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El-Erian Says U.S. Default May Be More Unpredictable Than Lehman

A U.S. default on its debt obligations would prove more unpredictable to financial markets than the 2008 collapse of Lehman Brothers Holding Inc., according to Pimco’s Mohamed El-Erian.

“What frightens us the most is what happens to the plumbing system of the global-financial system,” El-Erian, chief executive and co-chief investment officer at Pacific Investment Management Co., said in an interview on Bloomberg Television’s “Bloomberg Surveillance” with Tom Keene. “You will have cascading failure, multiple defaults, and Treasuries that act as collateral would be very difficult to exchange and people will simply step back. It will be like Lehman, but more unpredictable.”