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.]