PIMCO: Why The Eurozone Will Ultimately Fail
Pimco says 'untenable' bailout policies will lead to eurozone break-up.
By Ambrose Evans-Pritchard
Pimco, the world's largest bond fund, has called on Greece, Ireland and Portugal to step outside the eurozone temporarily and restructure their debts unless the currency bloc agrees to a radical change of course.
Andrew Bosomworth, head of Pimco's portfolio management in Europe, said current policies are untenable in the absence of fiscal union and will lead to a break-up of the euro.
"Greece, Ireland and Portugal cannot get back on their feet without either their own currency or large transfer payments," he told German newspaper Die Welt.
"The euro crisis is not over by a long shot. Market tensions will continue into 2011. The mechanism comes far too late," he said.
"Can countries inside a fixed exchange-rate system like the euro grow and tighten budget policy at the same time? I don't think so. It didn't work in Argentina," Mr Bosomworth said.
"None of the policy responses put in place in Europe since the start of the crisis provides a credible backstop to prevent further contagion," Mr Cailloux said.
"We remain most concerned about an escalation of the sovereign debt crisis hitting larger economies in the euro area. Markets continue to underestimate the potential disruption via financial transmission channels that such an event could trigger."
Continue reading at the UK Guardian...
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Why the Eurozone will ultimately fail...
Video - El-Erian on Squawk Box with Joe Kernen - Aired Nov. 30
More European countries will need bailouts until policy makers address the underlying causes of their financial problems, which include too much government debt and not enough spending controls, Pimco's Mohamed El-Erian told CNBC.
More detail on this clip is here...
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Dec 22, 2010 at 5:18 PM
Reader Comments (4)
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