“Investors are viewing the recent Greek bailout with skepticism and rightfully so, says Mohamed El-Erian, CEO of Pimco, which runs the world’s largest bond fund.
Investors would be wise to avoid risky asset classes at this time, because even though the $172 billion bailout fund for Greece will steer the country away from a messy March default, it won’t solve the country’s deep-seated economic problems.
“The market is being very rational in saying it’s a step but it’s not a big enough step yet,” El-Erian says of the Greek debt deal, CNBC reports.
“Fundamentally, Greece is going to have to find a way to restore growth and restore competitiveness. If it doesn’t do that, private capital isn’t going to come in and if private capital doesn’t come in you don’t get the oxygen that an economy needs.”
Greece is still carrying massive debt loads currently at 160 percent of gross domestic product, and austerity measures attached to bailout money including public-sector layoffs and pension overhauls will slow growth in the near future.
The U.S. isn’t immune to a European implosion either….”
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