Mohamed El-Erian, head of PIMCO, said over the weekend that a restructuring of Greek debt is inevitable and that failure to address the country's problems correctly could contaminate the rest of Europe.
Reuters reported that El-Erian (left), appearing on the program Fareed Zacharia GPS,said that current measures being taken to keep Greece from defaulting were inappropriate. "It is inevitable that Greece will have to restructure its debt. Europe has been kicking the can down the road, treating Greece's problem not as a solvency issue, but as a liquidity problem," he was quoted saying.
Key votes are planned for the Greek Parliament on Wednesday and Thursday on additional austerity measures designed to induce the European Union (EU) and International Monetary Fund (IMF) to release a tranche of funding amounting to 12 billion euros ($17.2 billion). But El-Erian says he does not think the vote will solve the problem. "Greece has too much debt and cannot grow until these problems are solved. More and more of Europe is going to be contaminated," he said in the report.
