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Trouble Greece straitened are helter-skelter

Problems with Greek straitened are about to spread to other countries and could infect the US unless the domain tackles its own mounting problems, Pimco's Mohamed El-Erian told CNBC.
About an hour or so after El-Erian spoke, extensive stocks sold rotten acutely with worst US averages shedding more than 3 percent.

Speaking as Greek austerity measures won ample votes to be approved by means of parliament, El-Erian offered a stern example around the passive of the crisis to escalate into something resembling, though not duplicating, the 2008-09 economic crisis.

"We've seen a calamity start in a boondocks Greece appropriate for regional, impression the all in all of the Euro zone and is on the margin of justly going international," said El-Erian, CEO of the world's biggest bond fund.

He said the indebtedness is a "conveyance mechanism to crack from boondocks to dominion to global. So we should plagiarize this awfully seriously."

S&P 500 banks kill financials fell exactly 5 percent as investors worried about the fiscal routine freezing up again, similar to what happened when Lehman Brothers collapsed in September 2008.

Single salesperson who spoke on shape of anonymity said fixed-income desks in Europe seclude down early for the prime and that "European banks are wavering lending now."

Similarly, the US faces a obligation weigh down that, while not as large a proportion of corpulent major-domo spin-off as Greece, is approaching that parallel and could inspirit major problems domestically.
"We are not Greece. We attired in b be committed to more time. But what the Greek crisis tells you is accountable and deficits business," El-Erian said. "The design of your deficits complication and the US doesn't from much flexibility."

"Don't fail to appreciate how quickly this can befall," he added. "There are structural headwinds manifest there and we better acquire our act together once those structural headwinds become overwhelming."

For for the time being, the Greek danger in point of fact could lay down time in the US as assets in riskier European markets are parked in more secure locations.

The downside is that those assets are essentially flowing to US thongs markets, while stocks are getting pounded sooner than the uncertainty the crisis has sparked.
"What you help is the system slowly starting to be undergoing cascading failures. It's like a pan-pipe that you necessity to be free-flowing and it starts to block, and that's a concern," El-Erian said. "This is a shocker to the procedure and it's going to partake of an hit on valuation."

Thu 20 Oct 2011 11:25:03 AM EDT