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Mohamed El-Erian , Chief executive of Pacific Investment Management Co. (Pimco), said on Wednesday, that the only solution to the debt crisis of Greece is default. Videoconferencing from Taiwan, El-Erian said that Greece will probably end up declaring a moratorium on its sovereign debt, even after the adoption of new austerity measures.
El-Erian cautioned that the IMF and European Union are at risk of wasting money by giving aid to Greece and a Greek default will probably not cause a new global financial crisis, because Greece is very small in terms of economic impact.
Pimco's CEO also said that other European countries are also likely to enter into default, but did not specify what these countries. "For the next three months, we'll see different economies deal with different problems. For the European economies, especially Greece, it will be by way of default,".
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