Andrew Bosomworth, head of Pimco's portfolio management in Europe, said current policies are untenable in the absence of fiscal union and will lead to a break-up of the euro.Read the rest here.
"Greece, Ireland and Portugal cannot get back on their feet without either their own currency or large transfer payments," he told German newspaper Die Welt.
He said these countries could rejoin EMU "after an appropriate debt restructuring", adding that devaluation would let them export their way back to health.
Mr Bosomworth said EU leaders were too quick to congratulate themselves on saving the euro last week with a deal for a permanent bail-out fund from 2013.
"The euro crisis is not over by a long shot. Market tensions will continue into 2011. The mechanism comes far too late," he said.
I've been saying for going on two years now that Greece is broke and it WILL default at some point. They simply owe far more money than they can pay back. Default is inevitable. The only question is what form it will take. Ireland and Portugal are in tough shape. But they might be able to survive. That said it would certainly be in their interest to abandon the Euro (a technical default) and print their way out of the hole they have dug. In any event bond holders are looking to take a really big hit.