Arnab Das, Managing Director of Market Research and Strategy at Roubini Global Economics, says Portugal will follow in Greece's footsteps.
“Our view is that Greece is done, Portugal is coming and also Ireland,” Das told CNBC. “We will see more orderly debt restructuring within the eurozone as long as it’s not part of the 'too big to fail' economies like Italy and Spain.”
Das says the U.S. had managed banking industry deleveraging process far better than the eurozone had done.
“We are going to be in a bank deleveraging mode and leveraging in Europe is much worse than in the U.S. Europe will have a tough time overall,” says Das.
“We’ve averted the worst financial crisis in history but have not solved the core issues yet.”
Das believes the European Central Bank has done an awful lot “without which we’d be in a banking crisis.”
“It has bought banks a lot of time, between 18 months to three years,” he says.
Nonetheless, Das says that while the European Central Bank’s Long Term Refinancing Operation (LTRO) had provided liquidity, that has done nothing to resolve the deeper rooted problems affecting the eurozone.
“A lot of people are already asking, what about after LTRO?” says Das. “It’s been entirely about liquidity. There has been nothing about solvency of banks or the capitalization of banks and that’s what liquidity can’t solve.”
The Washington Post reports that bailed-out Portugal raises $2.65 billion in debt auction despite doubts over the country’s economic recovery.
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