Roubini, PIMCO’s El-Erian: Kick Out Greece to Save Euro

PIMCO CEO Mohamed El-Erian. (Photo: AP)

Two of the most followed financial leaders on Monday called for Greece to abandon the euro to save the eurozone.
Both Mohamed El-Erian of PIMCO and Nouriel Roubini, a leading economic strategist, suggested the move was the only way forward.
El-Erian, CEO and co-CIO of PIMCO, says an exit from the joint currency bloc for Greece and possibly one or two other countries (likely Portugal and Ireland, though he does not specify) will make for a stronger eurozone with a currency better able to resist "policy mistakes and market accidents."
Roubini, co-founder and chairman of Roubini Global Economics, says that Greece must default on its debts and leave the eurozone in order to escape its current disastrous economy and "rip-off" debt exchange deal.
El-Erian advocates saving the euro, via the departure of peripheral, bailed-out nations—one of only two courses of action open to the 17-nation bloc. In an opinion piece originally appearing Saturday in the German business newspaper Handelsblatt and reported by the Huffington Post, El-Erian said the euro was not only "central to Europe's economic prosperity, financial stability and political harmony," but "critical to placing an increasingly multi-polar world economy back on the path of high growth and job creation." To that end, he said, Europe must make some hard decisions concerning both structures and institutions, and its approach must change.
Calling upon Germany, France, Austria, Finland and the Netherlands to decide on just what they envision for European integration, he said that the status quo was no longer acceptable and that neither choice available to them is easy: either maintaining the eurozone at its current size, or reducing it to a smaller and stronger entity.
While both options are expensive and controversial, he added, with the strong possibility of "collateral damage and unintended consequences," he pointed out that the first choice, of keeping the eurozone intact, depends on a number of factors, one of which is the willingness of stronger economies to shore up weaker ones—but they cannot help them grow their economies; the weaker countries themselves must work to do that, a task that is growing less likely as their citizens are increasingly subject to austerity fatigue and the perception that they are being forced into austerity by richer neighbors.
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