Tags: Pimco | El-Erian | Europe | Risks | Slow-Motion | Wreck

Pimco's El-Erian: Europe Risks ‘Slow-Motion Wreck’

By    |   Tuesday, 30 Nov 2010 11:55 AM

European countries will continue to face financial crises until governments address their exploding debt burdens and slash their spending, says Mohamed El-Erian, CEO of bond king Pimco.

Ireland received a $113 billion bailout over the weekend, and more bailouts will follow without strong governmental action, he tells CNBC. Portugal, Spain, Belgium and Italy would be the next targets.

"The first rule of crisis management hasn't been met by the Europeans, and that is to get ahead of the crisis, be seen as proactive rather than reactive," El-Erian says.

"As long as they're being seen as reactive, we're going to have a slow-motion wreck going on in Europe. We're going to wake up and it's going to be a new country we're talking about."

Bailouts aren’t enough by themselves, he points out. "Unless we see more than just liquidity support, unless we see something that deals with the balance sheets, expect this contagion to go up," he said.

Ireland may have been made safe for three years, El-Erian says. "The problem is if you tell creditors that at 2013 something's going to happen, creditors will try to move ahead of that. That's what we're seeing today."

Many experts predict that the euro will break apart.

“I don’t think it’s sustainable in the absence of a much greater degree of political and economic integration,” Simon Tilford, chief economist at the Center for European Reform, tells The New York Times.

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European countries will continue to face financial crises until governments address their exploding debt burdens and slash their spending, says Mohamed El-Erian, CEO of bond king Pimco. Ireland received a $113 billion bailout over the weekend, and more bailouts will follow...
Pimco,El-Erian,Europe,Risks,Slow-Motion,Wreck
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2010-55-30
Tuesday, 30 Nov 2010 11:55 AM
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