The global economy has to avoid irresponsible fiscal policies and start producing high growth and jobs, Pimco’s Mohamed El-Erian told CNBC. The CEO of the world’s largest bond fund, said job creation and fiscal policy changes have to take priority in the US and abroad. “If [we dont'] then we’re going to have a major adjustment, a multi-year adjustment,” El-Erian said in a live interview.
El-Erian also said that using high leverage and low collateral has caused governments like Dubai to take a hit when the time comes to pay on their debts while simultaneously creating programs to jump-start their economies. “Look at Dubai as a signal that we still have to deal with the repercussions of last year’s financial crisis,” El-Erian said.
“Last year we had a massive shock to public finance. The debt levels virtually across the world went up as governments went into stimulus mode. What you’re getting now is some countries can afford it and others cannot,” El-Erian said.
