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Bailing Out Greek Politicians or Bailing Out Banks

CNBC.com reported yesterday that “President Barack Obama on Tuesday urged European countries and bondholders to prevent a "disastrous" default by Greece and pledged U.S. support to help tackle the country's debt crisis.” The financial news organization then went on to report:

“After a meeting with German Chancellor Angela Merkel, he stressed the importance of German "leadership" on the issue - a hint that he expects Berlin to help - while expressing sympathy for the political difficulties European Union countries face in helping a struggling member state.

"I'm confident that Germany's leadership, along with other key actors in Europe, will help us arrive at a path for Greece to return to growth, for this debt to become more manageable," Obama said.

"But it's going to require some patience and some time. And we have pledged to cooperate fully in working through these issues, both on a bilateral basis but also through international and financial institutions like the IMF."

“A proposal for a second Greek bailout package worth 80 billion to 100 billion euros over three years was taking shape, euro zone sources said.”

At BigGovernment.com today, Dan Mitchell cites the CNBC.com article, and then provides some additional comment concerning the story, writing:

“The story doesn’t have much detail, but it appears that Obama is willing to brutalize American taxpayers directly (which is what he means by “on a bilateral basis”) and indirectly (i.e., thThe bailout is really a backdoor giveaway to the big European banks that foolishly lent money to the Greek government.

“What makes this development so unpleasant is that this new bailout (Greece already has been bailed out several times, with both direct and indirect handouts) will make things worse. Another bailout will be a case of throwing good money after bad. And it will exacerbate the economic damage by delaying the economic reforms that are needed to put Greece’s economy in better shape.

“And to make matters worse, the other insolvent European welfare states will look at what’s happening in Greece and conclude that they also can avoid necessary reforms and wait for handouts from American and German taxpayers.

Are you wondering why the “German politicians are willing to bail out Greek politicians?”  Mitchell points to this graph from the NY Times, and says, “The bailout is really a backdoor giveaway to the big European banks that foolishly lent money to the Greek government.” (emphasis added)

Ah yes, politicians helping the common man. Not!


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