Tags: pimco | El-Erian | europe | eurozone

Pimco’s El-Erian: Europe Is a Mess, Could Get Worse

Monday, 07 Nov 2011 08:52 AM

The European economy is a mess and could get worse if it continues along its pattern of stop-gap relief measures followed by bouts of panic, says Mohamed El-Erian, CEO of Pimco, the world's largest bond fund.

Debt-ridden Greece recently agreed on terms for aid money to alleviate its debt crisis, which included asking some private creditors to take a 50 percent haircut on their Greek debt, but Prime Minister George Papandreou called for a referendum on the package, which was later scrapped to much relief to the rest of the world.

For over a year now, Greece has agreed to terms of assistance, and markets relax, yet worries that the country will default always return and send shockwaves through global markets.
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"There are three parties to a solution and all three are unraveling. There are the debtor countries and they are starting to have even bigger political issues," El-Erian tells Bloomberg TV.

MohamedEl-Erian200ap-.jpg
Mohamed El-Erian
(Associated Press photo)
"There are the official creditors and they cannot agree on providing support. And then there are the private creditors. It is not sure that they will get all of the banks to agree on the 50 percent reduction for Greece, which is the minimum Greece needs. So I'm afraid it's a bit of a mess out there," El-Erian tells Bloomberg TV.

"We are [worse off now], because every time you get to an agreement and it unravels, the credibility of the process is undermined," El-Erian adds.

Papandreou meanwhile is urging political leadership in Greece to achieve some kind of a political consensus to prove to countries helping it out — France and Germany especially — that it wants to stay in the eurozone.

"My aim is to immediately create a government of cooperation," Papandreou says, according to Reuters.

"A lack of consensus would worry our European partners over our country's will to stay in the eurozone."

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The European economy is a mess and could get worse if it continues along its pattern of stop-gap relief measures followed by bouts of panic, says Mohamed El-Erian, CEO of Pimco, the world's largest bond fund. Debt-ridden Greece recently agreed on terms for aid money to...
pimco,El-Erian,europe,eurozone
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2011-52-07
Monday, 07 Nov 2011 08:52 AM
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