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Despite the new rescue package, there’s still a strong risk that Greece will eventually have to drop the euro, influential economist Mohamed El-Erian said Thursday.
“The baseline scenario is still that Greece ultimately exits the euro zone,” he said.
But the short-term roadmap for the debt deal, which passed the Greek parliament early Thursday, should go relatively smoothly, the chief economic adviser at German financial giant Allianz said.
In the long run, however, it’s going to get “really messy” for Greece, warned El-Erian, former co-CEO of Pimco. “Greece doesn’t own the program. So implementation is going to get tricky. The financing is very challenging.”
“It’s not going to be easy to restart that economy,” which continues to implode, he continued—adding it’s going to be expensive to restructure and recapitalize the Greek banking system.
Full article: El-Erian: Greek deal only prolongs the inevitable (CNBC)