Sunday, September 18, 2011

Reduce Size of EuroZone, Expert Says

Mohamed El-Erian, CEO of PIMCO, the largest bond fund in the world, makes the case that to "save" the Euro, the Euro-zone must "shed" (or as El-Erian puts it, "be placed on sabbatical") some of the poorer performers like a Greece or a Portugal, so the region (and its currency) can recover its footing and lay the basis for a turn-around. It sounds analogous to a large conglomerate spinning off or selling non-performing business units. The difference here, of course, is who is the buyer?

Prior to the commencement of the war in Iraq, then Secretary of State Colin Powell purportedly told the President Bush that once the conflict were to begin, the "Pottery Barn" rule would kick in: Namely, that once "you break it, you own it." It seems to me that while El-Erian's suggestion is an interesting and even plausible one, the bigger Euro centers (Berlin, Paris, etc.) are in far too deep to countenance a sabbatical. It is axiomatic to state that the Euro system is severely damaged, if not broken. And it is too late to say that Berlin and Paris don't own it.


Post a Comment

Twitter Delicious Facebook Digg Stumbleupon Favorites More

Powered by Blogger