Mohamed El-Erian : QE3 would be a very bad idea

Mohamed el Erian , PIMCO's CEO on CNBC this morning 14 Apr 2011 he speaks about the debt crisis in Europe and gives an idea about his Market Analysis "The ECB is writing a check every single day" he said , and regarding the situation in America he said that "QE3 would be a very bad idea."





Mohamed el Erian, : ...."...Europe's debt crisis is not going away. why isn't it going away? very simple. you do not solve a debt crisis by piling new debt on top of old debt. ... so our view for what it's worth is that portugal, spain, portugal Ireland and Greece will restructure their debt. the market is pricing that in. today again greece interest rates are at record high. we think spain will avoid this. we think there's a line that's being formed between these three countries and the rest. but the market is going to test that line over and over again."

" what's hapening is that people are realizing that an advanced economy can have a debt issue. you had s&p come out yesterday saying there may be a haircut for countries like greece. you have the greek finance minister in the financial times today saying i don't think the country can come back to the markets "
"they did but as you pointed out earlier they took action so they have been recapitalizing the banking system they've been trying to fix the Cajas which are the saving banks. so they've been taking steps that slows the process down. importantly, don't forget there's someone to write checks. in lehman's case there wasn't somebody to write a check here there is Germany and there is the ECB . the ecb is writing a check every single day." " there are repercussions for Germany. there are absolutely repercussions for Germany " " they can handle it. the main worry is not germany as much as the ecb. you have a central bank just like the fed which is increasing its balance sheet taking on someone else's liabilities. that is a real issue because central banks should not be in the business of taking other people's liabilities. they should be in the business of monetary policy."