June 22, 2011
The head of Pimco, the world's biggest bond trader, has warned that Greece is still likely to default on its debts, despite prime minister George Papandreou winning a crucial vote of confidence late on Tuesday night.
Mohamed El-Erian, chief executive of Pimco, ratcheted up the pressure on Europe's leaders by predicting that other eurozone members could also follow Greece into default territory.
"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," El-Erian told reporters in Taipei on Wednesday via a video conference, according to Reuters.
The warning came as shares slid across Europe, as attention shifted to Papandreou's next challenge – persuading the Greek parliament to approve a new package of asset sales and spending cuts next week. In London, the FTSE 100 fell as much as 33 points in morning trading and the euro also sagged, as experts warned that Papandreou's narrow victory did little to address the wider eurozone crisis.
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