Tom McDonnell: Willem Buiter says the key remaining question is whether it will be the banks who default, the Sovereign or both – and there is nothing the EU/IMF can do about it.
Citigroup Global Markets, in an analysis of the ongoing debt crisis, is arguing that the senior, unsecured debt of the banks and/or the sovereign will ultimately need to be restructured. They also argue there is little the EU/ECB/IMF can do to credibly threaten the Irish sovereign should the latter wish to restructure its senior unsecured bank debt unilaterally. However, severe contagion would likely result for the banks in other countries. Lowering the interest rate to something more manageable, say in the region of 3%, is suggested as the only plausible mechanism available to the EU/IMF to dissuade a unilateral restructuring.
Dr Tom McDonnell
Tom McDonnell is senior economist at the NERI and is responsible for among other things, NERI's analysis of the Republic of Ireland economy including risks, trends and forecasts. He specialises in economic growth theory, the economics of innovation, the Irish and European economies, and fiscal policy. He previously worked as an economist at TASC and before that was a lecturer in economics at NUI Galway and at DCU. He has also taught at Maynooth University.
Tom obtained his PhD in economics from NUI Galway.
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