Jan. 9 (Bloomberg) -- Paul McCulley, managing director at Pacific Investment Management Co., talks with Bloomberg's Kathleen Hays about the outlook for the U.S. economy in 2010.

McCulley, speaking from Newport Beach, California, says the Federal Reserve is using the right policy response to the current crisis and that he has "very small" concerns about inflation. ("On the Economy" is seen weekdays on Bloomberg TV. Source: Bloomberg)

00:00 "Wickedly nasty recession," bond market
01:24 "We'll avoid an Armageddon outcome."
02:39 Job losses, Fed actions, economic stimulus
03:41 Pimco's bond investment strategy
04:48 Citigroup's agreement on mortgages
06:27 Fed's efforts to reduce mortgage rates
07:38 FDIC guarantees to banking system
09:15 "Very, very small concern" about inflation
10:39 Exit strategy for Fed, Pimco; outlook

Running time 13:09

Last Updated: January 9, 2009 16:28 EST