Pacific Investment Management Co.'s Mohamed El-Erian and Loomis Sayles & Co.'s Dan Fuss said the European debt crisis may spread across the globe because of investor concern that governments have borrowed too much to revive their economies.
“After morphing into a regional dislocation, the Greek crisis is now going global,” Mr. El-Erian, the chief executive officer of Newport Beach, California-based Pimco, said Thursday in an e-mail. Mr. El-Erian shares the title of co-chief investment officer of Pimco with Bill Gross, who runs the world's biggest bond fund.
U.S. stock markets fell again today after plunging by the most in a year Thursday on concerns that sovereign debt troubles in Europe will bring the global economic recovery to a halt. The Dow Jones industrial average was off 1.2% near midday on Friday. It fell 3.2% Thursday after European Central Bank President Jean-Claude Trichet resisted pressure to take steps to fight the spreading crisis, and said the bank didn't discuss buying government debt when policy makers met.
Mr. Fuss, whose Loomis Sayles Bond Fund beat 96% of competitors in the past year, said the euro crisis had reached a “critical” point.
“It's a liquidity issue, so it's not just over there, it's over here,” Mr. Fuss said in an interview.