Not surprisingly, PIMCO co-chief Mohamed El-Erian sees the US on the Japan path.
The head of one of the world's largest bond funds said Thursday that the U.S. faces a significant risk of falling into deflation, and that Japan's struggle with damaging price falls is becoming increasingly difficult--trends that are constraining policymakers in both countries.
"On the road to deflation, which is what the United States is on today ... policy becomes less effective," said Mohamed El-Erian, chief executive of Pacific Investment Management Co.
It doesn't sound as though there is too much new here. Apparently he still only sees this as a 25% scenario.
The more interesting story, really, is that everyone is now on the same side of this debate, it would seem. There aren't that many folks (yet) that think a double dip or a deflationary period is a sure thing, but everyone thinks the risks are solidly weighted in this direction. And the word "Japan" is just getting used over and over again.
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Full story at http://feedproxy.google.com/~r/businessinsider/~3/6f19tuNEHF0/pimcos-el-erian-the-us-is-on-the-road-to-deflation-2010-8
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