Pimco's Mohamed El-Erian said today that debt problems in foreign countries are now also a problem for US investors. He added that while the US is not Greece it still has "some elements of Greece":
"The US is not Greece. The US has elements of Greece. You recognize that the minute the sovereign is disrupted that has ripple effects through risk markets. You become more humble not about what should happen...it's really what's likely to happen, and what's likely to happen is muted growth, concern about public financing, a crowding out of the private sector and therefore we have to impose a risk premium on account of those factors."
The foreign debt issue feeds into Pimco's forecast of the "new normal" and its scenario of slower growth than what would be expected during a recovery. El-Erian said there is a 60 percent chance of "muted growth and dead dynamics" ahead.
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