PIMCO chief: Merkel's fiscal union is a 'burden'

PIMCO's chief executive Mohamed El-Erian described Chancellor Merkel's decision to insist on fiscal reform as a ‘burden' to an already challenged political construct that is trying to restore order.

El-Erian, also co-CIO at the world's largest bond house, said Merkel's move towards European fiscal union was a 'political moral hazard'. "Many knowledgeable observers believe that the intention in the eurozone core is to intervene, provided the reform process is serious and making headway, but not to announce this intention in order to mitigate the moral hazard problem," said El-Erian. "A similar kind of political moral hazard may have motivated German Chancellor Angela Merkel's decision to insist on a parallel process of fiscal reform, in spite of the fact that such a process burde...