Mohamed El-Erian spoke with CNBC this morning about the state of the “new normal” (which is a phrase we are tired of hearing).
- 0:45 Unemployment is the serious concern. This is a structural problem that cannot be solved overnight. And it makes the unemployment rate both a lagging and leading indicator.
- 1:55 Current social safety nets are built assuming that unemployment will not last long, but things are changing and so will the rules.
- 2:50 People are asking if they have enough self-insurance.
- 4:15 We are in a structural problem, we need to move away from cyclical solutions, which is difficult prior to an election.
- 5:00 “Our credit factories are no longer working like they used to, our banks are being de-risked, people…are self insuring.”
- 5:30 The U.S. needs a structural vision like China and Brazil.
- 6:15 A credible stress test needs to occur before people know what banks to trust in Europe.
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