"Pimco co-CEO Mohammed El-Erian says European Bond Investors Must Accept Losses
"The main issue right now is the integrity of the eurozone is getting weaker and weaker as we delay the problem,” El-Erian tells CNBC. “They are simply kicking the can down the road."
"Ultimately there will be a haircut to bonds issued by certain governments in the eurozone, and the longer we delay that recognition the bigger the problem and the more disorderly the process will be."
El-Erian believes U.S. municipal bonds are an especially interesting market now.
"We are in the midst of a massive adjustment in the state and local level that we're going to have to undertake," he says.
"The key issue when you invest in municipals is two things: It's not just in the rate risk, it's interest rate and credit risk, and therefore be highly differentiated. You want to be very high up in the credit curve."
at http://globaleconomicanalysis.blogspot.com/2011/01/pimco-ceo-says-europe-is-kicking-can.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+MishsGlobalEconomicTrendAnalysis+%28Mish%27s+Global+Economic+Trend+Analysis%29
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