The EU’s problem is solvency, not liquidity, says Pimco’s El-Erian
The EU faces a tricky 2011 as it navigates excessive debt, but needs to address solvency issues rather than liquidity, says Pimco's CEO Mohamed El-Erian.
The European Union (EU) cannot continue to treat its financial problems as merely a liquidity issue or there will be market fallout for the union's member states, according to Mohamed El-Erian, chief executive officer and co-chief investment officer at Pimco in Newport Beach, California.
Thus far, the European Central Bank has offered liquidity support to troubled countries in Europe’s periphery by buying their bonds, while in 2010 the EU and IMF agreed bailouts for both Greece and Ireland. Many
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