Rebel Traders asks Americans to Bailout Greece?
(emphasis mine) [my comment]
Americans to Bailout Greece?
Will the deteriorating conditions in Europe result in American tax payers digging into their wallets to assist with European nation bailouts?
It was reported today that the U.S. Treasury Department was in “close contact” with officials in Europe. Whenever I hear that U.S. officials are in close contact with someone or some nation I get worried.
Why would we contribute to the bailouts in Europe? First is that American corporations are very intertwined with the Euro, and as such American corporations will push the government to make sure bailouts move swiftly in order to stabilize the Euro currency, even if that means involving American taxpayer funds.
Another reason goes right back to the banks and investment houses (yea, Wall Street again). It has been said by some main stream media outlets that a collapse of Greece or the Euro itself would have little impact on the United States. That statement could not be further from reality. Remember that Wall Street banks fought tooth and nail to have their restrictions reduced over the past decade, and as such these firms are ‘in deep' with derivatives, currency swaps, and bonds of various flavors tied to Europe.
So will American taxpayers be a part of Europe' s bailouts? I expect we will. [Me too]
Obama concerned about Greek debt, monitoring closely
ABOARD AIR FORCE ONE, April 28 (Reuters) — U.S. President Barack Obama is concerned about Greece' s debt problems and his administration is in touch with Europe about the issue, White House spokesman Bill Burton said on Wednesday.
"This is something that is of great concern to the president and we' re monitoring it very closely," Burton told reporters on Air Force One, adding that the U.S. Treasury Department and other agencies were "in close contact with folks in Europe about the issue." […]
[On an unrelated note, I am going to start using a slightly darker shade of red highlighting to make my blog entries more readable:
The RED I have been using. The new RED I will start using.
If you look closely you can see the difference. (I still want a fairly bright red)
My reaction: As expect, seems like America is getting ready to bailout Greece.
1) U.S. President Barack Obama is concerned about Greece's debt problems.
2) The US Treasury Department is in "close contact" with officials in Europe. “Close contact” with the Treasury usually means two things:
A) Trouble is much more serious than officially believed.
B) A bailout is imminent.
The US can' t allow a Greek default
1) It has been reported by main stream media outlets that a collapse of Greece or the Euro itself would have little impact on the United States. That statement could not be further from reality.
2) American corporations are very intertwined with the Euro.
3) More importantly, Wall Street firms are 'in deep' with derivatives, currency swaps, and bonds of various flavors tied to Europe.
4) Expect a US bailout of Greece through the IMF (to hide what is going on from the already furious US taxpayer).
Conclusion: On Monday, I wrote about the “Greek debt crisis”. I predicted that the US would bailout Greece. This latest piece of news about ‘close contact' with the US treasury seems to confirm what I wrote.
Greece hit the panic button last Friday.
1) Greece on Friday asked fellow euro-zone members and the International Monetary Fund to bail it out.
2) Investors have been walking away from Greek bonds all year. Greece' s ten-year bond yields shot to nearly 9%, almost triple what Germany pays to borrow.
Greek Default would be a disaster for the US
1) The Greek debt crisis highlights the collapse of the traditional G7 growth model (ie: the US growth model) of high indebtedness and a low share of exports in the economy.
2) A Greek Default would be a disaster for the US. It would be the first confirmed sovereign default of a Western US-style economy, and it would send investors running from the debt of all similar Western economies, especially the US doubts about treasuries.
German Financial Aid Highly Doubtful
1) According to German Finance Minister Wolfgang Schaeuble:
A) Germany has not yet decided whether it will agree to Greece's request for financial aid.
B) No German budget funding will be used to bail out Greece.
IMF (US) aid virtually guaranteed
1) The International Monetary Fund is speeding up efforts to deliver funding help to Greece.
2) IMF officials are circulating the story that “today's IMF is a changed institution from the agency that generated anger in countries around the world for its devastating austerity programs in previous crises.” This suggests that IMF officials are embracing to the idea of aid without demand tough economic/fiscal demands attached.
3) Given the vital importance to the US of preventing a Greek default, the first tranche of aid will probably come from the IMF (the US) not Germany.
Conclusion: I haven' t been focusing on the “Greek debt crisis” because I believe it is a non-event in the grand scheme of things. As I have written before, it wouldn' t be a problem that can be solved by printing money which will bring down the global financial system. In the case of the “Greek debt crisis”, the US will cave, and the IMF will provide enough money to bailout Greece for a couple of months. Before Greece has the chance to run out of money again, the 2010 crisis will begin this summer, leading to the default of all countries with the US growth model of high indebtedness.