04.06.2012 in Bailouts, Economy by Robert Romano 12

IMF’s Lagarde asks U.S. taxpayers for another $64 billion to bail out Europe

Stop European BailoutsBy Robert Romano — Despite recent deals totaling tens of billions of euros from the International Monetary Fund (IMF), European Central Bank (ECB), and the European Financial Stability Facility (EFSF) to prop up the banks that bet poorly on Greek debt, IMF director Christine Lagarde is coming hat in hand to American taxpayers for more money.

The IMF has recently approved about $36.7 billion of additional loans to Greece. This will raise taxpayers’ stake in Greece to $13 billion, and Europe as a whole to $20.9 billion.

And now Lagarde wants the U.S. to double its quota subscription to nearly $130 billion. The increased quota would replace $65 billion of part of the nation’s current $100 billion line of credit to the IMF created in 2009 by the Pelosi-Reid Congress, keeping the nation’s total stake in the IMF at $165 billion.

The difference is that whereas the credit line can be tapped when needed, the quota moneys are given to the IMF up front and irredeemably.

Said Lagarde, “We can provide a circle of protection against global turbulence, and help members adjust to changing circumstances with minimal disruption. But to do this effectively in today’s world, we need more resources.”

The IMF’s pleas for more taxpayer money come at a time when Greece has already defaulted on about €105 billion debt ($138 billion) of its €340 billion debt ($447 billion).  Even with the relatively smaller liability to financial institutions, Greece’s remaining €235 billion debt ($309 billion) most certainly still exceeds its GDP, which for 2011 was €215 billion ($283 billion).

All of which makes further bailouts for Greece and other troubled European sovereigns a very bad investment for taxpayers.

Even the IMF had to admit that the risks of the new Greek loan program were “exceptionally high”.  It even admitted that further restructuring — which would be a technical default — by Athens may be necessary to get its fiscal house back in order.

Making matters worse, the IMF, with U.S. support, proposed doubling the current quota subscriptions to the IMF, bringing the U.S. total to $130 billion.

How do we know the White House gave its blessing? Because it requires 85 percent of the IMF’s executive board to approve any increase of quotas, and the U.S. has 16.75 percent of the vote, such a move could not have occurred — not without U.S. support.

Yet, the Obama Administration has yet to place a formal request with Congress for doubling the quota. Treasury Secretary Timothy Geithner had the audacity to tell lawmakers last month that “we have no intention to seek additional U.S. resources for the IMF.”

Then, why did the U.S. representative vote at the IMF to do just that?

It would appear that the White House is promising one thing to Europe, and singing a different election year tune to taxpayers.

Much like Obama’s need for “flexibility” until after the election to discuss missile defense with the Russians, Geithner wants to tamp down political criticism of European bailouts, while assuring Europe that the money is on the way — with a wink and nod.

Robert Romano is the Senior Editor of Americans for Limited Government.

  • Mdoylem

    NO NO NO NO……NOT ANOTHER DIME!   We refuse to continue taking part in this extortion – or check book diplomacy or what ever else you opt to call it. Enough is enough…….

  • Dean

    NO MORE MONEY!!!!  OH,  WHAT MONEY?????

  • Jthres

    Does this bozo understand that we will have to borrow the money to bailout Europe. What is wrong with these supposedly intelligent people who are put in these high level positions. NO WAY LADY!!!!!!!!!!!!

  • Swann75

    I say not only NO, but HELL NO!  If this IMF wants more money to bail out Europe, tell them to go to China, that’s where all our money is anyhow.  And not only NO to Europe, but double HELL NO to sending another dime to any of these Islamic countries.  They hate our guts, yet the idiots in Washington still send them our money while we can hardly afford to buy a loaf of bread.  

  • Don39

    They should be told to take a flying leap at a rolling doughnut!

  • Altsman1602

    Does anyone think that Europe would bail out America if we get into a tight fix?  I very much doubt it.

  • Nanna

    Altsman:  In answer to you question, not just”no”, but “H*ll no”.  No  one would come to bail us out.  They want to keep everything we have given them already and MORE.

  • Nanna

    Swann75:  The idiots in Washington keep sending OUR money to these other countries, because HE is a MUSLIM.

  • Konstantinos

    Greece and Eurozone are NOT islamic countries. But reading your comments it fairly easy to understand a couple of things, the first being that you don ‘t know nearly as much about macroeconomics as you would like to think that you do. 
    Do you honestly think that the USA are bailing out Eurozone out of the goodness of their heart?  There is no such thing when it comes to international policy. Have you even consider what the spillover effects maybe to your economy if the Eurozone came to collapse as a total? I highly doubt it. Yet, you will suprised when you discover that your pension funds and your bank deposits have been invested to european state bonds, european banks, are being denominated in EURO currency and so on…
    A collapse of the Eurozone would cause a global financial meltdown. The IMF was founded to be able to divert a large scale crisis from hitting the global capitalism and that’s what it’s doing right now. It ‘s not providing charity. If the latter was correct, several countries in Africa or Asia would have a priority over Europe and Greece.
    Let’s not also forget who were the guys that invented the financial engineering that has caused all this false global economic growth over the last decades. Just do a search on the Goldman-Sachs role in the Euro crisis. You will then understand better who is truly responsible for all the money you are asked to pay.
    But hey, why worry? Just invade Iran and I ‘m sure that the $40 oil price that will follow will give the world the economic boost that it currently needs. Let’s not forget how the Americans overcame their financial crises following the dot.com scandal and the stock market collapse: With Gulf War I and Gulf War II respectively.

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  • political_proxy

    What is wrong with these people is their NWO (World Gov) agenda & their Marxist/Leninist ideology.

    This is the crisis of which they will use to usher in their agenda, a world powergrab.

  • Gary

     Europe has to make some tough decisions for themselves, their liberal policies have to be restructured, their early retirement pension plan has collapsed. Until Europe tries to help themselves Not a dime from US taxpayers should go to them! Period!

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