Roubini Warns of Further Irish Government Finance Problems

Nouriel Roubini, chairman of Roubini Global Economics, told CNBC on Friday that recapitalizing Irish banks would be a mistake if it interfered with its own financing concerns. It's expected that the European Central Bank, the Irish Central Bank and Irish government will fund a pool to assist undercapitalized banks. Ireland released results of stress tests on its banks Thursday, reporting that they need a further 24 billion euros ($34.11 billion) in capital. Roubini wonders whether the amount is enough, and whether this is just another duct tape solution for the country's battered financial situation. "I'm not sure that it's going to be enough and putting all the losses of the banks on the balance sheet of the government and eventually breaking the back of the government … it's not the right solution," Roubini said in an interview from the Ambrosetti Forum in Italy. "They cannot keep on socializing losses and eventually having sovereign risk becoming banking risk and banking risk becoming sovereign risk, that's not the right approach."