Who Would Want to Be President?
Mohamed A. El-Erian, the CEO and co-Chief Investment Officer of PIMCO wrote an interesting piece recently, “America’s Constrained Choice.” I think it would have been better titled, “Who On Earth Would Want to Be President?” He argued that while the two candidates argue that they are vastly different, it is very uncertain that they will be able to pursue their desired policies. Their choices will be constrained by fiscal and economic conditions:
1. Economic growth will be a sluggish 2%.
2. Unemployment will be very high (with many long-term unemployed and many more who have dropped out of the labor force).
3. Fiscal deficit near 8% of GDP.
4. The banking sector will be still be “de-risking” – limiting the flow of credit to small and medium-size companies (which will limit hiring and capital investment).
5. The household sector will only be partly through its deleveraging process.
6. We will be in a more difficult global environment. Europe’s debt crisis will most likely worsen. Emerging economies (including China) are slowing. Pressure for protectionist legislation will increase.
7. We will have to counter the fiscal cliff (as tax cuts expire and across-the-board spending reductions kick in).
8. Serious medium-term budget reforms will be necessary.
9. The President will face a bifurcated society – including persistent differences in unemployment rates depending on skills and education as well as income and wealth inequality (which leads to debate over redistribution).
Today’s Random Comment Complaint
I love the Olympics and I had really been looking forward to watching the summer games. Unfortunately, they’re not being shown in Austin. There’s just some random beach volleyball tournament from London that is on our NBC network each night.
There are so many great sports and athletes – it’s absurd that we’re not seeing them in prime time. I love water polo, REAL volleyball, team handball, etc. Why don’t they put these events on during prime time? (I do love the swimming and track and field – at least those sports still get shown. Of course, I fully expect that four years from now, we’ll have beach badminton and we won’t see swimming or track.)
Have a great week.
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