The World's About to Go Greek, say two top analysts

[marmar]

Pimco’s El-Erian, Loomis’s Fuss Say Greek Crisis Going Global
By Sree Vidya Bhaktavatsalam and Christopher Condon


May 7 (Bloomberg) -- Pacific Investment Management Co.’s Mohamed El-Erian and Loomis Sayles & Co.’s Dan Fuss said the European debt crisis may spread across the globe because of investor concern that governments have borrowed too much to revive their economies.

“After morphing into a regional dislocation, the Greek crisis is now going global,” El-Erian, the chief executive officer of Newport Beach, California-based Pimco, said yesterday in an e-mail. El-Erian shares the title of co-chief investment officer of Pimco with Bill Gross, who runs the world’s biggest bond fund.

U.S. stock markets plunged by the most in a year yesterday on concerns that the debt troubles in Europe will bring the global economic recovery to a halt. The Dow average slumped as much as 9.2 percent during the day before paring losses. European Central Bank President Jean-Claude Trichet resisted pressure to take steps to fight the spreading crisis, and said the bank didn’t discuss buying government debt when policy makers met yesterday.

Asian stocks fell today after the rout in U.S. equities. The MSCI Asia Pacific Index slid 1.6 percent to 117.88 at 9:22 a.m. in Tokyo, set to close at the lowest level since Feb. 25.

Fuss, whose Loomis Sayles Bond Fund beat 96 percent of competitors in the past year, said the euro crisis had reached a “critical” point. ..............(more)

The complete piece is at: http://www.bloomberg.com/apps/news?pid=20601087&sid=aNS3MryXueCk&pos=5

[Tansy_Gold]

1. No, it was just a glitch. everyone gets a do-over tomorrow.

Dontcha know?

There's no crisis. Just a glitch, that's all.



:sarcasm:


Tansy Gold

[villager]

2. so what do "investors" invest in after they succeed in collapsing governments?

how did market manipulators become bigger than governments?

And how do We the People "correct" this?

[PurityOfEssence]

20. 1. Alaskan Bananas, 2. By the Invisible Hand, 3. Shut up and buy more

La la la la la.

[villager]

21. Good to hear from you, PoE. Alaskan Bananas, indeed...

...should take just a few more years of ratcheted-up temperatures before we're there...

[WinkyDink]

27. The govts have the guns. They should nationalize the economy before letting the nation collapse.

[Skink]

3. Nine percent?

was that like a thousand points off?

[beyurslf]

16. I think it was like 950 or something about there.

[Oregone]

4. Oh, but please don't take my capitalism away

Its the bestest system ever. It wont create bubble economies again backed by debt and hope. I promise.

"It puts the lotion on"

[BzaDem]

23. What economic system do you propose? Just curious. n/t

[Oregone]

24. Mixed economy between socialism and co-op private enterprise

I would be a fan of only allowing private ownership insofar as the owners are the actual employees (then socializing necessary services & industry like energy and health insurance).

You could still do this and allow private investment, as long as there is no infinite ROI on an initial investment. If an investor is not materially involved as an employee, they must sell their ownership back to the company over a certain schedule (such that it is still lucrative to invest)

[Statistical]

31. "they must sell their ownership back to the company"

What if the company doesn't want to repurchase the shares. Repurchasing all of a companies shares is rather expensive. Doing so would put the company at competitive disadvantage to its peers (who is spending money on plants, upgrades, R&D, marketing).

So then the investor is just stuck. Yeah I wonder why nobody is the world adopted this system.

[Oregone]

33. If a company cannot buy those shares back over a 20-30 year schedule....

That company isn't doing very good, and hence, those shares shouldn't be worth shit. So egg in face of the capitalist that made the initial shitty investment.

The company will want to repurchase the shares with their *profits* (since the employees who run the company will want that ownership), and being that it will only spend its *profits* to do so, then it will create no competitive disadvantage whatsoever. In capitalism, those profits are simply disbursed to the shareholders; in this system, those profits are exchanged with the private shareholders for the ownership (which is then distributed back to employees proportionally to their pay, and the rest of the profits are distributed to the employees).

Remember, money spent on "plants, upgrades, R&D, marketing" is not *profit*, and never makes it to a shareholder anyway. In both systems, you still have the exact same amount of money at the end of the year, theoretically, to blow on stock repurchases and dividends. I say theoretically because a company ran by employees may be more focused on long-term business models and may invest more into the business (and have less profits). But thats a board decision that is independent of the system, and depends on various scenarios.


"So then the investor is just stuck"

The investor (or former employee) gets a nice solid 20-30 year return on their investment or work. An employee could call this a "pension" (which could also be invested in some sort of local, limited exchange for security).

Think outside of the box for once. This is a system that rewards both hard work and investment. It just doesn't create an infinite, inheritable ROI on investment by shorting the workers.

[WinkyDink]

28. Scandinavia sems to work well.

[Statistical]

32. There is capitalism in Scandinavia.

You can even buy some of their largest companies here (ADR) like Nokia.

[Rex]

5. I don't agree, not unless China and America default.

We would have gone down with the USSR, didn't happen.

[MUAD_DIB]

10. THe USSR was a closed system.

[Rex]

17. So, centralized or not doesn't matter. Both had assets in the global economy.

China survived quite well with their form of communism.

[MUAD_DIB]

35. Which makes your former point a little weak.

[Democrats_win]

6. That's what happens when you borrow from the rich instead of taxing them.

Is there a communist revolution in our future? If the rich people won't give, or lend us "their" (our) money, we'll just take it. And if you think about how crooked and rotten the rich have been over the past 30 years, you've got to love the justice of it all. As with the deregulated BP oil platform, the rich don't know what's good for them. They could have had their cake and steak.

Head for the hills rich people, we're all Greeks know and soon it will all be Greek to you.

[Hardrada]

9. It's the final conflict. Let each stand in his place!

The International Working Class will be the Human Race!!




(The Internationale)

[PM Martin]

7. The massive debt was accumulated

because the banks demanded massive bailouts.

[Rex]

8. And the government gave it to them, they caved in to corporations

instead of the other way round.

[inna]

11. Great post. And wtf is going on in Great Britain???

(Labour just suffered its WORST loss in 80 years!!)


:banghead:

[girl gone mad]

12. The crisis never ended.

We simply shifted much of that bad bank debt onto the public balance sheet, creating a sovereign crisis in the process. Only now it seems the initial insolvency crisis has reared its ugly head again. The only surprise is how quickly it happened. $30 Trillion didn't buy very much time.

[Greyhound]

22. This is going to be an interesting Summer. The same crisis for decades that

they keep delaying and re-financing, and now...

People are standing up, a few right now. Let's see if it catches on...

[Turbineguy]

13. Mr El-Erian

is not like Glenn Beck or Rush Limbaugh. He does not talk out of his ass.

I read his commentary as such: "To the ECB: Get your head out of your ass and fix this. You can. Just do it. Quit stalling!"

[bemildred]

14. Oh good, more "experts". nt

[depakid]

15. I wonder what scam these two have running

You can bet the farm that they have one (or more).

[leeroysphitz]

18. There never was a fucking "global recovery". n/t

[hulka38]

19. It's already here in many of our states.

[xchrom]

25. Well this is certainly going to be interesting to watch. Nt

[indepat]

26. When El-Erian speaks even a word, the wise scamper to take note

:-)

[Uncle Joe]

29. Well there's plenty enough lubrication floating around in the Gulf to make it happen. n/t

[Octafish]

30. Fiscal austerity, meaning cut social programs.

Don't touch the war spending, however. As it's the only sector in the global economy that's recession-proof, the business of killing is, pardon the blasphemy, sacrosanct.

[nadinbrzezinski]

34. Are these two guys NEOCONS?

Or did they forget about Keynes?

This is the right wing wishing the economy collapses so we can privatize or destroy every social program.

While the left wishes it collapses for the glorious revolution to come... in the end, they can give each other a hand shake under the table