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European bailout is not working, says Pimco

The assistance being given to the peripheral, debt-laden countries of Europe is not working, according to Pimco.

In a post for the Financial Times, Pimco chief executive Mohamed El-Erian warned that the European Central Bank/International Monetary Fund aid handed to Greece, Portugal, Spain and Ireland have not aided their economies, rather just aided those looking to take their money out of them.

He says: “The public sector bailout is not working. Rather than provide assurances of better times ahead and, thus, encourage new investments, ECB/EU/IMF support funding is being used by existing investors to exit their exposures to the most vulnerable peripheral European countries.”

El-Erian says the market risk for the sovereign debt of the so-called PIGS is still “at or near danger levels” and something must be done soon to avoid sovereign defaults.

He says: “This situation cannot be sustained forever. It undermines any chance that the most vulnerable countries have of limiting the collapse in their GDP and maintaining social cohesion; it contaminates the balance sheet of the ECB; it exposes the revolving nature of IMF resources to considerable risk; and it raises the risk of renewed contagion.

“If [policymakers] continue to stumble and hesitate, what has been simmering may well come to a full boil in the next few months.”



IFAs angry at Standard direct sales plan

IFAs have criticised Standard Life for not valuing the adviser channel following chief executive David Nish’s announcement this week that the firm is looking to develop its direct-to-consumer offering. Nish said: “We do not serve 70 per cent of the market, those people who do not use advisers. That is daft.” Managing director of distribution […]


Lost and found

Ask the right questions and even the most uncertain of clients can be put at ease in a first meeting


PFS Conference: Retainers work for younger clients

Offering advice on a retainer basis for younger clients provides a profitable revenue stream, says former Personal Finance Society president Carole Nicholls. Nicholls, partner at Nicholls Stevens Financial Services and PFS president in 2007, has run her business on a fee-based model for a number of years. Speaking in a panel session on adviser charging […]

Ignis warns of autumn fall in economic shock

Markets will plunge in the autumn as investors realise that new government bailouts for the economy will fail to provide a boost, according to Ignis multi-manager Simon Mungall. In a severely bearish commentary, Mungall warns that markets are already “pricing in” a fresh bout of quantitative easing. This means that if another round of QE […]

The investment clock

While Trump blazes blond in the political foreground, it’s easy to overlook the economic background to the new political dimension of 2017. Political risk will be a feature of the year: the unpredictable and untested Trump administration has already created uncertainty, which is unlikely to diminish, especially if protectionist rhetoric starts to outweigh promises of […]


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