Friday, December 21, 2012

PIMCO's El-Erian: Ugh, Recession is Now More Likely




Fasten your seatbelts, Dudes and Dudettes, according to El-ERian: Here is a simple way to think about the political calculus of Washington's latest twists and turns. And — unfortunately — it suggests that economic and market dislocations may be needed to get our politicians to cooperate and govern properly.

A major issue from day one was the extent to which the lack of trust between our political parties undermined Washington's ability to govern.   Hoping to resolve this problem and thus deliver consensus, party leaders opted in the summer of 2011 for a very big stick: threaten the country with a major economic setback as a way to get the rank and file of both parties to cooperate.
The stick succeeded in catalyzing serious negotiations between President Obama and House Speaker Boehner. But the stick was not big enough….
Wait…wait…there’s more at http://www.cnbc.com/id/100334741

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