Ireland may be plunged into a a “disastrous” sovereign debt crisis within three years as the cost of rescuing its banks mounts, Nouriel Roubini, who predicted the global financial crisis, said.
Ireland’s government has injected 46 billion euros ($65.5 billion) to bailout the country’s debt-laden financial system, after a decade-long real estate bubble collapsed in 2008. The banks need another 24 billion euros in capital, and the state has pledged to provide whatever they can’t raise alone.
“Eventually the back of the government is going to crack” by “taking all the huge losses of the banking system,” said Roubini, chairman of Roubini Global Economics LLC, at a conference in Budapest today. The approach will “lead us with almost near certainty to a sovereign debt crisis in Ireland in a matter of two or three years.”
Source and full story: Bloomberg, 27 May 2011
