El-Erian: European Bond Haircuts ARE Coming

Photo: CNBC

PIMCO’s Mohamed El-Erian is on CNBC.He’s wearing a Jets jersey.

We’ll update LIVE if he says anything notable.

After a little bit of football banter, he gets to Europe…

  • The problem is not solved, he argues. We’ve seen this movie several times before, and just printing more money won’t help.
  • It’s time for a “Plan B” he says. 
  • Ultimately, there will be haircut on bonds issued by certain governments in the Eurozone.
  • If you’re buying right now, you’re just making a moral hazard bet.
  • On the muni market: We are in the midst of a massive adjustment at the states.
  • On Bill Gross vs. Meredith Whitney: They’re not actually saying much that’s different. Both acknowledge the need for massive adjustment. Some are going to make it; some will face way more difficulties. In order to get to $100 billion defaults (Whitney’s forecast) you need to stretch, and find some major defaults.

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