June 18 - While the Greek election results have eased some immediate concerns, fears about Spain and Italy persist, is putting attention on the G20 and the Federal Reserve for what, if anything, can be done to help the global economy. Bobbi Rebell reports.
The Greek election results have eased immediate concerns about a possible euro zone break up. But the reality is that no economic problems have actually been solved. PIMCO's Neel Kashkari thinks Greece is still on its way out of the euro zone- and it's not going alone: SOUNDBITE: NEEL KASHKARI, HEAD OF GLOBAL EQUITIES, PIMCO (ENGLISH) SAYING: "The big risk of when Greece leaves, it's not just when Greece leaves- is it orderly or disorderly, but who walks out the door with the them? Other countries that could leave- Portugal, Ireland, you know the countries that have already been bailed out by the Troika so to speak. They are still not growing and they are not so big that they have to be preserved within the euro zone." At the G20 in Mexico, world leaders said in their draft communiqué "We are committed to adopting all necessary policy measures to strengthen demand, support global growth and restore confidence." and said they welcomed the Greek election results. But actions will speak louder than words, says S&P Capital IQ's Alec Young: SOUNDBITE: ALEC YOUNG, INTERNATIONAL EQUITY STRATEGIST, S&P CAPITAL IQ (ENGLISH) SAYING "The G20 is already committed to $430 billion in bailout money through the IMF. I think investors are going to be looking to see that number beefed up at the very least." The Fed's two-day meeting, which ends on Wednesday, could have an interesting twist as well. SOUNDBITE: ALEC YOUNG, INTERNATIONAL EQUITY STRATEGIST, S&P CAPITAL IQ (ENGLISH) SAYING "Even though the Greek election did break the right way for markets, I think investors still expect significant details on what the Fed is prepared to do, whether it's extending operation twist, moving ahead with QE3. And I think there is room for disappointment because so far the Fed has made it clear they are not willing to get into at a lot of detail." But as economic growth in the U.S. weakens, a case is building for some kind of action from the Fed. Bobbi Rebell, Reuters.