Some Nations Going Overboard With Austerity: Pimco Exec

The public outcry over national deficits has spurred international fiscal policy makers in some countries to impose austerity measures unnecessarily, Paul McCulley, managing director at Pimco, told CNBC Wednesday.

"I am a card-carrying religious Keynesian, and what's been going on recently has brought tears to my eyes," said McCulley.

McCulley said that while he understands that countries in the South of Europe that are taking part in an International Monetary Fund Program may need forced austerity, he does not think all countries carrying deficits should be subject to such measures, including the United States.

"For the developed countries, and this includes the Northern part of Europe and the United States, we need Keynesian stimulus right now, so this whole notion that somehow we should impose austerity on ourselves from a moral perspective as opposed to an economic perspective, I find very disquieting."

Although McCulley does not embrace Europe's adoption of austerity measures, McCulley did acknowledge that while the European debt crisis could pose a risk to the U.S. banking system because it affects risk-appetite.

"Certainly what has been going on in Euro-land has been a cold shower to risk appetite here in the United states. You see that obviously with the equity market, the credit market as well, and you see it in the Treasury market in an inverse sort of fashion. And a pull back in risk appetite is ... a threat to what is still a fragile economy," said McCulley.