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US Taxpayers Commence Bailing Out ECB, With Greece As Intermediary

Tyler Durden's picture




 

Over the past few month we have made it expressly clear that as part of its bailout of European banks, all Greek "bailout" funding in the form of super senior first lien debt funded by the Troika (since the Greek balance sheet now has 7 distinct debt classes), which counts the IMF among its backers, which in turn means you, US taxpayers, will go to European banks and most importantly, that most undercapitalized hedge fund of all, the ECB, LLC. Said funding has now officially commenced. There are those Greeks who may read the following headline from Reuters with delight "Greece receives first tranche of new bailout aid", at least until they get to the following part: "Greece  has received the first 7.5 billion euros of aid from its new EU/IMF  bailout, with the bulk of the payment going to repay bonds held by the  euro zone's central banks, government officials said on Tuesday." So while the Greek may particularly care that not only will they not see much if any of the actual bailout cash, and in fact will soon have to start using their gold to fill the capital shortfall as reported here, we are curious what the response will be from US taxpayers, who are on the hook for about 17% of IMF funding, as the money starts trickling in, however not for some old-fashioned concepts such as stimulating jobs, but simply to indirectly, with Greece as a conduit, bailout Europe's insolvent central banks.

More:

The International Monetary Fund and Greece's euro zone partners last week approved a second 130 billion euro ($172.15 billion) rescue to keep the debt-choked country afloat through 2014.

 

"We received 5.9 billion euros from the euro zone and 1.6 billion euros from the IMF," a finance ministry official told Reuters.

 

The official said Greece would use this money to pay 4.66 billion euros to the European Central Bank and other euro zone national central banks for the capital amount of a 3-year bond which expired on Tuesday. The amount will also cover about 200 million euros in interest on the same bond, with the rest going to cover budget needs, the official said.

For now the US-sourced funding is de-minimis in the grand scheme of things. However, if history is any precedent, the number will only rise. Another precedent also is that US response will be largely muted. After all iTrinkets abound.

 

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Tue, 03/20/2012 - 09:33 | 2272879 GetZeeGold
GetZeeGold's picture

 

 

Here......let me write you a check for that.

Tue, 03/20/2012 - 10:44 | 2273110 Sudden Debt
Sudden Debt's picture

Glad you're fronting it because I only have trillion dollar bills in my wallet

Tue, 03/20/2012 - 09:35 | 2272884 LongSoupLine
LongSoupLine's picture

Long - US sales in Ramen-Noodles

Short - Anything more expensive than Ramen-Noodles

Tue, 03/20/2012 - 09:37 | 2272891 Stuck on Zero
Stuck on Zero's picture

Long - European sales of Ferraris in $$$

Tue, 03/20/2012 - 13:36 | 2273910 falun bong
falun bong's picture

Italy announced that all Ferrari owners will get a tax audit. So sales of used 458s have quadrupled. You can buy one now for EUR 120,000, drive it to Paris, and make EUR 50,000.

Tue, 03/20/2012 - 13:52 | 2273986 odatruf
odatruf's picture

Don't you mean buy it in and drive it from Paris?  That would make sense if the demand in Italy for used 458s has quadrupled.  Since Itay can't audit someone in Paris (unless there is some nexus), why would the market there be affected?

 

Tue, 03/20/2012 - 09:35 | 2272886 pepperspray
pepperspray's picture

So we can audit the German tax collectors

Tue, 03/20/2012 - 09:38 | 2272893 SheepRevolution
SheepRevolution's picture

You'll find them in 50-feet yachts on Krete and Rhodos by now..

Tue, 03/20/2012 - 09:42 | 2272903 steve from virginia
steve from virginia's picture

It is likely the IMF funds have gone to Greece (but the Greek government is hopelessly corrupt so little of that trickles down to actual Greek human beings).

Any funds actually going to Greece from here out will be IMF funds and the form these funds will take will be SDRs (presuming the Greeks have parted ways w/ the euro).

The IMF will fund the country and the amount will likely be the €17bn that was announced as the IMF contribution. That would be in line with the IMF loan made to Hungary in 2008:

http://www.imf.org/external/pubs/ft/survey/so/2008/car110608a.htm

As it stands, the bulk of the legacy Greek sovereign balance sheet is already in ECB 'safekeeping'. New euro loans are out of the question.

Tue, 03/20/2012 - 10:25 | 2273022 Schmuck Raker
Schmuck Raker's picture

No new Euro loans? Maybe.

But plenty more Euro 'liquidity' it seems.

From Friday:

http://www.ekathimerini.com/4dcgi/_w_articles_wsite2_1_16/03/2012_433265

Tue, 03/20/2012 - 09:45 | 2272919 Stackers
Stackers's picture

Give em all the Federal Reserve Notes they want. I'm hoping they dig the hole deep enough that we'll never see them again when the sides cave in on their heads.

Tue, 03/20/2012 - 09:45 | 2272920 topshelfstuff
topshelfstuff's picture

so we are basically "Bailing Out" any thing, country, company, people, etc., in the WEST, since the USD is acceptable in the West, just put it on our Tab

won't work in the East though

Tue, 03/20/2012 - 09:45 | 2272923 WaEver
WaEver's picture

let there be one lesson from the greek default/bailout drama/comedy : only fools buy government bonds

Tue, 03/20/2012 - 10:11 | 2272989 Dr. Engali
Dr. Engali's picture

There are plenty of fools out there. Who would have thought that people would have bought corporate bonds after all the contract laws broken in the GM bankruptcy? But corporates are in high demand. Or who would have thought that there wouldn't even be a peep after 1.2 billion dollars was stolen in the MF Global bankruptcy? There are plenty of fools who will continue to play.

Tue, 03/20/2012 - 10:23 | 2273014 fiftybagger
fiftybagger's picture

Yes, and a fool and his money are soon parted.

Silver For The People

http://www.brotherjohnf.com/

 

Tue, 03/20/2012 - 11:51 | 2273463 Amish Hacker
Amish Hacker's picture

The question is, how did the fool and the money get together in the first place?

Tue, 03/20/2012 - 09:48 | 2272931 MsCreant
MsCreant's picture

I have typed this before but it may be worth repeating

Greece = AIG

Tue, 03/20/2012 - 10:00 | 2272961 Stackers
Stackers's picture

Let me fix that for you.

 

Greece = Bear Sterns

Portugal = Lehman Bros

Spain = AIG

Tue, 03/20/2012 - 09:58 | 2272954 Richard Head
Richard Head's picture

The Bernank must hang.  (Utah, did you copy this?)

Tue, 03/20/2012 - 10:28 | 2273039 Schmuck Raker
Schmuck Raker's picture

Reminds me...has Utah passed that law making gold legal tender yet?

Tue, 03/20/2012 - 10:02 | 2272970 yogibear
yogibear's picture

Never underestimate Ben Bernanke and the fed's denial of bailing out Europe with infinite fiat US dollars.

Not only are people in the US subsidizing drug research they also are still giving away support money while racking up huge deficits on the backs of our youth.

 

How about those 50 to $200K student loans the banksters and the central bank put on our youth?

Tue, 03/20/2012 - 10:05 | 2272977 i-dog
i-dog's picture

 

"we are curious what the response will be from US taxpayers"

...(crickets)...

Tue, 03/20/2012 - 10:12 | 2272992 Fastback
Fastback's picture

Until your average American is confronted with the Big Ugly Nastyness that is maintaining the Status Quo........which, unless Snooky starts talking about it is ZERO.

Tue, 03/20/2012 - 10:32 | 2273060 10mm
10mm's picture

I long for that day when Nastyness is upon the lards 

Tue, 03/20/2012 - 10:22 | 2273010 El
El's picture

I never understood why people were so thrilled when hearing about lawsuits brought against the banks for their bad behavior. Don't they understand that it isn't the banks that end up paying the settlements, it is the taxpayers? All I can say is, be very glad these settlements are turning out to be very low in comparison to the amount actually stolen by the banks. Otherwise, we would be even more on the hook than we are now! In our current environment, there is no such thing as punishing the banks...just as there is no such thing as capitalism in the banking industry. Privatized profits, socialized risks.

Tue, 03/20/2012 - 13:56 | 2274004 odatruf
odatruf's picture

El - I try to make the same point about gas prices for those who want to stop tax subsidies for big oil.  I've given up trying to talk about the so-called subsidies mostly being depletion / depreciation expensing that every business uses and have instead simplified the argument down to the effect on prices.

The typical response includes the currently high profit levels and how the oil companies can 'afford' to not pass the tax increases on.  Sometimes, as they start with that I imagine myself with a ballpeen hammer...

 

 

Tue, 03/20/2012 - 10:26 | 2273033 moriarty
moriarty's picture

People 18% Bankers 82% (give or take) about par for the course, sadly.

Tue, 03/20/2012 - 10:57 | 2273166 Curtis LeMay
Curtis LeMay's picture

The entire premise of a collective currency of different countries is inherently flawed. ALL currency unions such as this have failed - throughout world history.

Apparently helicopter Ben and Turbo Timmahhh are not well read...

Even worse, that the government of my country is contributing moneys in my name to the euroland "project" and the tyranny that rules it, the Brussels Politburo, is simply unacceptable and beggars belief.

Bring back the D-Mark, FF, Guilder, Lira and Peseta before Armageddon visits us all.

Tue, 03/20/2012 - 20:47 | 2275411 StychoKiller
StychoKiller's picture

Let's follow that train of thought to its conclusion:  Break up the FRN into at least 50 pieces!  Minnesota Marks, Kalifornia Kruggerrands, Pennsylvania Pounds, Delaware Drachmas...

Tue, 03/20/2012 - 11:19 | 2273264 Dick Darlington
Dick Darlington's picture

Here's Timmah:

*GEITHNER: GREECE `NOT LARGE ENOUGH' TO CAUSE BIG DAMAGE TO U.S.

No biggie dear tax payer, no biggie...

Tue, 03/20/2012 - 12:25 | 2273606 Curtis LeMay
Curtis LeMay's picture

Too late for that, Dick.

Portugal is now in the crosshairs. Let's face it, euroland is a target rich environment.

Once Portugal goes, Spain goes, as there is NO WAY Espana can carry their Banks debt to Portuguese banks.

You play Dominoes? Might want to learn real quick...

Tue, 03/20/2012 - 11:46 | 2273434 Clowns on Acid
Clowns on Acid's picture

Yeh...and the FX Swaps that were done with the ECB, what were those rates and what was the tenor of the swaps?

More obfuscation. 

Don't any Senators or Congresspeople read ZH?

 

Tue, 03/20/2012 - 12:07 | 2273528 exodus11
exodus11's picture

Stop feeding the parasite already.

Tue, 03/20/2012 - 12:31 | 2273618 Chupacabra-322
Chupacabra-322's picture

Could someone please explain this to me like if I'm a 1st Grader and tell me how this is legal? 

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