11.29.2011 in Bailouts, Economy, Featured, Politics by Bill Wilson 4

Obama says U.S. ‘stands ready to do our part to help’ bail out Europe

European BailoutBy Bill Wilson — Earlier Monday, Nov. 28, White House Press Secretary Jay Carney assured the American people that the U.S. was nowhere near bailing out European banks that had bet poorly on the sovereign debts of Greece, Portugal, Italy, and other bankrupt nations.

“We do not in any way believe that additional resources are required from the United States and from taxpayers,” Carney said.

Of course, just a few hours later, Barack Obama appeared from a meeting with European Council President Herman Van Rompuy and European Commission President Jose Manuel Barroso assuring the world just the opposite.

“The United States stands ready to do our part to help them resolve this issue,” Obama said, adding, “If Europe is contracting… it’s much more difficult for us to create jobs here at home. We’ve got a stake in their success.”

Specifics were not given, but he may have been referring to recent proposals to expand International Monetary Fund (IMF) to bail out Europe.  Last November, according to the bank’s website, the IMF executive board requested that the IMF’s resources be doubled to $750 billion from its current $375 billion level.

And, on Dec. 16, the IMF’s board of governors dutifully adopted the proposal, sending it back to member states, that Japan, the UK, Korea, and others have already approved.

The U.S. already has a $64 billion stake in the IMF, plus a $100 billion line of credit. The new proposal to double member quotas would raise the U.S. stake by another $64 billion that would replace a portion of the credit line, and would require congressional authorization.

Having 16.76 percent of the vote in a body that requires 85 percent approval to act, the U.S. wields an effective veto at the IMF.  That means Treasury Secretary Timothy Geithner has already voted at the IMF to double U.S. taxpayers’ exposure to risky foreign debts.

So, with all due respect to Carney, the Obama Administration has already approved additional resources from U.S. taxpayers that, if adopted by Congress, will be used to bail out Europe.  A recent Congressional Research Service (CRS) report published in September showed the IMF had already dispensed €78.5 billion to the creditors of Greece, Portugal, and Ireland, or about $112 billion for refinance bailout loans.  The U.S. stake in that bailout already totals at least $20 billion.

Yet, the IMF apparently has not made any official requests to the White House or Congress to increase its quotas, according to congressional sources — yet.  When it does, legislation will likely be introduced shortly thereafter.

But Obama should not expect a warm reception for the bailout, particularly from the House of Representatives.  House Republicans in 2010 won a majority in part by running on a clear pledge to “prevent Washington from forcing responsible taxpayers to subsidize irresponsible behavior by ending bailouts permanently”.

To fulfill that pledge, the House should consider legislation by Rep. Cathy McMorris Rodgers that would rescind whatever remains of the nation’s $108 billion credit line to the IMF.

But that alone is not the only avenue the federal government might pursue to bail out European financial institutions that hold the debts of troubled Portugal, Ireland, Italy, Greece, and Spain (PIIGS).

Influential writers like the UK Telegraph’s Ambrose Evans- Pritchard are openly questioning whether or not the Federal Reserve will intervene to make major bond purchases of European debt.  While the European Central Bank is expressly forbidden by the Lisbon Treaty from purchasing sovereign debt, the Fed has no such restrictions.

If House Republicans want to keep their pledge and “end bailouts permanently,” they will need to amend McMorris-Rodgers’ legislation or introduce separate measures to include a prohibition from the Fed purchasing European debt.  Because such a decision may be imminent, if it is not already happening.

Recall it took federal courts enforcing Freedom of Information Act requests and a congressionally authorized audit of the Fed to reveal trillions of dollars of emergency loans that were given to foreign banks overseas.  Not to mention $442.7 billion that was simply printed out of thin air to buy back shoddy mortgage-backed securities from overseas institutions that were heavily invested in U.S. housing.

With the ongoing chaos across the pond, if the Fed were already bailing out Europe, we likely would not even know about it.  Therefore, it is incumbent on Congress to once again audit Federal Reserve activities that have taken place to prop up Europe since the crisis began in Dec. 2009.

It is not the job of American taxpayers or any U.S. institution to bail out any foreign bank.  Enough is enough.

Bill Wilson is the President of Americans for Limited Government.

Editor’s Note: Corrected to reflect accurate measure of U.S. quotas in the IMF.

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  • http://profile.yahoo.com/KQ7ZO5GZUK5FDCU5MVJDAKJCVY FarscapeB

    How about asking we the TAXPAYERS if we want to bail anyone out. I SAY NO. I will be so glad when you are defeated in November. NOdumer 2012. We don’t need any more circus acts in the WH. 

  • James A Graham

    Real Facts About Mitt Romney=em

    Just Some Real Facts About Mitt Romney That We Will Not Hear About From The Lame Stream Media About The Real Mitt Romney!  All you will hear from the Lame Stream Media about Romney will be negative or repulsive (from Mitt’s high school days approx. 50 years ago!) that in no way proves anything about what this man is made of today.  The facts below are much more informative than what CNN or MSNBC can dig up about Romney. 

    Mitt Romney: 

    After going to both Harvard Business School and Harvard Law School simultaneously, he passed the Michigan bar, but never worked as an attorney. 

    As a venture-capitalist, Romney’s first major business deal involved investing in a start-up office supply company with one store in Massachusetts that sold office supplies. That company, called Staples, now has over 2,000 stores and employs over 90,000 people. 

    Romney or his company Bain Capital (using what became known as the “Bain Way”) would go on to perform the same kinds of business miracles again and again, with companies like Domino’s, Sealy, Brookstone, Weather Channel, Burger King, Warner Music Group, Dollarama, Home Depot Supply, and many others. 

    Got your calculators handy? Let’s recap. 

    Volunteer campaign worker for his dad’s gubernatorial campaign 1 year.

    Unpaid intern in Governor’s office 8 years. 

    Mormon missionary in Paris 2 years. 

    Unpaid bishop and state president for his church 10 years. 

    No salary as president of the Olympics 3 years. 

    No salary as MA governor 4 years. 

    That’s a grand total of 28 years of unpaid service to his country, his community and his church.
     
    And in 2011 Mitt Romney gave over $4 million to charity, almost 19% of his income….Obama gave 1% 

    Joe Biden gave $300 or .0013% 

    This is real character vs….well you know what! 

    Romney may not be the best representative the Republicans could have selected.  At least I know what religion he is, and that he won’t desecrate the flag, bow down to foreign powers, or squander my money on vacations.  I know he has the ability to turn this financial debacle that the “Spending President” has gotten us into.  We didn’t know that when Obama said he’d give us change, he meant nickels and dimes, and he would get the big bucks.  We won’t like all the things necessary to recover from this debt, but someone with Romney’s background can do it. 

    But, on the minus side, He never was a “Community Organizer”, never took drugs or smoked pot.  Never got drunk. Did not associate with communists or terrorists. Nor did he attend a church whose pastor called for God to damn the U.S.

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