A rotten U.S. apple spoils the EU bailout
In case you thought the US was standing by innocently while the European Union invented its own trillion dollar bailout, think again. Unsurprisingly, the US was intimately involved in this newest mind-boggling expenditure, whispering sweet nothings like 鈥渙verwhelming force鈥� directly into European ears.
From The Washington Post:
鈥淎merican officials became worried about the European response as early as February, a senior administration official in Washington said on Monday, when European leaders repeatedly stated that the Greece problem was well contained. They believed that mere expressions of support would be enough to calm the markets 鈥� and that they did not need to put in real commitments of emergency funds.
鈥淭he Americans were less persuaded, telling their counterparts that they had to eradicate 鈥榯he risk of default.鈥� [...] The United States officials began talking to their counterparts about an American concept: overwhelming force. 鈥業t鈥檚 all about psychology,鈥� said the senior official. 鈥榊ou have to convince people that the government will get its act together.鈥� But it was not until Sunday, one official noted, that the meltdown spreading across Europe was regarded as 鈥榓n existential threat.鈥�
鈥淎ware that the 鈥榳olf pack鈥� markets, as the Swedish finance minister called them, had dismissed their every move so far as too little, too late, some of Europe鈥檚 leaders knew they had to act in a big way 鈥� to 鈥檚hock and awe鈥� the markets [...] Washington was also ready to help, in a limited but crucial way. The Federal Reserve offered to swap euros for dollars, easing pressure on European central banks, which were bleeding dollars.鈥�
The article above seems to suggest that the EU鈥檚 biggest failure in this sovereign debt meltdown has only been that it鈥檚 consistently a day late and dollar short. The bigger problem is really that it鈥檚 been trying to bailout Greece in the first place. Conjuring up emergency funds in a newly-created, off balance sheet 鈥渟pecial purpose vehicle鈥� is just the kind of financial wizardry that keeps creating one crisis after another.
It鈥檚 unfortunate the US has been so intimately involved in the current build up to another disaster鈥� especially given the wide array of financial time bombs that are already being cooked up by policymakers right at home. To offer the benefit of doubt, perhaps the White House was only feeling that (extreme debtor nation) misery loves company.
You can read more details about President Obama鈥檚 intimate conversations with EU leaders in The Washington Post鈥檚 coverage of .
