Americans, get ready to pull your pants down. US tax money to fund euro bailout

[Saracen]

Nope. We've already done that with TARP. A lot of that money went to foreign banks holding US derivatives/CDS's. (IMO, that was unnecessary. They bought it, they should've known what they were doing. You want the reward, you take the risk. Fsck 'em.)

....

Remember that that TARP money that went to European banks, like Barclays, RBS, DeutscheBank etc were loans. According to the Fed, funding went to "support funding markets that were global, and agencies and branches of foreign firms were significant participants in lending to U.S. households and businesses".

And, of course, the TAF and CPFF loans were just that - loans. Not handouts, but loans at the primary credit rate.

So, some Fed funding went to foreign banks with significant U.S. operations, and it went to banks that have already been demonstrated as too big to fail, and that if necessary, will be bailed out even to the extent of being effectively bought by their respective states. So if it's a loan, and to a borrower that is very unlikely indeed to default because it;s effectively backed by governments (and not of the Greek type), and at a rate of interest that represents good business, it's hardly a huge drain on the U.S. taxpayer.

It's also worth pointing out, back on the original subject of IMF loans that they too are loans, and has been pointed out by European politicians, no IMF loan has ever (yet) resulted in a loss. Again, they're loans, not gifts.

A little accuracy in what's meant by "bailout" is needed.


Also, of course, it's worth bearing in mind that Europe is a pretty diverse place, and even financially and economically, Italy is not Greece. Both are in trouble, but different types of trouble. Greece is in deep poop, but the underlying Italian economy is not a basket case. THey need reform, seriously and quickly, but underneath it, it's a reasonably well-performing economy. Their problem is simpky debt, and given time, that can be dealt with. Right now, their proglem is the cost of financing that debt, and liquidity. Greece, on the other hand, is a very different matter.

It's also worth remembering that the current crisis is a eurozone crisis, and not all EU countries are in the eurozone, and nor are all European countries even in the EU. The actual crisis is not European, or even EU-wide .... though contagion would be fairly wide, but then, that contagion will hit the US and others too if things go really bad.

 

[Jhhnn]

They have no re-election chances if they keep egging on the American people. The majority have been ok with getting shit on so far, but the bail outs over all aren't popular and bailing out Europe isn't going to go over well and the "dooms day" scenarios they're going to spew are going to be the same ones the public has heard for years now. If Obama can't get elected without it and I don't see how he can be elected with it, it's a lose-lose. So he's going to lose on this, Republicans are going to sneak in Romney and more status quo.

Unlike any of his free marketeer potential opponents, Obama can demonstrate good faith efforts to protect the public with the Dodd-Frank Act.

Republicans, otoh, would need to contend with their own words & deeds-

http://www.nytimes.com/2011/09/21/b...n-gop-campaign-trail.html?_r=1&pagewanted=all

Not to mention their past performance & ideology of failure.

 

[bfdd]

Jhhnn at this point neither party is in a position to win an election IMO, but one will due to the fact most people don't realize there are other options.

 

[Darwin333]

You idiot the reason why we would have to bail them out is because US banks and Wall Street were selling them toxic debt.

Wonder why they didn't bail out local governments (US), pension funds in the US, and a myriad of other American people/entities that bought the same toxic debt? Naw, fuck all of those guys that are mostly made up of "normal people" but we bail out some elite banksters in other countries?

At least we prosecuted those assholes who committed all of that fraud that cost us all that money...

 

[William Gaatjes]

If policies do not change...
It will become a lot worse...

 

[Darwin333]

Nope. We've already done that with TARP. A lot of that money went to foreign banks holding US derivatives/CDS's. (IMO, that was unnecessary. They bought it, they should've known what they were doing. You want the reward, you take the risk. Fsck 'em.)

Anyhoo, Europe's current problem is bad foreign (country) bonds, like Greece and Italy et al, not anything from us. And we're worried that their problems may cause us problems with (lessening) demand etc that would negatively impact our economy.

Fern

I think the more immediate concern is our big institutions exposure to European debt. There is a very high chance of huge haircuts on that debt or worse an all out default which means the bonds are worth 0. To make matters worse leverage could, and probably is, involved making the losses bigger (potentially MUCH bigger) than the face value of the bonds.

 

[mshan]

From comments I've seen, the obvious and "official" exposure to European institutions is low and manageable.

However, there are not just derivatives, but derivatives on derivatives, and derivatives on derivatives on derivatives, etc, so no one is really sure who actually holds the bag if the European banking system implodes, though market might be guessing:

http://video.cnbc.com/gallery/?video=3000058583

That being said, it sounds like Merkel, IMF, and ECB might, just might, be loading the "bazooka" market is looking for that defuses immediate liquidity crisis in European banking system, but does not definitively fix the underlying sovereign debt crisis and required eventual recapitalization of European banks.

 

[Darwin333]

Unlike any of his free marketeer potential opponents, Obama can demonstrate good faith efforts to protect the public with the Dodd-Frank Act.

Republicans, otoh, would need to contend with their own words & deeds-

http://www.nytimes.com/2011/09/21/b...n-gop-campaign-trail.html?_r=1&pagewanted=all

Not to mention their past performance & ideology of failure.

Lol, the dodd-frank act???

A few quick questions, you wouldn't know how many pages the Glass-Steagall act was would you?

How many banksters has the Obama justice department prosecuted?

In your opinion, does allowing criminal activity to be absurdly profitable and go completely unpunished usually lead to more or less of that criminal activity?

 

[LegendKiller]

Remember that that TARP money that went to European banks, like Barclays, RBS, DeutscheBank etc were loans. According to the Fed, funding went to "support funding markets that were global, and agencies and branches of foreign firms were significant participants in lending to U.S. households and businesses".

And, of course, the TAF and CPFF loans were just that - loans. Not handouts, but loans at the primary credit rate.

So, some Fed funding went to foreign banks with significant U.S. operations, and it went to banks that have already been demonstrated as too big to fail, and that if necessary, will be bailed out even to the extent of being effectively bought by their respective states. So if it's a loan, and to a borrower that is very unlikely indeed to default because it;s effectively backed by governments (and not of the Greek type), and at a rate of interest that represents good business, it's hardly a huge drain on the U.S. taxpayer.

It's also worth pointing out, back on the original subject of IMF loans that they too are loans, and has been pointed out by European politicians, no IMF loan has ever (yet) resulted in a loss. Again, they're loans, not gifts.

A little accuracy in what's meant by "bailout" is needed.


Also, of course, it's worth bearing in mind that Europe is a pretty diverse place, and even financially and economically, Italy is not Greece. Both are in trouble, but different types of trouble. Greece is in deep poop, but the underlying Italian economy is not a basket case. THey need reform, seriously and quickly, but underneath it, it's a reasonably well-performing economy. Their problem is simpky debt, and given time, that can be dealt with. Right now, their proglem is the cost of financing that debt, and liquidity. Greece, on the other hand, is a very different matter.

It's also worth remembering that the current crisis is a eurozone crisis, and not all EU countries are in the eurozone, and nor are all European countries even in the EU. The actual crisis is not European, or even EU-wide .... though contagion would be fairly wide, but then, that contagion will hit the US and others too if things go really bad.

This is 100% correct.

I can attest that many Euro banks have *HUGE* exposure to US corporations and consumers. This is a global economy we are in.

 

[mshan]

Would the AIG payouts fall into same category?

And is problem with Greece that they just have too much debt for size of their economy, or that their economy just does not function / grow at all, while Italy just sounds like a politically connected class of tax cheats (?)

Someone on Hardtalk (http://www.zerohedge.com/news/steve-keen-parasitic-bankers-deluded-economists-and-why-%E2%80%9Cwe-are-already-second-great-depression) said Greece has like $60 billion Euro in unpaid taxes, and Italy, well:

"But no problem is more glaring than Italy’s thriving “shadow economy,” where evaded taxes on legal commerce coupled with lost taxes from illicit or under-the-table deals are costing the national treasury about $340 billion a year. If collected annually, that amount could pay back every last cent of Italy’s $2.6 trillion debt in just under eight years.

Yet in Italy, as a saying goes, “only fools pay,” and fools in some professions are few and far between. Jewelers, restaurateurs and real estate agents all declare an average taxable income of less than $18,500 a year — lower even than mechanics, who at least admit to earning roughly $30,000 a year.

If official tax returns are believed, this nation of 60 million with some of the most expensive urban real estate in the world is home to only 394,000 people earning more than $135,000 a year. Newspapers in Rome and Milan are rife with stories of “evasione totale ” — or entrepreneurs caught tooling around in Ferraris and Porsches despite declaring almost no income. Berlusconi himself managed to fend off at least two allegations of false accounting by forcing a law through Parliament that decriminalized falsification of company accounting books.

“Here’s the real problem with Italy: You have people with villas and back yards the size of a park still declaring 15,000 euros a year,” or about $20,000, said Sen. Enrico Morando, a member of a key parliamentary budget committee.

http://www.washingtonpost.com/world...sion/2011/11/22/gIQAef4JtN_story.html?hpid=z2