Head of bond fund predicts default

The head of PIMCO, the world's biggest bond fund, predicted that Greece and other European economies would default on their debts to resolve their problems as the euro area faces a debt crisis

Greece's government won a vote of confidence late yesterday, a crucial step towards securing further financial aid from the European Union as the country tries to avoid the euro zone's first sovereign debt default.

"For the next three years, we're going to see different economies work out different problems. For European economies, especially Greece, it would be through default," Mohamed El-Erian, chief executive of PIMCO, told reporters in Taipei.

Mr El-Erian has suggested in the past that Greece would default and that Europe risks wasting money for nothing by pumping billions of dollars into the ailing economy.

He added today it was "unlikely but not impossible" that a Greek default would trigger another global financial crisis.

The confidence vote in Athens came after a European ultimatum requiring the debt-choked state to implement a five-year austerity package of measures within the next two weeks or miss out on a €12-billion tranche of aid money.

European policymakers are also considering a second bailout package worth an estimated €120 billion that is meant to extend Greece's year-old €110 billion deal and fund it into 2014.

Reuters