The Hill Just Killed The Market - Stocks, Euro Stumble As Conservatives Push To End IMF Bailout

Tyler Durden's picture

As rumors and chatter circulate across trading desks, European equity and credit markets are starting to lose their giddiness. European sovereigns are leaking back wider and financials starting to underperform and it is being noted that, as reported by The Hill, that conservatives say they will try to block the IMF from bailing out Italy and Spain. Pointing to the huge bill this could leave at US taxpayer's feet, Republicans are concerned at the secrecy with which Geithner has acted. Sen. Tom Coburn appears to be at the helm of this legislation, noting:

"We're throwing good money after bad down a hole that I think is not a solvable problem. Europe is going to default eventually, so why would you socialize their profligate spending."

Of course, this is beyond obvious, because as we have been saying all along with every reincarnation of the idiotic "IMF to bailout [XXX]" rumor, there always is just one snag. A rather substantial one at that: US congressional approval for expanded IMF bailout capabilities.Specifically, when discussing the latest iteration of the IMF rescue we said: "La Stampa forgot to mention one thing: any changes to the IMF, which currently is massively underfunded and is why the organization was forced to create two new liquidity facilities: a Precautionary and Liquidity Credit line, since it is unable to fund its New Arrangements to Borrow, have to go through US Congress when it comes to expanding funding capacity. Yup, the most dysfunctional, corrupt and criminal thing in the world - the US House of Representatives, where unless everyone is short Italian CDS, this will never pass. In other words: this rumor is dead in the water." And so it is.

From The Hill:

Conservatives craft bill to prevent IMF bailout of crumbling eurozone


Conservatives say they will try to block the International Monetary Fund from bailing out Italy and Spain, which they say could leave U.S. taxpayers with a huge bill.


Republicans on both sides of the Capitol complain that the Obama administration has refused to share details of what Treasury Secretary Timothy Geithner is discussing with European leaders amid reports the IMF could intervene.


Sen. Tom Coburn (R-Okla.) says he is planning legislation directing the U.S. government to veto an expanded role for the fund.


Senate Republican Steering Committee Chairman Jim DeMint (R-S.C.) and Rep. Cathy McMorris Rodgers (Wash.), a member of the House Republican leadership, also have legislation to curb the proposed intervention.


“I’m adamantly against the IMF being involved in this,” Coburn said.


“We’re throwing good money after bad down a hole that I think is not a solvable problem,” he said.


“Europe is going to default eventually, so why would you socialize their profligate spending,” he added.


Coburn estimates the U.S. could be liable for as much as $176 billion if the IMF shores up Italy and Spain and the European Union collapses.


President Obama this week said the U.S. “stands ready to do our part” to help resolve the crisis, and Geithner in October said using U.S. tax dollars through the IMF to shore up Europe’s efforts was appropriate.


DeMint offered an amendment to the defense authorization bill instructing the U.S. executive director of the IMF to use the voice and vote of the United States to oppose funding of the European Financial Stability Facility, the bailout fund that would be used to stabilize countries at risk of default.


“We need some transparency about what’s really going on,” said McMorris Rodgers. “It’s hard to get information. We’re talking about U.S. taxpayer dollars being involved in the European bailout. The administration needs to be honest with the Congress. I believe Congress needs to be involved in making this decision.”

At least this will halt the idiotic rumormill for a day or two.

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stop.snitching's picture

Italian 5Y/10Y now inverted again! Saweet. A huge intraday turnaround of about 9 percent!!!

ratso's picture

This bill is as meaningful as a bill to end sharia law in the US.  It's going nowhere.

This is just more stupid political posturing by electioneering, right wing wingnuts

Carlyle Groupie's picture

It's also a glimps into your future if you pay taxes (99%'er).

whstlblwr's picture

And they say voting doesn't matter.

strannick's picture

Congress can be such a party pooping nuisance.

Thats why the Fed finds it much easier and more convienient to perform their bailouts with low (no) interest currency swaps

“We need some transparency about what’s really going on,” said McMorris Rodgers. Is he kidding? Drag this financial abortion into the light of day, and people would run screaming from the market. Little late for righteous pontificating at this stage of the game.

eureka's picture

In Jim DeMint's demented world only the US has the right to monetize (aledgedly internally only) - after all USD is the world-mint - and yet, at the same time, Demint doesn'tunderstand that any bailout "loans" printed out of thin air by the US Fed and distributed to the globalist bankster-cartel (in this case EU banks to which US banks are heavily exposed) - costs the US absolutely nothing, but rather is essential to preserving global USD+military hegemony - and enables the uber-rich elite's continued aquisition of all real assets.

US FED RES has "printed" and donated $7.7 TRILLION to it's own local bankster cartels.

EU/Europe has yet to multiply its printing by a factor of 7 to catch of with US.

DeMint is a moron; he wants to tank his own Masters: the US Fed bankster military corporate mafia empire.

Whatever. Regardless of congressional theatrics, death is coming to USD as world currency reserve. Anyone with a brain knows it.

Augustus's picture

Great observations.  Glad you are all in support of the IMF funding for the Euroland Bailout.

And you can call DeMint a Moron?

eureka's picture

I'm not in favor of any bailouts. I merely point out the hypocrisy: that US needs the bailout of some European banks, because its "own" banks are exposed to them - and, that since Germany won't allow ECB to "print" by issueing (and buying) EU bonds (as US FED RES buys US T-bonds) - well, the US FED & IMF has to print and "give"/"leand" it to some European banks.

AND - I point out that US "printing" "for" EU costs US nothing - but on the contrary is absolutely necessary to preserve US military and financial-corporate hegemony with cheap commodities for the US via a purposely deflating USD and continued exponential piling of US debt.

In other words, the matter is not US bailout of EU, but rather US bailout of itself and it USD world currency reserve regime. Of course I don't want the US/Fed Res to bailout EU banks - but - no such bailout is happening - the US is only bailing out itself - because it/Wall Street rigged EU sovereigns and EU banks with US garbage paper, just as it has rigged the entire world with increasingly worthless USD ever since WWII. 

US does not help anyone - US screws everyone, including the mass of its own citizens and working poor - and I merely point these facts out. Of course I also don't want US/FED bailout of US banks and corporations.

Here is my above comment again, in edited form (zh server failed to let me edit it aboove) Read it, and I'm sure you will see my point, and if not, you now know from the foregoing paragraphs what i was getting at.

thanks -

In Jim DeMint's demented world only the US has the right to monetize, and aledgedly internally onl. After all USD is the world-mint. Demint doesn't understand that bailout "loans" printed out of thin air by the US Fed and distributed to the globalist-bankster cartel (in this case EU banks to which US banks are heavily exposed) - not only does not costs the US absolutely anyhing, but rather is essential to preserving global USD+military hegemony - and to enabling the uber-rich elite's continued aquisition of all real assets.

US FED RES has "printed" and donated $7.7 TRILLION to it's own local bankster cartels.

EU/Europe has yet to multiply its "printing" by a factor of 7 to catch of with US.

DeMint is a moron, wanting to tank his own Masters: the US Fed bankster military corporate mafia empire.

Regardless of US congress theatrics, death is coming to USD as world currency reserve.

whstlblwr's picture

Argument doesn't make sense. Deflating USD cause commodities to go up. It's time for taxpayers to stop bailing out US banks, whether from IMF, or whereever, banks who gamble and make risky bets that lose, should fail. Bernanke is rewarding risky behavior putting all of us at risk.

eureka's picture

Argument does make sense - from the POV of US elite and even US governent - who couldn't care less if commodities go up, because it/they are more concerned with controlling China and with decimating the value of China's holdings of USD and US Treasuries by purposely devaluing the USD which effectively wipes out US' massive debt, to not just China, but everyone. 

That said, I agree there should be no bailouts of any kind whatsoever, including of the US military empire, which serves no purpose except to force through globalism for the sake the global financial-corporate elite and their corporate and banking institutions.

The battle, gentlemen, is not between US and EU or the world - but between the global elite, who owns and controls the US Fed, US government, US military/CIA etc apparatus, and exploits the common man in the US as well as in most other countries, Europe somewhat excepted due to stringer worker's rights traditions.

And anyone here and anywhere, who are against worker's rights, by definition for the elite, the Fed etc..

Logic Will'st It, Bitchez. And that's Shapespearean Anglo-Mania, not Germania.

GetZeeGold's picture


What......the US taxpayer is against bailing out 50 year old Greek retired citizens.....that seems almost unamerican.

azusgm's picture

The argument is based on the assumption that we NEED the TBTF banks and their derivatives.

Let those entities die and take the Fed with them.

eureka's picture

Agreed, just realize, acknowledge & embrace that with The Fed & banksters goes US Empire.

MonsterBox's picture

What?!?  A congressman actually performing his duly elected duties?  Of course, it hasn't actually happened yet, so the insanity of shoveling taxpayer money to the banksters will likely prevail....

ceilidh_trail's picture

Exactly. I for one do not want to pay ANYTHING to bail out useless europeans (via taxes or inflation). They spend themselves into oblivian and then cry and whine for the rest of us inferior beings to come rescue them AGAIN! We are not bailing out people so much as banksters that made dumbsh%t bets. When I do a dumb move, I eat it. Let them do the same.

Max Hunter's picture

Not to mention.. We have our own problems..

ucsbcanuck's picture

Aye to that - which is why I'm happy our Fin Min Jim Flaherty told them to solve their problems themselves

Jack Napier's picture

If sovereigns default in Europe then banks across the globe, including in the US will default with them due to counter party risk. The Fed has to prop up Europe or all their primary dealers will go kaput, and then the game is over for the USD too. I don't like this any more than the next guy, but they don't have a choice. Their fate was sealed long ago, and they'll go down swinging. Just stay out of the way and enjoy the show. Guns, butter, and precious metals FTW.

Clorox Cowboy's picture

Wonder what tune Congress will be whistling once it becomes obvious that the "unfixable" hole that Europe is in will swallow the US as well?  I predict we'll see another TARP-style, ram-it-down-their-throat, MAD-avoiding bill...maybe Paulson is helping to draft it already?

Random_Robert's picture

Why am I increasingly seeing people calling taxpayers the 99% .... ?

I'm seeing this everywhere. it's moronic.

In the US , The top 5% or earners pay 60% of the taxes, the next 45% of earners pay 37% of the taxes, and the bottom 50% pay 3% of taxes.

get your facts straight before spouting off about 99%'ers.

azusgm's picture

Are you forgetting about the payroll taxes -- SS and Medicare?

Robot Traders Mom's picture

Agreed. It is pointless, right?

The Fed doesn't answer to congress. This isn't going to be the Treasury providing money to the IMF?

CClarity's picture

A bit OT - but what's with the bump up in Morgan Staley, Goldman, and JPM.  7 and 8%?  Can't be Spain rumor.  BAC and WF not so much.  Clues?


ucsbcanuck's picture

Sorry dude, that would mean trying to rationalize the market's behaviour, and if you haven't noticed by now - it's irrational.

Manthong's picture

'Republicans are concerned at the secrecy with which Geithner has acted"

I believe Congress needs to be involved in making this decision.”

Geez.. so who sent them the memo pointing out that the House is supposed to control the purse strings?

Things that go bump's picture

They want a piece of the vig.

Schmuck Raker's picture


Although, it could pass if they attach a rider declaring 'Freedom' Fries will now be called 'Shut-the-f**k-up-and-do-what-we-tell-you' Fries.

SilverIsKing's picture

The Repubs need to be seen as trying to do the right thing so when the SHTF, they can blame the Dems.  They are all bought and paid for by the same banksters so nothing will come of this except make some of the sheep believe that they had our backs.

SMG's picture

You're right about them all being puppets. I wonder if the Oligarchy has finally decided to pull their finger out of the dam.  I still think one last deflationary wave benefits the oligarchy more, than just straight hyperinflation from here.

SilverIsKing's picture

Was the IMF set up in such a way that Congress has no jurisdiction over their decisions?

SMG's picture

I believe congress can cut or expand funding to the IMF.  But if congress is controlled by the same people who run the IMF, I guess it doesn't matter.

whstlblwr's picture

No, not all are puppets, some care about country and not pocket book.

SMG's picture

As far as I can tell, anybody who cares about their country  and the 99%, and is effective at pushing that agenda, gets removed from office with character assisnation, redistricting,  or worse.

whstlblwr's picture

Wrong. There is move on message board to discredit voting. Should tell you something, like maybe voting and getting involved matters.

Call your congress, organize people upset with military legislation or IMF funding to make meeting with their congressmen to oppose it.

Public opposition matters, and those we elect to represent us matter. If you can't run for office hold those you elect accountable.

Tramp Stamper's picture

You sound like a terrorist to me

pods's picture

Wow, please lay off the Hopium.  Or ship some my way!

Public opposition matters only when the issue doesn't.  For things that matters, you do NOT have a say (TARP).


whstlblwr's picture

If we had elected enough of the right ones TARP wouldn't pass. Then after the vote public was mad and voted many out of office. Nothing happens in one minute. We must plan and most important is not to be wimps, you think Coburn et al do this because why? They were elected and represent people who don't like IMF getting taxpayer money.

If tired of bad news take break and them come back, but now is not the time to hide or shrug shoulders.

pods's picture

I am not tired of bad news. I actually like the bad news.  The closer we are to collapse, the closer we are to restarting anew.

So we voted a whole hell of alot out, and the new crew did exactly what?

Anyone?  Bueller?

The TEA party put in a bunch, and when push came to shove, they voted for the system.  

You cannot vote in anyone who will take away his or her own power and authority.  Not going to happen as the people who want to be in those positions want power.

The IMF getting taxpayer money?  Please.

We have a 1.4 TRILLION dollar deficit, ain't no taxpayer money going to the IMF.  Unless you are speaking of my not yet born grandkids.

The system only survives cause of people like you who walk around with those dopey "I VOTED" stickers thinking that they actually have a say in the matter every two of four years.

Wake up.  It is a big fuckin club, and you ain't in it!  (thanks George)


whstlblwr's picture

You're one of those who think if we stop printing we get collapse. Wrong. Maybe initially it will happen, because greedy people who buy bonds in bankrupt cities, companies will lose, but then opposite will happen, faith is restored.

Taxpayer money is going to IMF in form of inflation for all of us, idiot. And anyone who says inflation contained? How the hell is oil at $100, how the hell is stock market high when economy sucks? It's fucking inflation from printing that goes to bailout Europe, IMF, whoever the fuck they want.

Many elected Teaparty are doing good work and supporting things we care about, without the few it would be worse, and next election there will be more, and then election after that.

Flakmeister's picture

The reason oil is at $100 is because of Peak Oil which is at the root of this mess. It is no longer possible to get growth out of the system and mask pledges that cannot be fulfilled... Very simple eh?

Now your Tea Party hacks are not doing good work, unless of course their goal is to collapse things in a way that screws most of the people.... I can handle hyperinflation, the black hole of deflation is another thing.....

whstlblwr's picture

Peak oil is excuse all printers love to explain oil price. Without bank bailouts what would be price of oil? Good for you, you can handle hyperinflation, you have comfortable nest egg for yourself? good for you, selfish prick.

Flakmeister's picture

So Peak oil is wrong?

Hell, with all the money printed up we should be able to increase supply, drop energy prices, stimulate consumption, in other words grow... What went wrong then??

So tell what the price of oil would be if the banks had not been bailed out? I am *very* curious to know...

whstlblwr's picture

What was oil price in March 2009? Around $35, now it's 100. Think peak oil theory around since 70's. So in last two years peak oil got really serious, LOL.

Flakmeister's picture

So you think that the price in a deflationary deleveraging of all assets is the correct one? So if oil should be $35 a barrel, what should gold be per oz?

Maybe explain to me why world oil net exports are down ~10% since 2005 and how the energy content of "All Liquids" is flat since then despite calling anything liquid that burns oil... 

And I have no idea what you meant by the word salad in the third sentence....

whstlblwr's picture

Actually if you had comfortable nest egg, you wouldn't be on your knees for hyperinflation. You are leveraged to your neck. Those of us who don't use margin, or spend more than we can afford don't want to pay for your McMansion.

Flakmeister's picture

Umm.. McMansion??? WTF are you talking about?

Look, you seem to be confused. I suggest you take some time and try to figure things out. I'll be back in a bit...

pods's picture

I tried to be nice.  

If we stop printing we DO collapse.  Sorry, we have not paid a dime toward our debt principal for over 40 years!  Been running deficits that whole time.  

If we stop printing and have to fully fund each and every year's spending with current tax receipts we are going to suffer a cut to GDP of what, 13% immediately?  

As well as problems for every single muni and state who have borrowed money from the to fund UE shortfalls.  Forget about that?

What about the 45 million on food stamps?  How is that going to be financed?  SS?  That surplus is held in special non negotiable bonds.  Which would have to be rolled over or paid off.  No more debt spending, they would have to be paid off.  

With no printing then we would have to sell our bonds on the open market if we did try and deficit spend.  What do you think the effective interest rate should be on bonds for a nation with a 100% Debt to GDP ratio?

Less than 2% on the ten year?

Grow the fuck up and sit your ass at the big kids table.  TEA Party?  Sure the people are good, but the pricks elected are there to protect the system.  

If we are going to debate you have to realize what is actually going on.  

Stop your political thinking and actually try and imagine if the USSA would actually try to live within its means by either funding gov with current receipts or through actual open bond auctions.

But to sit off in lala land of "if we just elect the right people" bullshit while calling others idiots is the height of hypocrisy.