Tom McDonnell: Credibility is a hard earned thing. The commentariat is overrun with the views of so-called experts whose predictions have been...mixed.
Professor Nouriel Roubini of NYU, on the other hand, gained fame in the US for his prescient predictions about the economic crash.
So what is Professor Roubini saying about the latest bank news out of Ireland?
“Taking all of the losses of the banking system and putting them on the balance sheet of the government doesn’t make sense,”... “Eventually, the back of the government will be broken.”
Roubini argues that a better solution would be to take the senior secured and unsecured debt of the banks “reduce it, convert it into equity so you recapitalize the banks that way and you’re not adding further losses to the balance sheet of the government. Otherwise, you’re going to have not only a banking crisis, but also a sovereign debt crisis.”
The full article is here
Time will tell if he is right.