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News Link • European Union

ROUBINI: The ECB Will Not Allow Spain And Italy To Game The Bailout

• http://www.businessinsider.com, Matthew Boesler
 NYU economist Nouriel Roubini was on Bloomberg TV this morning giving his thoughts on the ECB's new bond-buying plan announced yesterday.

One of the biggest concerns that the ECB itself has with implementing the new rescue program is that by only buying government debt with maturities of three years or less, Spain and Italy will be incentivized to only issue short-term debt.

However, Roubini said the ECB will tell Spain and Italy if they request bailouts that "this is a game you're not going to be allowed to play."


Roubini told Bloomberg TV:

The ECB is clearly concerned that with short rates now much lower than long rates, there will be a significant shortening of the maturity of the public debt, and that's going to force then the ECB to keep on buying more of the bonds on the short end in the secondary market.



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