Bernanke a 'Warm-Up' to Obama Job Speech: El-Erian
Federal ReserveChairman Ben Bernanke's speech Friday is a "warm-up act" to President Obama's Sept. 5 speech outlying his jobs program, Pimco CEO Mohamed El-Erian told CNBC Thursday.
"The real big act is Sept. 5," he said. In a "perfect world," President Obama would "set out a very clear destination — where we want the economy to be in five years in terms of growth, in terms of employment, in terms of inflation and in terms of social indicators."
To get there, "you need to move on structural reforms" in those areas and "put in place a process to get there," he added.
"That would give the market confidence we have in [Washington] D.C. a vision of where we’re going and we have an ability to get there. All these ad hoc measures, they don’t give confidence [when] what we need is a comprehensive approach."
When Bernanke does speak during the annual Jackson Hole, Wyo., conference Friday he "must not push" another quantitative easingplan, El-Erian stressed.
"Bernanke realizes the U.S. doesn’t face a problem that can be handled with monetary policy. It’s much more structural," El-Erian said. "The best thing QE3 can do is provide a bridge for other policymakers. But if other policymakers remain asleep, there’s little point in providing that bridge."
Instead, the Fed chairman "should put pressure on other policymakers and say, 'You won’t get help from the Federal Reserve. You get your act together.'"
He added Bernanke's "activism hasn’t been accompanied by other policymakers doing their bit. So we haven’t seen movement in housing, we haven’t seen movement in labor markets, we haven’t seen movement in medium-term public finance reform, we haven’t seen movement on infrastructure, etc. So Bernanke cannot carry the whole burden."