Wednesday, July 27, 2011

Roubini: Greek Package Just Buys Some Politicians Some Time, Ireland, Portugal Also Insolvent

Nouriel Roubini said today that the new rescue package for Greece does not put an end to the debt crisis of the euro area and warned that Ireland and Portugal "are also insolvent."

In an interview with German weekly newspaper Die Zeit, Roubini warned that "in some years, the current financial aid program for Portugal will fail. The same goes for Ireland."

The new aid package to Greece by European leaders that was closed last week will, at best, buy time, he said. Politicians in the euro area can be off the hook for another five years, " but in the end will be facing "very difficult decisions."

"I see a chance of up to 30% of Greece or Portugal out of the eurozone," said Roubini.
On the global economic outlook, the U.S. economist said "worried about the possibility of forced landing (in China) in two or three years." Chinese growth is fueled by heavy investment in infrastructure and production, which may create "excess capacity" and cause "credit problems," he said.

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