Pimco chief: Default Greece's way out of debt problems

Reuters News
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Posted: Jun 22, 2011 5:26 PM
Pimco chief: Default Greece's way out of debt problems

TAIPEI (Reuters) - Greece's way out of its current debt problems would be through default, according to Mohamed El-Erian, the head of the world's largest bond fund Pimco.

"For the next three years, we're going to see different economies work out different problems. For European economies, especially Greece, it would be through default," he told reporters in Taipei on Wednesday via a video conference.

Greece's embattled government survived a confidence vote on Wednesday that was crucial to avoiding a sovereign debt default [ID:nLDE75K21X].

The vote followed a European ultimatum requiring the debt-choked Mediterranean state to implement a new five-year package of deeply unpopular reforms in two weeks or miss out on a 12-billion euro aid tranche and plunge into bankruptcy.

Europe risks wasting more money for nothing if it keeps pumping billions into the ailing Greek economy, El-Erian told an Italian newspaper on Sunday.

(Reporting by Faith Hung; Editing by Jonathan Hopfner)

(The following story was corrected to show the spelling of first name to Mohamed)