The Other McCain

"One should either write ruthlessly what one believes to be the truth, or else shut up." — Arthur Koestler

Is Greece ‘Too Big to Fail’?

Posted on | May 7, 2010 | 6 Comments

The next bailout candidate:

Problems with Greek debt are about to spread to other countries and could infect the US unless the nation tackles its own mounting problems, Pimco’s Mohamed El-Erian told CNBC. . . .
“We’ve seen a crisis start in a country—Greece—become regional, impact the whole of the Euro zone and is on the verge of truly going global,” said El-Erian, CEO of the world’s biggest bond fund.
He said the debt is a “transmission mechanism to go from country to region to global. So we should take this very seriously.”

The White House wants the U.S. to bail out Greece (and Spain) via the IMF, as Wendell Goler of Fox News reports:

At issue is the US share of a $39 billion loan from the International Monetary Fund, about $7 or $8 billion, which will be voted on Sunday in Washington. The IMF loan is in addition to $106 in European loans, which makes the US share of the total deal about 5% or 6%. President Obama has privately told the Greek Prime Minister that he supports the deal, but it’s a measure of the unpopularity of bailouts that in his daily briefing White House spokesman Robert Gibbs would only say “it’s an important thing for Europe to work through.” Later, the White House released a printed statement saying of the IMF loan “We strongly support this effort to help restore stability to Greece and confidence to the global financial system.”

House Republicans oppose the Euro bailout:

Rep. Cathy McMorris Rodgers (R-Wash), vice chair of the House Republican Conference . . . and House Republican Conference Chairman Mike Pence (R-Ind.) . . . sent a letter to Vice President Joseph Biden urging him to oppose a potential bailout of Spain, which appears to be teetering toward financial crisis.
“Should Spain request a bailout from the IMF, we urge you to make it clear that the U.S. will oppose such a bailout, and do all in its power as the IMF’s leading contributor to reject putting American money further at risk,” they wrote. “The U.S. did not implement the policies that have caused Spain’s debt issue and the U.S. taxpayer should not be put at risk to bail them out.”
The lawmakers have already sent a letter to Treasury Secretary Timothy Geithner calling on him to oppose the $145 billion bailout of Greece, as well as future European bailouts.

With their union supporters devoted to protectionism, Democrats are going to have a hard time explaining why taxpayers should shovel hundreds of billions of dollars into the Eurozone. And the ugly fact is, this IMF bailout plan won’t work.

Accept the truth: If you bought Greek bonds, you’re screwed.

Category: Economics, Foreigners, Greece

Comments

6 Responses to “Is Greece ‘Too Big to Fail’?”

  1. Dave C
    May 7th, 2010 @ 12:55 pm

    Well, if ever there was a mission that was impossible, bailing out Europe would be it.

  2. Dave C
    May 7th, 2010 @ 7:55 am

    Well, if ever there was a mission that was impossible, bailing out Europe would be it.

  3. NebraskaPatriot
    May 7th, 2010 @ 1:04 pm

    Hey guys, it appears that we will soon add a country to our growing government portfolio of ObamaMotors and AGI. This one at least, has some nice real estate!

    Go post on this issue.

  4. NebraskaPatriot
    May 7th, 2010 @ 8:04 am

    Hey guys, it appears that we will soon add a country to our growing government portfolio of ObamaMotors and AGI. This one at least, has some nice real estate!

    Go post on this issue.

  5. richard mcenroe
    May 7th, 2010 @ 1:47 pm

    I say give it back to Turkey if they promise to roll through Armenia to pick it up.

  6. richard mcenroe
    May 7th, 2010 @ 8:47 am

    I say give it back to Turkey if they promise to roll through Armenia to pick it up.