Roubini: Ireland'S Sadness Will Speed Up The Restructuring Of Europe.

In Beijing time November 16th, the Financial Times published the topic entitled "

When the EU tried to force it to accept an aid package, the Irish government could hardly sell its domestic debt in the open market.

This sadness is exactly the same as that of Greece this spring.

At the same time, Spain, Italy and Portugal.

In the short run,

Take Ireland as an example. The current situation in the country is very similar to that in Greece. It has already been on the edge of insolvency, or even has lost its ability to repay.

By the end of this year, whether Greece or Ireland, the deficit will account for 30% of GDP.

At the same time, Ireland's public debt will account for 100% of GDP.

Experts predict that in the next two years, this proportion will rise to 120% or even higher.

Therefore, no matter what the details of any temporary aid scheme are, what Ireland needs most now is

The important question faced by EU policymakers is how should this restructuring be carried out?

So far, the European Union has proved that there is a lack of a formal and legitimate mechanism for emergency financial assistance aimed at restructuring debts.

At present, such mechanisms have long been taken into consideration in the European Union.

Through such a mechanism, we will see that the private sector owners with sovereign debt will bear losses before the government's further assistance takes place.

Previously, the Basel Committee and the Financial Stability Board have said they have been studying a comprehensive bank plan for "systemically important" banks, which may include capital surcharges, capital and Bail-in Debt.

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On the 12 th of this month, German finance minister Schauble proposed that the EU should plan to establish a permanent crisis response mechanism to deal with the bankruptcy problems faced by some member states.

German Chancellor Merkel claimed that taxpayers could not shoulder the heavy responsibility of "paying for sovereign arrears" on one hand. Instead, investors and taxpayers should shoulder the burden when the financial problems are unavoidable.

Merkel's argument has been recognized by many people, but has also been strongly opposed.

For example, there is a heated debate within the European Union on how to deal with Irish debt.

There were similar debates between 2001 and 2001.

At that time, as a crisis management plan for emerging market economy countries, Krueger, the first vice president of the International Monetary Fund (IMF), proposed the sovereign debt restructuring mechanism (SDRM) and aroused widespread controversy.

A core issue at that time was that sovereign debt restructuring involves decentralized and pluralistic international creditor groups. Therefore, there are problems of coordination and collective action, which may also be the core issue at present.

Proponents of SDRM claim that this mechanism will bind all countries together to replace the various and conflicting provisions in the private debt agreement.

If this mechanism is implemented, it will enable creditors and debtors to suspend their stay in court and start negotiations on reorganization.

However, because of the resolute opposition of Wall Street, the IMF member states also failed to see the common economic benefits, and the super national solution made people afraid, and so on, SDRM did not see the day.

Today, the European Union is facing the same problem.

The sooner the EU recognizes and introduces a default scheme, the sooner it will ask for the nightmare of the debt crisis.

The author of this commentary, Nouriel Roubini, is Professor of economics at New York University's (New York University) Stern business school and chairman of Roubini Global Economics Consulting Company (Roubini Global Economics). He was known as "Dr. doomsday" for accurately predicting the global financial crisis in Lille.