There are a lot of guys who write much and say little and one of those is Mohamed A. El-Erian, the Pimco-to-Harvard-to-Pimco-again-to-independent-financial-columnist guru.
One supposes it's their contract to produce so much verbiage in a certain time to justify their pay.
Divergence is a vague term and Mr. El-Erian conveniently blames it instead of the real culprits, central banks, in their zeal to prevent real restructuring that always involves real economic pain.
El-Erian writes in http://www.marketwatch.com/story/the-messy-politics-of-economic-divergence-2015-03-16
The world is increasingly characterized by divergence — in economic performance, monetary policy, and thus in financial markets. Global divergence has already contributed to stock-market volatility, unprecedented declines in advanced economies’ government bond yields, and outsize currency movements.
And the trend is not abating, placing increasing pressure on already-strained political systems.
The world’s systemically important economies can be placed into four categories.
On their own, currency markets will not bring about the growth-enhancing global economic rebalancing that is needed. Better policies at the national, regional, and global levels are also essential — and that requires better politics.
He then defines the four groups starting with the U.S. and India where, he claims, "economic recovery is "broadening, enabling them to overcome financial imbalances." If anything what the U.S.has done is creating more financial imbalances, many of them still hidden in the shadowy world of new regulations that as yet are to rear their unintended ugly consequences.
El-Erian then lists a bunch of vague terms that would make any office seeking politician proud like "better politics." Good luck waiting for that one. Related to better politics, he cites better policies. Man, that's earth-shattering progress.
Next he notes: Overcoming it — and ensuring steady, financially stable global growth — will require responsive national policy making and multilateral coordination. Unfortunately, today’s rather messy national and international political environments have so far precluded such an approach.
That "so far have precluded" phrase hints at a time element. Our cynical side suggests the real meaning here is that it's a cosmic so far. And it's been pretty difficult to find more multilateral than the current "beggar-thy-neighbor."
If El-Erian isn't careful someone will soon nominate him for the Nobel Prize for his specifics. That he can cash those economic column remuneration checks with a straight face tells you how much trouble we're in.
This somehow doesn't pass the smell test. And the odor is one that emanates from global central bank cellars to Wall Street to Goldman Sachs and back again.
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