Mohamed El-Erian : Japan Disaster could be a global tipping point

Mohamed El-Erian : Japan Disaster could be a global tipping point speaking on the phone to Bloomberg Television on Mar 17, 2011



Mohamed El-Erian : “Margaret What struck us and you just said it when we were discussing in our investment committee is how can you have a statement about the U.S. outlook on a Tuesday that follows a major catastrophe a few days earlier in the third largest economy in the world. And we that there were two interpretations. The one which we hope was the correct interpretation the correct motive if you like for the Fed is that the Fed simply did not have enough information. The material for its meeting was prepared ahead of the earthquake and the tsunami. There was not enough time to fully understand the impact on the U.S. economy. That is one interpretation and I hope it is the right one. The second interpretation is something that has been said by certain economists, which is that the impact of the Japanese disasters on the global economy will be transitory in the sense that they will be temporary and reversible. And our view is that it is too early to say that. We hope that is the case, but it is too early to say that. And we shouldn't simply assume it will have a transitory effect on the global economy. We should be analyzing in depth because this is a major development that has economic implications in addition to the horrible human suffering.”