Congress keeps the US out of IMF鈥檚 Greece bailout plan
International Business Editor Ambrose Evans-Pritchard has changed his stance on Greece. Previously, he鈥檚 supported the Greek bailout and wanted to avoid a 鈥渟overeign Lehman.鈥� Today, he sees the 鈥渕oral hazard rescue鈥� for what it is, and now chooses to 鈥渇lagellate鈥� himself and 鈥渨ear a dunce鈥檚 hat.鈥�
What prompted the turnaround? The wisdom he sees in Congress blocking the IMF from using US taxpayer money to backstop Greece.
From the Telegraph:
鈥�The US Senate has voted 94:0 to block use of taxpayers鈥� 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.
鈥溾�橳his amendment will help prevent American taxpayer dollars from underwriting dysfunctional governments abroad,鈥� said Texas Senator John Cornyn, the chief sponsor. 鈥楢merican 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.鈥�
鈥淐辞-蝉辫辞苍蝉辞谤 David Vitter from Louisiana said America had run out of money. 鈥極ur country already owes trillions of dollars in debt. We simply can鈥檛 afford to take on other countries鈥� debt in addition to our own.鈥� It is unclear where this leaves the EU鈥檚 $1 trillion 鈥檚hock and uh鈥� package. Urlich Leuchtmann from Commerzbank said the IMF share of $320bn was the only genuine money on the table, the rest being largely euro smoke and mirrors, or plain bluff.鈥�
Now here is a case of 鈥渟hock and awe鈥濃�� to see Congress have the sense to at least not spend the money of an already broke US on foreign governments. This is especially true when US states are themselves ranking so highly on lists of probable defaults. Like California, shown to be , just four places south of Greece.
The bill is not a law yet, but hopefully soon the US will be able to oppose an essentially hopeless IMF rescue package in Greece, where public debt is already greater than 100 percent of GDP and the loan is unlikely to be repaid. For perspective, Evans-Pritchard points out that the 鈥淚MF share of the Greek bail-out is 30 times quota, more than double any other rescue in the history of the Fund.鈥�
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