Portugal Could Start Crying out for Help Soon
"Any default within the euro zone would turn attention to the banks, many of which he believes have been allowed to exist in a vegetative, zombie-like state.
“Unless the resolution of these banks can be coordinated in an orderly manner with the restructuring of the debt of the insolvent euro area periphery sovereigns, Europe could be faced with a disorderly, indeed chaotic, period of sequential sovereign and bank default”.
Buiter’s third mechanism is to allow sovereign debt defaults.
“Burden sharing in the correction of an unsustainable fiscal position should see creditors share the burden, as well as tax payers and the beneficiaries of government spending programs,” he said.
If policy makers where to listen to Buiter, Portugal asking for assistance from the EFSF/EFSM could be least of investors problems."