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By Nouriel Roubini
Published: November 15 2010 21:02 | Last updated: November 15 2010 21:02
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.
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