The European leaders must resign themselves to monetary union, set down without leaving his option and at the same time to deal with the debt crisis in the region, says Richard Klarida, strategic advisor to Pacific Investment Management Co., The largest bond fund world.
“The challenge for Europe is that the euro was created without a mechanism to leave the monetary union”, said Klarida. “Now they have to create such a mechanism in motion”.
His two-day meeting in Brussels, EU leaders committed themselves to stand up for Greece in the event that the Greek Prime Minister George Papandreou failed to pass a package of new spending cuts. Thus the failure of the Mediterranean countries will be prevented for the moment, but the euro will be supported.
If Greece does not use the euro, the country could devalue its currency and thus lower debt levels and to encourage exports. The plan depends on the ability of the Greek prime minister to push for new budget cuts 78 billion euros in the Greek Parliament. The program was agreed by experts from the European Commission (EC), European Central Bank (ECB) and International Monetary Fund (IMF).
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The Dubai’s credit problems are “trailing effect” from the global credit crisis shows that governments should be more active actions to prevent such a new crisis. Such is the opinion of Mohammed El-Erian, chief executive of one of the most influential investment funds in the world – PIMCO. El-Erian points out that the center of the policy of the United States and other countries should stand in job creation and change of fiscal policy. Only thus could the world to return to growth. “The global economy should achieve higher growth, higher employment,” said El-Erian to CNBC. “If she does so, then we will have to undergo serious balanced economy, multi-redistribution,” said the specialist. According to El-Erian irresponsible fiscal policy, which is used in high leverage and low collateral attacks are caused by economies such as Dubai.
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