Pimco head says EU must change course on Greek aid

Mohamed El-Erian, CEO and Co-Chief Investment Officer of PIMCO, is interviewed at the 2011 The Milken Institute Global Conference in Beverly Hills, California May 2, 2011. REUTERS/Fred Prouser

Mohamed El-Erian, CEO and Co-Chief Investment Officer of PIMCO, is interviewed at the 2011 The Milken Institute Global Conference in Beverly Hills, California May 2, 2011.

Credit: Reuters/Fred Prouser

ROME | Sun Jun 19, 2011 5:33am EDT

ROME (Reuters) - Europe risks wasting more money for nothing if it keeps pumping billions into the ailing Greek economy, the head of Pimco, the world's largest bond fund, said in an interview published on Sunday.

"After a year, every indicator has unfortunately worsened, despite the incredible quantity of financial assistance," Mohammed El-Erian told Italy's Corriere della Sera daily,

"All of this has terrible human consequences and it's associated with a transfer of liabilities from private creditors to European taxpayers. Why? Very little is being done to deal with the excess of public debt, and the conditions for higher growth are not being put in place," he said.

"Further on, if this approach is kept up, more money will be wasted to save private creditors and the risk of a disorderly restructuring of the debt will be greater."

El-Erian's comments follow a promise by Germany and France last week to continue funding Greece in the hope of winning enough time to stave off a messy default which would have potentially drastic consequences for the euro zone.

The European Union and the International Monetary Fund have pledged a new bailout package worth 120 billion euros ($171.8 billion) on condition that Athens produces credible reforms to restore its crippled public finances.

(Writing by James Mackenzie; Editing by David Hulmes)
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Comments (7)
tmc wrote:
At this point I’m starting to think the real plan is to line up enough country’s to default that all governments are forced to forgive each others debts and start over.

Jun 19, 2011 5:54am EDT  --  Report as abuse
ajsfca wrote:
I agree with Mr.El-Arian. The expense side of the ledger needs to be decreased. The U.S. economic stimulus package is an example. Most of that taxpayer money was used by the U.S. administration to prop up and continue the bloated expenditures on public service employee union wages and benefits, which are and will continue to be be unsustainable, even with continued infusions of borrowed cash.

Jun 19, 2011 6:05am EDT  --  Report as abuse
hariknaidu wrote:
PIGS need a Marshall Plan – long term – to redress the economic disparity within EU-17 and rejuvinate their respective trade and developmnent under the umbrella of EIB.

Jun 19, 2011 7:17am EDT  --  Report as abuse
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