Pimco CEO and co-CIO Mohamed El-Erian says the world’s economies are at a tipping point.

"Rather than a traditional bell-shaped distribution curve for advanced economies, the world is now increasingly facing what can be best characterized as a bimodal distribution — one can think of it as like the back of a two-humped camel," El-Erian writes at CNN.

Within the next few years, says El-Erian, a tipping to one of the two extremes of the distribution is more likely — either into the good equilibrium involving the restoration of conditions for sustainable growth, meaningful job creation, and orderly financial rebalancing; or into a nasty one characterized by higher unemployment, debt deflation, financial instability, and even greater income and wealth inequalities.
_________________________________________________________

The ‘Unthinkable’ Could Happen — Wall Street Journal
Over one million Americans have heard the evidence for 50% unemployment, 90% stock market crash, and 100% inflation. Be prepared. Watch the Aftershock Survival Summit Now, See the Evidence.

_________________________________________________________

“This morphing, from a bell-shaped curve to a bimodal world, is most apparent in Europe,” El-Erian notes.

“Its 2011 muddle-through is likely to give way to one of two outcomes — a very messy fragmentation of the eurozone or its evolution into a smaller, less imperfect and more robust zone of countries with similar initial conditions.”

El-Erian observes that these conditions provide a daunting agenda for the high-level government officials, thought leaders and CEOs from virtually every corner of the globe will gather in the Swiss Alps for the annual Davos meetings.

“Once again, those of us witnessing the festivities from afar will hope that this impressive mix of brainpower and personalities can contribute to a better understanding of what ails the world and, importantly, what needs to be done to improve global welfare,” he says.

Meanwhile, the World Bank warned developing countries on Wednesday to prepare for the "real" risk that an escalation in the euro area debt crisis could tip the world into a slump on a par with the global downturn in 2008-2009.

In a report sharply cutting its world economic growth expectations, the World Bank said Europe was probably already in recession. If the euro area debt crisis deepened, global economic forecasts would be significantly lower, Reuters reported.

"The sovereign debt crisis in the euro zone appears to be contained," Justin Lin, the chief economist for the World Bank, told reporters in Beijing.

"However, the risk of a global freezing-up of the markets and as well as a global crisis similar to what happened in Sept. 2008 are real."

The World Bank predicted world economic growth of 2.5 percent in 2012 and 3.1 percent in 2013, well below the 3.6 percent growth for each year projected in June.

© Moneynews. All rights reserved.