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Why Fed Policy Is Just Like the NFL Refs

Sep. 26, 2012 8:40pm Guest Post

[Editor’s note: the following is a cross post that originally appeared on CNBC.com]:

The dilemma facing the Federal Reserve is the same dilemma facing the NFL when it comes to replacement refs, Pimco CEO Mohammed El-Erian told CNBC’s “Closing Bell” on Tuesday.

“We know that the NFL refs are not first best, but we expect them to be perfect,” El-Erian said. “That’s the problem with the Fed. It doesn’t have the right tools. Expectations are too high and the Fed needs help from other government entities, but the other entities are on strike.”

Without politicians tackling the country’s fiscal problems, the Fed is likely to continue to provide extra stimulus and other extraordinary measures, El-Erian said, in hopes of provide a bridge until the politicians eventually step in and deal with the “fiscal cliff.” The fiscal cliff is when a host of tax cuts expire and automatic spending cuts kick in.

“If they don’t, the investment theme will go from betting on Fed liquidity to positioning for the collateral damage the Fed will create,” he warned.

Investors should also change their approach to the markets. The stock market has done well this year, with the S&P 500 up 15 percent, largely because central banks have removed the risks of U.S. recession and a breakup in Europe.

“If that tail risk comes bank in because politicians don’t sort out the fiscal cliff and European politicians can’t deliver on their policy commitments, then markets will come back down,” he said.

Protests in Spain and elsewhere are “an indication of how difficult it is to go from designing a response to implementing it,” El-Erian said. “Parts of the population are just fed up.”

While a return of these tail risks isn’t his base case, El-Erian said investing has become a differentiation story. “It’s no longer about betting on markets for removal the tail risks,” he said.

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Comments (15)

progressiveslayer
Posted on September 28, 2012 at 8:15am
o

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drs1969
Posted on September 27, 2012 at 12:34am
El-Erian is part of the lies. He defends the Fed policy as if it’s trying it’s hardest to help the US. Lies. They’re trying to keep the banks and NYC in business. They have suppressed interest rates for over 25 years in order to enrich Wall Street. In the process, they have made it possible for the Fed. Gov. to run up $16Trillion in debt that wouldn’t have been possible at a real market rate of interest between 5 and 10%.
Pimco has done well betting that the Fed. will continue suppressing rates. Fair enough, but it will put us into 3rd world poverty in a few more years.
I agree wholeheartedly w/ his statement that ‘the market will come down’. He should have said, ‘it didn’t have to get this bad, if the Fed was looking out for the USA.

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Winedude
Posted on September 27, 2012 at 12:03am
You had me until you said that Medicare wouldn’t pay any more. That tells me that she’s over 65 and the Death Panels have spoken. I’m sorry…

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dmerwin
Posted on September 26, 2012 at 10:11pm
Both are amateurs with big stakes in play.

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dealer@678
Posted on September 26, 2012 at 10:05pm
These refs should go back to their other job of being community organizers

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PoliticiansRCrooks
Posted on September 26, 2012 at 9:57pm
Feds gotta go just like Refs gotta go. But people need to realize that it’s not about the refs. It’s people who control the system, THE NFL is rigging the games. Just like Bernanke. He is just a spokesman. The true criminals are behind the scenes just like the NFL.

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The-Monk
Posted on September 26, 2012 at 9:50pm
I’m not sure I trust Mohammed El-Erian or Pimco.

“Pimco’s Gross: Want to Make Money? Front-run the Central Banks”

http://www.newsmax.com/StreetTalk/Pimco-Gross-fed-ecb/2012/09/26/id/457730

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ProbIemSoIver
Posted on September 26, 2012 at 9:46pm
Sorry Guest Poster. Nothing personal, but this story about the Fed is meaningless.

This El Erian guy bloviating arcane rhetoric is too much to handle. Clueless.

Lets Talk about the Federal Reserve PRIVATE BANK !!!!!!!!!

But first we are going to say a pig with lipstick, is still a pig.
You can call it Jobs Stimulus, QE 1, 2, or 3, or you can call it whatever you want, but it is still JUST A LOAN PACKAGE from the PRIVATE BANK with INTEREST !!!!!!!

It causes INFLATION !!!!!

The Federal Reserve is America’s 3rd Privately owned Central Bank.

Andrew Jackson’s greatest personal accomplishment was killing America’s 2nd Central Bank.
He has “I killed the Bank” on his tombstone.

The Federal Reserve is owned by the International Bankers and their Families.
It was specifically created to be our Central bank. And The United States Corporation (oh yes it is)signed the contract with the bank in 1913 (The Federal Reserve Act) This was not a “loan”
They agreed to issue Notes in exchange for our T-Bonds. They knew we would default and they could seize America and it’s assets as collateral. Especially with the Progressive minions they had in place in D.C. already.

Well guess what ? In 1933, America Declared Bankruptcy and had to surrender collateral to the PRIVATE BANK.

http://www.youtube.com/watch?v=IlCs7u1ihws

Here is a GREAT General Electric Television (CNBC) clip
http://www.youtube.com/watch?v=CF8wfUJ6sj8

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- ProbIemSoIver
  Posted on September 26, 2012 at 10:06pm
  I forgot to add that in addition to our “government” pledging it’s citizens as collateral,
  The Private Bank also seized the Government’s gold and then came after the Citizen’s gold.
  They also pledged our gov’t branches and land. There was a lien placed on them.
  http://www.barefootsworld.net/usfraud.html
  
  In 1944 at the Bretton Woods Agreement, the Fed via FDR quit claimed (transfered) the lien to the
  IMF and World Bank.
  http://teamlaw.net/HistoryOutline.htm
  
  Those two entities created the UNITED NATIONS in 1945.
  
  In 1992 under E.O.12803, AMERICA WAS FOR SALE !!!!!!!!
  Infrastructure Privatization
  http://rense.com/general86/nomis.htm
  
  Most people never heard of this, because the Banksters buy up all the Media
  http://www.technewsdaily.com/4423-6-companies-control-90-percent-media.html
  
  Panetta Admits that we are under control of the UN
  http://www.youtube.com/watch?v=WSzZAOQnYFI
  
  This is why I am Going to Vote for GARY JOHNSON 2012 !!!!!
  http://www.youtube.com/watch?v=xrU6hTWyj6s&feature=relmfu
  
  Report this comment
soybomb315_II
Posted on September 26, 2012 at 9:41pm
El-Erian isnt really upset about the market distortion created by the Fed – he is upset that bond yields havent gone up yet.

At this point, the Fed is not operating to keep the economy doing well – it is trying to re-elect the administration and keep its secrecy

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KC1
Posted on September 26, 2012 at 9:09pm
Well luckily for all freedom loving people the GOP electorate has nominated a candidate that has spoken out against the Fed and supports free markets… Well except for his support of quantitative easing and opposition for years to even auditing the Fed, that and his support for bailing out the banks and refusal to propose a balanced budget or any cuts to Federal spending. Despite all that im sure hes a proponent of free markets because Beck and Fox tell me he is.

Well at least hes speaks out against the increasing power of the police state… well except he supports the TSA pat downs, NDAA and the Patriot act.

Well at least hell pull us out of unfunded and unconstitutional wars in the middle east… well except he just recently stated the president can declare war on Iran without approval from congress and seems to support the idea of invading Iran.

Hmm… can someone explain again to me how Romney is legislatively different than Obama? The rhetoric and platitudes are different. Yeah thats it my candidates rhetoric is slightly better than Obamas.

Yeah Hope and Change! Romney 2012-2020

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- soybomb315_II
  Posted on September 26, 2012 at 9:48pm
  http://www.youtube.com/watch?v=4R4KtYVF-74
  
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- ProbIemSoIver
  Posted on September 26, 2012 at 9:48pm
  There is a difference between the two candidates. look.
  http://www.youtube.com/watch?v=IWDJEc92d38
  
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Chromo200
Posted on September 26, 2012 at 8:57pm
I wonder is Obama is listening .. Oops sorry no he is on the View listening Joy or yucking it up with Letterman.

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The Jewish Avenger
Posted on September 26, 2012 at 8:43pm
You meant “…worse than NFL refs” right?

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