Skip to comments.PIMCO chief Mohamed El-Erian expects 'second Greece’ in Portugal
Posted on 03/18/2012 4:53:34 PM PDT by DeaconBenjamin
The giant bond fund PIMCO said Europe has not yet tamed its debt crisis and will soon face a second Greece in Portugal as the countrys economy spirals downwards.
Mohamed El-Erian, PIMCOs chief executive, said Portugal will need a second rescue as the original package of 78bn falls short, setting off a political storm over EU rescue costs.
Unfortunately, that is how it will be. It will make the financial markets nervous because they are worried about a participation of the private sector, he told Der Spiegel.
German finance minister Wolfgang Schäuble insists that there will be no further haircuts for banks, insurers and pension funds holding eurozone sovereign bonds.
However, the EU authorities broke their pledges so many times during the Greek saga that market faith has been shattered. Even Norways sovereign wealth fund will give Club Med debt a wide birth from now on. It has already sold half its Spanish bonds.
If the Greek haircut formula is ultimately extended to Portugal, private creditors can expect to lose everything. The EU and the International Monetary Fund already own most of the debt, reducing everybody else to cannon fodder status.
The IMF said in its latest report that Greece remains accident prone and may need further help and more debt haircuts if the economy fails to respond rapidly enough to reforms.
It warned that a disorderly euro exit would be unavoidable if the EU cuts off support. Such an outcome would threaten the IMF itself with unprecedented losses.
Greek prime minister Lucas Papademos told the Financial Times: "I am convinced that we are more than halfway along the path to economic recovery although the fiscal consolidation process will last longer. Positive growth rates should be achieved within less than two years."
(Excerpt) Read more at telegraph.co.uk ...
Does not matter about Greece or Portugal. The fed is pumping up the market regardless of the fundamentals. The market is on a “Once in a Lifetime Run”.
are we still worried about this.
see post 203 here -
Would not surprise me since the market up everyday for some unknown reason. If true it would not matter for long because Ben B will start QE3 and the market will rally again. If all one did was “buy the dips” they would be a genius.
It will likely take years for the sovereign debt crisis to unwind and crash the respective economies of those holding the debt. But assuredly, the dominoes will fall.
I am deeply scared. If you are not terrified, you are not paying attention.
I’m not a “prepper” as I just don’t believe that the financial collapse will end in Mad Max, but certainly there will be a collapse.
Like I say, if you are not terrified, you are watching too much football and American Idol and not paying attention to the man behind the curtain propping things up.
‘Im not a prepper as I just dont believe that the financial collapse will end in Mad Max, but certainly there will be a collapse.’
i don’t see any other course in the large cities. a financial collapse means that people won’t be getting ‘their check.’ no check = no food = riots.
You’ve lost me.
In both Weimar Germany and in Zimbabwe, the checks kept coming, just in larger and larger wheelbarrow loads, until the collapsed currency was eventually replaced.
I am not saying I’m not terrified by that scenario. I’m just saying that there are 2 ways this could go.
One way is no checks = Mad Max, which we don’t see happen much in history. That did happen in Zimbabwe, where people quit taking cash for goods and dealt in gold, however tiny the weight.
The other way is, continuous massive printing by the government such as during Weimar.
I’m happy to stand corrected but I guess I would need some examples of Europe going Mad Max with the checks cut off sometime in the past 150 years so I have an example to look into. And while you could say it is different this time do to the number and composition of leaches getting checks, the key is if everybody is down to bare subsistence from the government checks, it does satisfy the leaches to some extent that they are getting the same wheelbarrow loads as others.
What am I missing? When did Europe go Mad Max? Or has it always in a deep depression and I’m just ignorant of that fact?
Anybody who doesn’t expect Portugal to go Greek just isn’t paying attention. Portugal is the next domino, and then I’m stumped whether it is Italy or Spain or another nation.
European nations will be rolling through insolvency over the next 10 years as the depression steadily and irresistably deepens. Its going to be a harsh decade.
I really feel for all those out of work who are slaughtering a lifetime of savings while trying to hang on. Especially if they are supporting minor children. That has to be brutal.
i’m in agreement that the likely course is inflation to perhaps hyperinflation.
now, wouldn’t the need to spend the ‘whole check’ on one loaf of bread be the same as no check.
lol, my shift key is broken and i can’t do caps.
I’ll say this. I wish to heaven that I had known one of the unfortunate suffering few who lived through Weimar. They could have given me a nice road map. In fact, if anyone had written a 1st party accout of their day to day survival during Weimar, written with exceptional accuracy and detail, that would be a great road map.
I just can’t answer your question. I am not aware that Weimar or the Great Depression went Mad Max with roving hordes of criminals sacking houses in random neighborhoods on a nightly or weekly basis. I’m just not aware of that, so I am not a full blown “prepper” expecting some modern form of feudalism where I have to be 90% self contained with a barterable surplus, defending my compound with guns and ammo (not that I don’t have any means of defense, mind you...)
Maybe withi the lack of morals today, we will see a mad max situation. I don’t know. I think the government will print hard and inflation will be stiff and we will be shocked with the store prices and scarcity of supply. I just don’t expect full out and out mad max.
I will have full knowledge and get back to you around 2025, after I’ve lived through the coming financial apocalyse I’m dreading.
Good luck to you and yours as it is going to be a difficult struggle for a while. I just don’t know when it starts or how long it lasts or how bad it is going to hurt.
At least we both know something really bad is unavoidable and imminent. Most people I know are still asleep and invested in the stock market and thinking that this will be a normal recession. Yeah. Right. Sure.
‘I will have full knowledge and get back to you around 2025, after Ive lived through the coming financial apocalyse Im dreading.’
me too. i’m 68 so...i may not see you in 2025.
my advice is to go over-board in the direction of over-prepardness and perhaps be a little embarrassed in the future if it’s not needed instead of serious suffering if it is needed.
anyway, good luck to you and yours.
Thank you. I can’t knock anyone who prepares for the worst.
A lot of us won't be around in 2025.
And it's got nothing to do with our age.