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Irish Woes Should Speed Europe’s Default Plan

From the Financial Times:

As the European Union attempts to force it to accept an aid package, Ireland’s government is close to being unable to sell its debt on the open market, a fate that befell Greece last spring. Bond spreads in Spain, Italy and Portugal are also rising, with the Portuguese finance minister warning on Monday that his country may have to accept a rescue package too.
 
In the short term the EU will kick the can down the road via a temporary Irish bail-out, just as it did with Greece. It is likely to do the same with Portugal. But it has finally dawned on the EU that a rolling process that places private bank losses on to public balance sheets could leave its governments insolvent too.

Read the rest of the article.

 
Editor’s Note: This is an excerpt of a longer piece previously made available to RGE clients, An Orderly Market-Based Approach to the Restructuring of Eurozone Sovereign Debts Obviates the Need for Statutory Approaches by Nouriel Roubini

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