Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
Silver Price 2021 Roadmap - 22nd Jan 21
Why Biden Wants to Win the Fight for $15 Federal Minimum Wage - 22nd Jan 21
Here’s Why Gold Recently Moved Up - 22nd Jan 21
US Dollar Decline creates New Sector Opportunities to Trade - 22nd Jan 21
Sandisk Extreme Micro SDXC Memory Card Read Write Speed Test Actual vs Sales Pitch - 22nd Jan 21
NHS Recommends Oximeter Oxygen Sensor Monitors for Everyone 10 Months Late! - 22nd Jan 21
DoorDash Has All the Makings of the “Next Amazon” - 22nd Jan 21
How to Survive a Silver-Gold Sucker Punch - 22nd Jan 21
2021: The Year of the Gripping Hand - 22nd Jan 21
Technology Minerals appoints ex-BP Petrochemicals CEO as Advisor - 22nd Jan 21
Gold Price Drops Amid Stimulus and Poor Data - 21st Jan 21
Protecting the Vulnerable 2021 - 21st Jan 21
How To Play The Next Stage Of The Marijuana Boom - 21st Jan 21
UK Schools Lockdown 2021 Covid Education Crisis - Home Learning Routine - 21st Jan 21
General Artificial Intelligence Was BORN in 2020! GPT-3, Deep Mind - 20th Jan 21
Bitcoin Price Crash: FCA Warning Was a Slap in the Face. But Not the Cause - 20th Jan 21
US Coronavirus Pandemic 2021 - We’re Going to Need More Than a Vaccine - 20th Jan 21
The Biggest Biotech Story Of 2021? - 20th Jan 21
Biden Bailout, Democrat Takeover to Drive Americans into Gold - 20th Jan 21
Pandemic 2020 Is Gone! Will 2021 Be Better for Gold? - 20th Jan 21
Trump and Coronavirus Pandemic Final US Catastrophe 2021 - 19th Jan 21
How To Find Market Momentum Trades for Explosive Gains - 19th Jan 21
Cryptos: 5 Simple Strategies to Catch the Next Opportunity - 19th Jan 21
Who Will NEXT Be Removed from the Internet? - 19th Jan 21
This Small Company Could Revolutionize The Trillion-Dollar Drug Sector - 19th Jan 21
Gold/SPX Ratio and the Gold Stock Case - 18th Jan 21
More Stock Market Speculative Signs, Energy Rebound, Commodities Breakout - 18th Jan 21
Higher Yields Hit Gold Price, But for How Long? - 18th Jan 21
Some Basic Facts About Forex Trading - 18th Jan 21
Custom Build PC 2021 - Ryzen 5950x, RTX 3080, 64gb DDR4 Specs - Scan Computers 3SX Order Day 11 - 17th Jan 21
UK Car MOT Covid-19 Lockdown Extension 2021 - 17th Jan 21
Why Nvidia Is My “Slam Dunk” Stock Investment for the Decade - 16th Jan 21
Three Financial Markets Price Drivers in a Globalized World - 16th Jan 21
Sheffield Turns Coronavirus Tide, Covid-19 Infections Half Rest of England, implies Fast Pandemic Recovery - 16th Jan 21
Covid and Democrat Blue Wave Beats Gold - 15th Jan 21
On Regime Change, Reputations, the Markets, and Gold and Silver - 15th Jan 21
US Coronavirus Pandemic Final Catastrophe 2021 - 15th Jan 21
The World’s Next Great Onshore Oil Discovery Could Be Here - 15th Jan 21
UK Coronavirus Final Pandemic Catastrophe 2021 - 14th Jan 21
Here's Why Blind Contrarianism Investing Failed in 2020 - 14th Jan 21
US Yield Curve Relentlessly Steepens, Whilst Gold Price Builds a Handle - 14th Jan 21
NEW UK MOT Extensions or has my Car Plate Been Cloned? - 14th Jan 21
How to Save Money While Decorating Your First House - 14th Jan 21
Car Number Plate Cloned Detective Work - PY16 JXV - 14th Jan 21
Big Oil Missed This, Now It Could Be Worth Billions - 14th Jan 21
Are you a Forex trader who needs a bank account? We have the solution! - 14th Jan 21
Finetero Review – Accurate and Efficient Stock Trading Services? - 14th Jan 21

Market Oracle FREE Newsletter

FIRST ACCESS to Nadeem Walayat’s Analysis and Trend Forecasts

PIMCO's El-Erian on European Debt Crisis Assessment

Politics / Global Debt Crisis Nov 04, 2011 - 09:52 AM GMT

By: Bloomberg


Best Financial Markets Analysis ArticleMohamed El-Erian, CEO of PIMCO, spoke with Bloomberg Television's Betty Liu and Michael McKee this morning about the situation in Europe and the global economy.

El-Erian said that it's "striking" that German Chancellor Angela Merkel can't agree on the "easy part" and that "unfortunately it's a mess" in Europe

El-Erian on the situation in Europe and the G20 meeting in France:

"It is both disappointment and concern. It is striking that Ms. Merkel came out this morning and said they could not agree on the easy part, and the easy part was enhancing the IMF resources to help Europe. I am both worried and disappointed so far. Hopefully something will happen in the next day or so, but the signals are not good."

"We need four things. We need an agreement on Europe. We need to stabilize the European situation. Second, the world has to come together and agree on a growth and employment pact. Just like it did in April 2009 when there was a financial crisis, today we have an economic crisis and an employment crisis. We need to see different countries coming together with a common purpose. Third, let's not forget the hot spots in the world like North Africa. We need something there. Finally, there are longer term issues that are just as important, like climate change. That would have been an original agenda, but the G20 got hijacked by Europe."

On recently returning from Europe and his assessment from having been there:

"Unfortunately, it is a mess. 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. 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% reduction for Greece, which is the minimum Greece needs. So I'm afraid it's a bit of a mess out there."

On whether Europe is worse off now having gone through the agreement on Greek debt last week:

"We are [worse off now], because every time you get to an agreement and it unravels, the credibility of the process is undermined. Keep the image in your of the snowball rolling downhill. The problems get bigger and it becomes even more difficult to control the snowball. We cannot afford disappointment after disappointment. Europe needs to turn a corner and start building the basis for a solution."

On European leaders questioning whether or not they should belong in the euro:

"You are getting leaders saying strange things. It started with Mr. Sarkozy last Thursday saying Greece should not be in the euro zone. Now you have questioning left, right, and center. The leaders need to get on the same page. The narrative is important here. When there are difficulties that there is a conflict between regional priorities and national realities. That is what we're seeing in Italy. That is what we're seeing in Greece, countries like Germany and France as well. This is a very delicate period."

On today's jobs report:

"The good news is that the report in relative terms is better than expected mainly because of the revisions to August and September. The bad news is that we are still in this unemployment crisis, so no, it does not do enough to remove the risk of stall speed, which is growth but not fast enough growth. We need to see much higher employment creation to get over this issue."

On what it will take to achieve faster growth in the U.S.:

"We have fundamental structural problems in the labor market, housing market, credit market. We don't have enough infrastructure. These are a series of structural issues. We also have to reconcile medium-term fiscal reform with short-term stimulus. There are some big issues that are not as yet addressed sufficiently, certainly not addressed in a comprehensive manner."

On whether there is an increasing risk that the U.S. is losing control of its own economy because of the crisis in Europe:

"The reality is that we live in a globalized economy. Europe is a major economic area. It is an important trading partner. European banks are an important part of the financial situation. No country, whether it is the U.S. or China, is totally immune from what is happening in Europe. The important thing is to be able to navigate it and that depends on your internal dynamics. We are not immune from Europe. Nobody is in the world, but different countries are better or less able to navigate it."

On how central banks have been handling the situation so far:

"They have been doing heavy lifting. The Fed in particular has been the only policymaker really in play. The problem is they don't have enough instruments. You must always remember that central banks are monetary institutions. They can only be a bridge to somewhere. In order to be a bridge to somewhere good, you need other policymakers to also contribute. That is what has failed Europe and the U.S. so far."

On the October market rally and whether we won't see activity like that for a long time:

"This is an incredibly headline-driven market, a macro-driven market, as opposed to a bottoms up market. What we should expect is enormous volatility. We suggest to investors to play general defense and selective offense. I think it's important to be generally defensive because the world is very fluid, but there are values out there."

On whether there's more value in the U.S. than in Europe right now:

"I see value where balance sheets are strong, where companies are exposed to growth in emerging markets and where they're relatively immune to erratic policymaking. That's where value is and it's all over the world."

Copyright © 2011 Bloomberg - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules