Financial markets have failed to price in the remaining problems that bedevil a long-term economic recovery, Pimco’s Mohamed El-Erian told CNBC.
“You come to the conclusion that the market simply hasn’t priced in the reality of what we talk about every single day,” said El-Erian, who helps run the world’s largest bond fund.
“What you’re getting is a recovery phase, a healing phase that was artificially created,” he said. “The history of crises is very clear. They expose structural problems and when you look at the structural problems you need a structural response, and so far we’ve only had a cyclical response.”
A lasting recovery will only be built on real growth and not that which is stimulated by government, he said.
Source: CNBC, January 15, 2010.
