A fascinating interview from El-Erian chief executive officer of Pacific Investment Management Co. This is one of the few interviews that succulently expresses some important ideas Europe. Europe is a two speed economy - on the inside there is Germany and France on the outside Spain, Portugal, Ireland etc. As a result the ECB's job is tricky - it needs monetary policy and support for the banking system.
Spain is improving Spain is not Greece and need not be Ireland. It has a banking issue but not a government debt problem. It could, like Ireland take on liabilities of the [savings] banking sector or it can try and force as many savings banks as possible to raise capital merge etc. It is trying to fore it to get the private sector to take care of the problem. As a result it is significantly outperforming Greece and Ireland. Greece and Ireland are using liquidity to address solvency and growth problems - and approach that can not continue indefinitely. The underlying issues need to be addressed. They need to restructure the debt like Uruguay, also structural reforms to allow them to grow.
For reasons that I don't fully understand but are probably due to copyright I could not embed the video but you can get it from here.
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