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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 […]


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Ignis warns of autumn fall in economic shock

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The investment clock

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