (or a man joblessness), people do become honest, even if for only a short while. Whether you hate pimco for their ill-gotten profits or for other reasons, you must see the wood not the trees: the western world's credit market would be a really sad place when we get to the end in the next few years, which is almost a certainty now, as would the rest of western society as we know it. The man is trying to leave something behind for history to remember you.
Comments by El-Erian are always vacuous and/or self-serving. His pitch is that the world has become so uncertain and unpredictable that no mere mortal can manage money. PIMCO to the rescue. Give your money to PIMCO to manage. Only they have the necessary expertise.
This guy is the Wizard of Oz. He and Summers did such a great job on Harvard that they had to run to other jobs.
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