Greek (Inverse) DIP Update: Bailout Loans To Be Junior To Existing Claims

In breaking all ties with reality, the IMF has decided that not only will US taxpayer money be freely abused to rescue a profligate Greece, but that money will be effectively junior to existing claims, in essence making it some MC Escher DIP reverse DIP nightmare. Basically US taxpayers will be Last In, Last Out, and will recover any proceeds only after existing creditors get paid out. Pardon us, but this is bloody ridiculous. When will someone in the mainstream media start focusing on this??? Americans are getting the short end of the stick, and nobody in this country knows or cares about it.This is more billions that will be promptly paid and never recovered.

Euro Intelligence reports:

In a conversion with German MPs, that was already being leaked while it was taking place in the Bundestag, Dominique Strauss Kahn outlined some of the details:

  • The package would be in the order of €100-120bn for three years, during which Greece would be taken off the market. (Germany ‘s economics minister said that Germany contribution would be €8.4bn each year for three year running, with a risk on the upside. The Germans had apparently thought that the €45bn would be the total size of the package)
  • The package will contain no element of restructuring and rescheduling
  • The loans will be junior to those of the existing bondholders.

Everything, and we mean everything, is being done for Europe's banks to not experience even one cent of Mark to Myth losses as that would set off the entire house of cards. Who is paying: European and US (and global) taxpayers. Why? Because the alterantive is the same "end of the world" bullshit we have grown to love and expect.

Even Germans, still staunchly opposed to the bailout, are voicing in on Merkel's lack of decision-making ability:

A frong-page editorial in FT Deutschland launched a severe attack on Merkel, criticising a total loss of reality by ignoring the problem, and saying that her procrastination is adding to the cost of the crisis. Martin Schulz head of the Socialists faction in the European Parliament said that the aid should have been decided a long time ago. He accused Merkel of Greek bashing, as she tried to benefit politically from the rising anti-Greek sentiment in Germany. The Italian economist Tito Boeri said that each days of this crisis would cost the German taxpayer dearly.

As for the Greek response, we are still confident a government overthrow is merely months away:

Kathimerini quotes Juergen Stark as ruling out the possibility that the ECB might end up buying Greek bonds. In a separate article, Kathimerini reports that IMF/EU/ECB sought to cut the 13th and 14th salary but labour minister Andreas Loverdos said that this is not acceptable to the Greek government. Pushing retirement age and job cuts in the public sector are other sensitive issues (see Kathimerini). The government still expects to end negotiations on Sunday and to get aid by May 19. Strikes are likely to continue until the summer, but the hard part only starts later.

h/t Paul