“The head of the world’s biggest bond fund said he sees a more than 1-in-3 chance that the eurozone will break apart and trigger a financial crisis akin to the one that devastated the global economy in 2008.
“It would be the equivalent of a sudden stop” in which financial markets seized up, Mohamed El-Erian, chief executive officer of Pacific Investment Management Co. in Newport Beach, California, said. “It would be really, really messy.”
The global economy suffered its worst recession since World War II after the collapse of Lehman Brothers Holdings Inc. in September 2008 triggered steep falls in global stock markets. Gross domestic product in the U.S., the world’s largest economy, shrank by 5.1 percent.
El-Erian said in a Bloomberg interview that the crisis in Europe is no longer just about what will happen to periphery nations like Greece. “It is now a crisis for the eurozone as a whole,” he said.
He said the most likely outcome — with a 1 in 2 chance — is that European policy makers “get their act together” and manage the transition to a smaller currency union. The least likely is that the 17-nation euro zone stays intact: the possibility of that occurring is just 15 percent, he said……..”
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So 2 in 3 chance we don’t have an 08-09 type meltdown.
Giddy up.