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Mohamed El-Erian is the CEO and co-CIO of Pimco, the firm that manages the largest mutual fund in the world. In an editorial for Bloomberg today he expresses his serious concerns for the US financial markets and economy, concerns he believes are not currently “priced in” the asset markets. The following is an excerpt:

Judging from market valuations, I sense quite a gap between consensus market expectations and key political and economic realities, especially in the U.S. If the gap isn’t bridged by the validation of the more optimistic expectations, investors may well find that January’s global equity sell-off was just a precursor to a disappointing year for several asset classes, including stocks.

I am not a political expert but I respect and listen to the insights of many who are. Their messages are eerily consistent, and quite concerning.

The political atmosphere in Washington is tense and increasingly polarized. Bipartisan backing for measures is harder. With the political center shrinking, the ability to “manage to the middle” is growing more elusive while the more partisan wings don’t command sufficient broad-based support.

The situation isn’t helped by the diminished trust in key institutions, both public and private. Policy decisions, past and present, are second-guessed. Banks’ standing in society is severely shaken. The regulatory framework is in flux, with agencies fighting for turf. And the divide between large and small firms is as big as I have ever seen it, as is the disparity between the rich and the less-fortunate segments of the population.

All this comes at a time of great economic fluidity and challenge. The global financial crisis has undermined growth and job creation; it has clogged many of the pipes that allocate funds to productive uses; and it has rapidly taken public debt and the budget deficit to worrisome levels.

I am particularly concerned about the surge in joblessness. In the absence of bold structural measures, most of which face political headwinds, we are looking at a period of persistently high unemployment that will disproportionately affect the young. We risk significant welfare losses and skill erosion, lower labor-market flexibility, and yet another burden on the country’s stretched public finances.