The False Economist

Thursday, May 5, 2011

Mohamed A. El-Erian: How Risky is the Global Economy?

Rather than just stretching his arms as wide as possible and saying "about this much" Mohamed A. El-Erian discusses four potential risks that the weakened global economy still faces. These are:

  • The world as a whole has yet to deal fully with the economic consequences of unrest in the Middle East and the tragedies in Japan.
  • The debt crisis in the EU's periphery.
  • Housing in the US is weakening again.
  • The increasingly visible fiscal predicament in the US: having used fiscal spending aggressively to avoid a depression, the US must now commit to a credible medium-term path of fiscal consolidation
It is not a pessimistic or alarmist view and makes for interesting reading. It would however have been helpful for El-Erian to include his opinions on what could be done to counter these risks.

This Project Syndicate article is taken from a lecture Mr. El-Erian gave at Princeton.

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