If money managers want to invest successfully in this highly volatile, largely negative financial environment, they must adapt their financial forecasts and decision models, according to Mohamed El-Erian, the CEO and co-chief investment officer of Pacific Investment Management Co. LLC (PIMCO).

"What we are witnessing goes well beyond a cyclical economic shock and a consolidation of the financial sector," El-Erian said in an interview. "We are also in the midst of a prolonged increase in precautionary behavior among entities that have suffered massive wealth destruction and face a multi-year cleanup of assets and businesses. Without further adjustments, there will be an aggravation of the negative feedback loops that have been so detrimental to global welfare."

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