Euro Zone: Another Crisis, Another Backdoor Taxpayer Bailout?

EconMatters's picture

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spanish inquisition's picture

Based on previous behavior, the FED can print as much as it wants and give it to whomever they damn well please.

Also, the Fed has guaranteed $7T and lent out only about $1.2T. If they are not going to give me cash directly, I can always call JG Wentworth. I will sell the guarauntees at 50%, take the cash and lever up in the UK.

Edit: Nobody tells baby not to print

walküre's picture

All you have to ask is who benefits from this treaty?

All lenders and buyers of sovereigns are being made whole now. They sure won't go hungry /sarc

Rest of the people can live like Dreck!

swani's picture

@ Commerce Exchange

The IMF is the US and so ultimately, these new 'loans' to insolvent sovereigns, are being guaranteed by the US tax payer. We also know that if involved in the financings, the US IMF banks (JP Morgan and others) get preferred status in any sovereign bankruptcy. In light of what transpired during the MF Global bankruptcy, the 'preferred' status given to JP Morgan by the trustee has meant, that segrated client funds that were supposed to stay segregated, by law, have been taken by JP Morgan, an unsecured creditor. That doesn't bode very well for the US tax payers in the case of any future sovereign bankruptcies where investment banks like JP Morgan will have preferred status off the bat. In this situation, the US tax payers will have less 'protection' than the MF Global customers.

Plus, if the IMF gets involved, countries would lose all of their soverignty. The IMF would essentially run the country's finances and control all state assets, which basically results in the asset stripping of the said economies in order to continue to repay the new IMF loans that were necessary because the countries' GDP could not sustain the payments of the central banks's loans.  Historically, borrowing from the IMF has always been devesating for countries, as after paying the IMF, there is no capital left for growth, all state assets fall into private, usually foreign hands and most wealth extracted from those assets is exported outside of the countries. It's a great deal for the IMF banks, as this means, the taking of real assets, like Italy's gold reserves for example, in exchange for paper, which in light of all the debt, QE and other inflationary policies, has questionable future value.




swani's picture

Of course this is what will happen, as I am convinced that these people will not stop privatizing profits and socialisng losses until they are forced to do so. They will squeeze every last drop from the tax payers of the world until everyone is paving their own roads, picking up their own mail and paying taxes on breathing. They will keep going until they cannot continue.

Element's picture

Politics truly trumps economics as Germany could be using this crisis as a cudgel to gain power and control over the EU and on the global stage. This also seems to indicate Germany has plenty of resource for this step-by-step waiting game. 


I don't know why people are surprised by this, as a strong large state surrounded by small weaker states that are basically a strategic liability, are going to take control, as a matter of their own necessities and self interest.  I don't see this progression as strange or unforeseeable.  It's really the relative weakness in the other states that is pushing Germany to a dominant role.  Of course they are going run with it.