Wednesday, 19 May 2010

US Senate stands unanimously athwart Euro bailout yelling “no!”

The one-trillion dollar European bailout was made up mostly of smoke and mirrors—the smoke was the “shock and uh” of the initial announcement, intended to arrest the Greek crisis.  The mirrors came later, i.e., a labyrinthine tale of credit swaps and paper-printing and IMF money explaining (supposedly) where the trillion dollars was supposed to come from, and how exactly the “sterilisation” of that sea of money was supped to be done.

Except the mirrors are still awfully foggy, and the lions’s share of that money—the only part of if that wasn’t just paper  hot off the printing press—may now not be coming at all, because “the US Senate has just voted 94:0 to block use of taxpayers’ money for IMF rescues.” Explains Ambrose Evans-Pritchard in the UK Telegraph:

    “Europe may have to clean up its own mess after all. The US Senate has voted 94:0 to block use of taxpayers’ money for IMF rescues that make no economic sense or bail-outs for countries like Greece that far are beyond the point of no return.
    “ ‘This amendment will help prevent American taxpayer dollars from underwriting dysfunctional governments abroad,’ said Texas Senator John Cornyn, the chief sponsor. ‘American taxpayers have seen more bailouts than they can stomach, and the last thing they should have to worry about are their hard-earned tax dollars being used to rescue a foreign government. Greece is not by any stretch of the imagination too big to fail.’
    “Co-sponsor David Vitter from Louisiana said America had run out of money. ‘Our country already owes trillions of dollars in debt. We simply can’t afford to take on other countries’ debt in addition to our own.’ “


[Thanks to reader Julian for the tip. And Bernard Hickey for two hat tips.]

1 comment:

  1. Hickey has linked to a very good op-ed by ROSS DOUTHAT related to this (the op-ed could be from Hayek's 'Road to Serfdom').


    But look through these anti-establishment theatrics to the deep structures of political and economic power, and suddenly the surge of populism feels like so much sound and fury, obscuring the real story of our time. From Washington to Athens, the economic crisis is producing consolidation rather than revolution, the entrenchment of authority rather than its diffusion, and the concentration of power in the hands of the same elite that presided over the disasters in the first place.

    This is the perverse logic of meritocracy. Once a system grows sufficiently complex, it doesn’t matter how badly our best and brightest foul things up. Every crisis increases their authority, because they seem to be the only ones who understand the system well enough to fix it.

    Cheers Mark Hubbard

    [Incidentally, I've changed computers and lost my Blogger A/c password. Trying to recover the password is impossible and bloody frustrating. To set up a new account now now requires verication by mobile phone. No, blogger are not getting my mobile phone number. If anyone has a solution to this bureaucratic madness, I'm all ears, otherwise I'll have to post to blogger site anonymously now.)


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