Tag Archives: Mohammad El Erian

Portugal will be the next Greece, predicts Mohamed El-Erian

Please refer to the story below:

Portugal will be the next Greece, predicts Mohamed El-Erian (The Guardian)

El-Erian, who is also co-chief investment officer of Pimco, said he expected Portugal’s first bailout package to be insufficient, prompting it to ask the EU and IMF for more money.

“Then there will be a big debate about how to split the burden between the EU, creditors, the IMF and the European Central Bank. And then financial markets will become nervous because they are worried about private sector participation,” he said.

Analysis

Lets look at the unemployment rate in Greece and Portugal (thanks to Google, it is much easier). As a note, I am trusting Google data feed for now, but I plan to take a look into where the data is coming from for future analysis.

The unemployment numbers are minimized by Governments, and growth is usually exaggerated. Given the current polticial situation in the Euro Zone (aka Shit), it seems that Mohammad El Erian is correct in making that call for Portugal following Greece’s path. The next question is, what other countries will follow Portgual?

I found another fun “Debt” clock – thanks to The Economist. Check it out here. (The funny thing is that Greece has 141% debt to GDP ratio, Portugal: 94.6%, Spain: 78.4%, Italy: 121.6%, France: 92.5%, Germany 77.8%). As the debt increases for one country, then it has to be an asset (loan out by) another country, which will be Germany in most of the cases. Is the last card Germany?

Alpha