The bailout outrages never stop.
Of the 110-billion Euro Greece bailout, 30-billion (approx $40 billion) will be paid for by the IMF.
The US supplies almost 20% of the IMF’s funding (per quotas). So that means US taxpayers are providing ~$8 billion of the $145 billion going to kick the Greek can down the road.
That’s the first outrage. (Why is this our problem?)
The second outrage is that, as in some of the US bailouts, our bailout money is JUNIOR to Greece’s existing debt. That means that, over the next couple of years, the idiot banks that loaned bankrupt Greece money will get their money back. And then, when Greece runs out of cash again, we’ll be left holding the bag (along with Germany and the rest of the folks who bailed Greece out).
In any normal financing, the lender of last resort would be SENIOR to all existing debt. It would get its money back first, before the other idiots got a penny.
In the Greece bailout, however, the new money we’re putting in will be going right out the door to pay off existing lenders who would have lost their shirts. And if the Greece austerity measures don’t work and there’s nothing left for us? Tough.
(Why don’t the existing creditors have to lose a penny? Same reason the AIG creditors didn’t lose a penny. Because it would apparently be too traumatic to ask them to do that. The idea that the existing creditors might have to lose money was apparently so unthinkable that it was never even on the table).
It’s nice of us to bail out Greece, isn’t it? Can’t we at least get the Parthenon as collateral or something?
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