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Eurozone debt crisis: it's fiscal union or bust, says Pimco
The Telegraph ^ | 12/3/2011 | Richard Blackden and Rachel Cooper

Posted on 12/03/2011 4:10:09 PM PST by bruinbirdman

European governments must rapidly commit to fiscal union or a partial break-up of the euro to prevent a "fundamental erosion" in demand for the region's debt, Pimco, the world's biggest bond investor, has warned.

"They can't continue to muddle through," said Andrew Balls, who runs Pimco's European investments. "They'll either have to signal their position or you'll get a continued disengagement by investors from the eurozone."

The stark assessment comes ahead of a gathering of European leaders in Brussels that has been billed as a summit that cannot afford to fail. A crisis that began in Greece almost two years ago, has since ensnared Ireland, Portugal, Spain and Italy, and now threatens France and Germany.

Rising bond yields across the continent will only alarm, rather than tempt, investors until there's agreement on the future structure of the euro. "Yes, yields are higher but you have existential problems and risk that's hard to quantify," said Mr Balls, brother of Shadow Chancellor Ed Balls MP. "We're very cautious and we're underweight versus our indices."

A series of bail-outs for individual countries, accompanied by promises of austerity, have failed to convince global investors that monetary union can survive its first major hurdle since it was created more than a decade ago. China has, so far, baulked about committing cash to the European Financial Stability Facility and no sovereign wealth fund has stepped forward as a buyer of the bonds of the most indebted members of the euro.

Mr Balls said that while it was not too late for European leaders to decide on their future, each carries "enormous execution risk and co-ordination risk. If you don't need to be invested in the eurozone, then go for better global alternatives".

The escalation in the crisis was underlined by last week's

(Excerpt) Read more at ...

TOPICS: Business/Economy; Crime/Corruption; Foreign Affairs; News/Current Events
KEYWORDS: bondcollapse; dollarinflation; eucrisis; fed; pimco; swaps

1 posted on 12/03/2011 4:10:15 PM PST by bruinbirdman
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To: bruinbirdman

it’s fiscal union so...

2 posted on 12/03/2011 4:14:00 PM PST by the invisib1e hand (omg - obama must go!)
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To: bruinbirdman

ROFLMAO Mr. Balls! Seriously though, should I spend tomorrow adding to my prepping stores?

3 posted on 12/03/2011 4:17:34 PM PST by goodwithagun (My gun has killed fewer people than Ted Kennedy's car.)
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To: bruinbirdman

fiscal union AND bust is more like it

4 posted on 12/03/2011 4:19:11 PM PST by GeronL (The Right to Life came before the Right to Pursue Happiness)
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To: bruinbirdman

And the plan is complete, a few decades after it launches. Adopt a common fiat currency, create common laws by unelected bureaucrats in Brussels. Allow all nations to set their fiscal policy seperately.
Then,, simply wait 10 years for the weak and irresponsible nations to endanger the Euro with their predictable irresponsible fiscal policy.

The “solution” to the deliberately created problem, is that the remaining national powers must be surrendered to the EU government.

Watch folks,, this is scheduled to happen here. This is why DC is “terrified” that the instability in the EU threatens the dollar and the US banking system. This will “prove” that we in the USA must learn to answer to an unelected international government for our own good.

5 posted on 12/03/2011 4:22:41 PM PST by DesertRhino (I was standing with a rifle, waiting for soviet paratroopers, but communists just ran for office)
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To: DesertRhino

“The “solution” to the deliberately created problem, is that the remaining national powers must be surrendered to the EU government.”

I thinks it’s already happening. They have gotten involved in Greek and Itlalian politics and were instrumental in forcing their Prime Ministers to resign. At the time Greek PM Papandreou was forced out he was trying to arrange a referendum from the Greek people as to whether or not they wanted to go back to the Greek Drachma.

6 posted on 12/03/2011 4:54:36 PM PST by haroldeveryman
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To: goodwithagun
Don't forget about Ball's and Cox's call to globally regulate hedge funds...(don't click on the link if you're easily offended.)

7 posted on 12/03/2011 8:06:22 PM PST by Red Dog #1
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To: Red Dog #1

It took Balls to say that!

8 posted on 12/03/2011 9:52:01 PM PST by CT
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