Paul McCulley
Encyclopedia
Paul Allen McCulley is a former managing director at PIMCO. He coined the terms Minsky moment
and Shadow banking system
which became famous during the Financial crisis of 2007-2009.
He was also a generalist portfolio manager and member of the investment committee in the Pimco Newport Beach office. In addition, he headed PIMCO's short-term bond desk, led PIMCO’s cyclical economic forums and was author of the monthly research publication, Global Central Bank Focus. Prior to joining PIMCO in 1999, he was chief economist for the Americas at UBS Warburg. During 1996-98, he was named to six seats on the Institutional Investor All-America fixed-income research team. He has 25 years of investment experience and holds an M.B.A. from Columbia Business School
. He received his undergraduate degree from Grinnell College
.
He retired from PIMCO in December 2010 and joined the Global Interdependence Center
thinktank.
McCulley adheres to Keynesian economics
, and was particularly influenced by Hyman Minsky
.
He is a regular guest of CNBC
and Bloomberg Television
providing investment commentary.
"Thus, we are willing to say stocks are irrationally exuberant, notably growth stocks, and, in particular, technology stocks."
"There is room for the Fed to create a bubble in housing prices, if necessary, to sustain American hedonism. And I think the Fed has the will to do so, even though political correctness would demand that Mr. Greenspan deny any such thing."
"Debt deflation is a beast of burden that capitalism cannot bear alone."
"Macroeconomic life after bubbles is not a self-correcting process of renewal, but a self-feeding process of debt deflation — to wit, it’s a Minsky Moment."
"Loosely defined, a Shadow Bank is a levered-up financial intermediary whose liabilities are broadly perceived as of similar money-goodness and liquidity as conventional bank deposits. These liabilities could be shares of money market mutual funds; or the commercial paper of Finance Companies, Conduits and Structured Investment Vehicle
s; or the repo borrowings of stand-alone Investment Banks and Hedge Fund
s; or the senior tranches of Collateralized Debt Obligations; or a host of other similar funding instruments."
Minsky moment
A Minsky moment is when over-indebted investors are forced to sell good assets to pay back their loans, causing sharp declines in financial markets and jumps in demand for cash. In any credit cycle or business cycle it is the point when investors begin having cash flow problems due to the spiraling...
and Shadow banking system
Shadow banking system
The shadow banking system is the infrastructure and practices which support financial transactions that occur beyond the reach of existing state sanctioned monitoring and regulation. It includes entities such as hedge funds, money market funds and Structured investment vehicles...
which became famous during the Financial crisis of 2007-2009.
He was also a generalist portfolio manager and member of the investment committee in the Pimco Newport Beach office. In addition, he headed PIMCO's short-term bond desk, led PIMCO’s cyclical economic forums and was author of the monthly research publication, Global Central Bank Focus. Prior to joining PIMCO in 1999, he was chief economist for the Americas at UBS Warburg. During 1996-98, he was named to six seats on the Institutional Investor All-America fixed-income research team. He has 25 years of investment experience and holds an M.B.A. from Columbia Business School
Columbia Business School
Columbia Business School is the business school of Columbia University in Manhattan, New York City. It was established in 1916 to provide business training and professional preparation for undergraduate and graduate Columbia University students...
. He received his undergraduate degree from Grinnell College
Grinnell College
Grinnell College is a private liberal arts college in Grinnell, Iowa, U.S. known for its strong tradition of social activism. It was founded in 1846, when a group of pioneer New England Congregationalists established the Trustees of Iowa College....
.
He retired from PIMCO in December 2010 and joined the Global Interdependence Center
Global Interdependence Center
The Global Interdependence Center is a Philadelphia-based non-profit organization that holds conferences and programming to increase global dialogue and promote free trade, in order to improve cooperation and understanding among nation states, with the goal of reducing international conflicts and...
thinktank.
McCulley adheres to Keynesian economics
Keynesian economics
Keynesian economics is a school of macroeconomic thought based on the ideas of 20th-century English economist John Maynard Keynes.Keynesian economics argues that private sector decisions sometimes lead to inefficient macroeconomic outcomes and, therefore, advocates active policy responses by the...
, and was particularly influenced by Hyman Minsky
Hyman Minsky
Hyman Philip Minsky was an American economist and professor of economics at Washington University in St. Louis. His research attempted to provide an understanding and explanation of the characteristics of financial crises...
.
He is a regular guest of CNBC
CNBC
CNBC is a satellite and cable television business news channel in the U.S., owned and operated by NBCUniversal. The network and its international spinoffs cover business headlines and provide live coverage of financial markets. The combined reach of CNBC and its siblings is 390 million viewers...
and Bloomberg Television
Bloomberg Television
Bloomberg Television is a 24-hour global network broadcasting business and financial news. It is distributed globally, reaching over 200 million homes worldwide. It is owned and operated by Bloomberg L.P...
providing investment commentary.
Quotes
"We believe that Mr. Greenspan should quit giving away puts on the equity market.""Thus, we are willing to say stocks are irrationally exuberant, notably growth stocks, and, in particular, technology stocks."
"There is room for the Fed to create a bubble in housing prices, if necessary, to sustain American hedonism. And I think the Fed has the will to do so, even though political correctness would demand that Mr. Greenspan deny any such thing."
"Debt deflation is a beast of burden that capitalism cannot bear alone."
"Macroeconomic life after bubbles is not a self-correcting process of renewal, but a self-feeding process of debt deflation — to wit, it’s a Minsky Moment."
"Loosely defined, a Shadow Bank is a levered-up financial intermediary whose liabilities are broadly perceived as of similar money-goodness and liquidity as conventional bank deposits. These liabilities could be shares of money market mutual funds; or the commercial paper of Finance Companies, Conduits and Structured Investment Vehicle
Structured investment vehicle
A structured investment vehicle was an operating finance company established to earn a spread between its assets and liabilities like a traditional bank...
s; or the repo borrowings of stand-alone Investment Banks and Hedge Fund
Hedge fund
A hedge fund is a private pool of capital actively managed by an investment adviser. Hedge funds are only open for investment to a limited number of accredited or qualified investors who meet criteria set by regulators. These investors can be institutions, such as pension funds, university...
s; or the senior tranches of Collateralized Debt Obligations; or a host of other similar funding instruments."