Jim O'Neill warns against over-pessimism on Greek question

MANNHEIM: Emerging markets' place in today's world makes a re-run of the 2008 crisis unlikely, said Goldman Sachs's Jim O'Neill at a conference in Mannheim, Germany today as he warned against 'over-pessimism' in investor sentiment surrounding Greece.

'China is creating another Greece every three to four months', said O'Neill, speaking at the Fonds Professionell Kongress, in reference to the relative economy size of the two countries. 'Greece is not the most important thing in the world.'

His comments come as some commentators warn that a Greek default and a break of the 17 member common currency could lead to a credit crunch comparable to the Lehman crash.

Michael  Hasenstab, global bond manager at Franklin Templeton, is amongst those to warn in his outlook for 2012 of a worst-case 'Lehman' scenario if a resolution to the Euro debt crisis sees no progress.

Negotiations between holders of Greek debt and officials saw little progress last week on an agreement that would see Greek investors take voluntary losses.

'We are nowhere near where we were in 2008,' O'Neill told an audience of investors. 'It is not the right framework to use because of the place of the BRICs and growth markets today'.

The next IMF chief, he said will not be chosen through a 'cushy deal' between the US, Germany and France as 'by 2020 China's share of global GDP will match the whole of the euro area.'

Last week, the Chinese government announced figures that showed economic growth had fallen in the fourth quarter to just below 9% compared with the previous quarter which saw over 9% growth.