Mohamed El-Erian knows a thing or two about illusions. Like the illusion that Bill Gross is a reasonable man with whom reasonable people can work. He also knows how quickly illusions can become delusions, in this case, the same belief after direct experience teaches you otherwise. And Mohamed El-Erian has made his way to Las Vegas—in a notably dark, Bill Gross-esque mood—to warn the SALT conference attendees that rising interest rates could have the same effect on the economy as looking him in the eye has on Bill Gross.
“We have this illusion of liquidity for when the paradigm changes,” El-Erian said. “It’s not just an illusion, it’s a delusion….”
“We have structurally changed the financial system,” he said. “Whenever you want to reposition, you find that you cannot….”
“I wonder whether we’re not living in a new world in which governments no longer control as much as they think they control,” he said.
El-Erian Sees Market ‘Delusion’ Amid ‘New World’ [WSJ MoneyBeat blog]