Mohamed El-Erian: A period of major global realignment
Mohamed El-Erian, PIMCO’s CEO, is #45 on Foreign Policy’s list of the 100 Top Global Thinkers of 2010. He tells Chrystia that his big idea is a “recognition that we are living in a period of major global realignment.” This rapidly changing environment favors emerging markets, which are accustomed to periods of upheaval, as well as businesses, which have the metrics and flexibility required to make quick course corrections. The developed world has been hobbled by years of inertia, he says, and is at a disadvantage in responding to these global shifts.
In El-Erian’s eyes, being an outsider is fundamentally connected to being a top global thinker. He credits his unconventional background — growing up in Egypt, studying four different schools of economics at Cambridge, and analyzing emerging markets for 15 year at the IMF — with his ability to spot the realignment in world economic growth towards the developing world.
El-Erian attributes PIMCO’s success to its heterodox culture — the investment giant’s motto is to be “constructively paranoid,” and once a year management invites a “shadow” investment committee to its Newport Beach offices to second-guess the portfolio managers’ investment decisions.
In FP‘s words, El-Erian belongs on the list “for reminding us just how bad things could get:”
The world’s best financial minds have closely watched the prognostications of this Oxbridge-trained economist ever since January 2007, when Mohamed El-Erian, then the head of Harvard University’s endowment, bet $1.6 billion of the school’s money that global markets were headed for a downturn — and turned out to be right.
Author of the 2008 book When Markets Collide, a former IMF economist, and head of investment colossus Pimco, El-Erian helped popularize the term “the new normal” to describe the post-crisis economic era: one in which growth remains stubbornly low everywhere but the developing world. This year, as hopes for a rapid recovery have faded, he has penned a series of full-throated articles warning that world leaders aren’t taking the potential consequences of a prolonged downturn seriously enough.
Read more about El-Erian at Foreign Policy.
Posted by Peter Rudegeair.