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EU’s $957B ‘Shock And Awe’ Bailout Pkg

From a cheering New York Times:

Elena Salgado, right, the Spanish finance minister, announcing the deal with Olli Rehn, the European commissioner for economic affairs, on Sunday.

E.U. Details $957 Billion Rescue Package

Markets Welcome E.U. Rescue Package

By JAMES KANTER and LANDON THOMAS Jr.

May 10, 2010

BRUSSELS — Global markets rallied Monday, reversing the steep declines of recent days, after European leaders agreed to provide a huge rescue package of nearly $1 trillion to combat the debt crisis that has engulfed Europe, and central banks began injecting cash into the financial system.

In an extraordinary meeting that lasted into the early hours of Monday morning, finance ministers from the European Union agreed on a deal that would provide $560 billion in new loans and $76 billion under an existing lending program to countries facing instability. Elena Salgado, the Spanish finance minister, who announced the deal, also said the International Monetary Fund was prepared to give up to $321 billion separately.

Since the United States is responsible for 17% of the IMF, the US taxpayer is going to be providing at least $54.6 billion of that largess.

Officials were hoping the size of the program — a total of $957 billion — would signal a “shock and awe” commitment to such troubled countries as Greece, Portugal and Spain, in the same vein as the $700 billion package the United States government provided to help its own ailing financial institutions in 2008

Except that the $700 billion that the US used to bail out the financial markets has already been paid back with interest, apart from the auto-makers that Mr. Obama and the Democrats threw in. The loans to Greece are not likely to be repaid.

By the way, this $957 billion is such a staggering sum, and yet it is roughly the cost of four years of Mr. Obama’s healthcare reform. That is, if you believe the CBO’s wildly low-balled estimates.

The initial market reaction was ecstatic. The euro jumped back above the $1.30 mark for the first time in a week, to $1.3030 from $1.2757 late Friday. Greece’s 10-year borrowing costs plunged by almost half — an astonishing 5.9 percentage points — to 6.5 percent…

Trading in U.S. equity index futures suggested stocks would open sharply higher on Wall Street.

The package was much larger than expected, and represented an audacious step for a bloc that had been criticized for acting tentatively, and without unity, in the face of a mounting crisis

Which would suggest that things are far worse than the EU has been letting on.

This article was posted by Steve on Monday, May 10th, 2010. Comments are currently closed.

9 Responses to “EU’s $957B ‘Shock And Awe’ Bailout Pkg”

  1. proreason says:

    Phase 1 of ?

    • confucius says:

      Here’s Phase 2.

      From AFP:

      US Fed offers emergency help to ease euro crisis
      May 10, 2010

      WASHINGTON (AFP) – The US Federal Reserve stepped in to ease Europe’s debt crisis on Sunday, offering to swap dollars for the euros in an emergency bid to prevent bank lending from grinding to a halt.

      The Fed, announcing a coordinated effort by central banks in the European Union, Britain, Canada, Switzerland, said it would announce details of the deal soon. …

      The Fed’s announcement came as Europe announced a monster rescue package running to 750 billion euros between euro countries and the IMF. …

      The breakthrough followed urgent telephone calls during Sunday between US President Barack Obama, German Chancellor Angela Merkel and French President Nicolas Sarkozy. …

      http://news.yahoo.com/s/afp/20100510/pl_afp/eufinanceeconomybankworldus

    • Petronius says:

      So the catastrophe has been postponed.

      Fiscal irresponsibility and fraudulent accounting by governments never did anyone any good.

      To underwrite such policies with more money is madness. Like pounding sand down a rat hole.

      What do socialists do when they run out of other people’s money?

      I guess we shall see.

    • Right of the People says:

      For some reason I’m not shocked at this, neither am I awed, just disgusted.

  2. NoNeoCommies says:

    I wish I owned the furnace they are tossing their money into.
    Every one of my relatives could help me as I try so very hard to help the EU.
    Of course we would fail.
    But we would have tried sooo hard!
    And our offshore accounts would work hard for us!

    So they placed a LARGE ant on front of the steam locomotive as it heads for the cliff?
    Oh well, maybe they will go down first and help show us the way back.

  3. Petronius says:

    In the Carboniferous Epoch we were promised abundance for all,
    By robbing selected Peter to pay for collective Paul;
    But, though we had plenty of money, there was nothing our money could buy,
    And the Gods of the Copybook Headings said: “If you don’t work you die.”

    Then the Gods of the Market tumbled, and their smooth-tongued wizards withdrew,
    And the hearts of the meanest were humbled and began to believe it was true
    That All is not Gold that Glitters, and Two and Two make Four–––
    And the Gods of the Copybook Headings limped up to explain it once more.

    As it will be in the future, it was at the birth of Man–––
    There are only four things certain since Social Progress began:–––
    That the Dog returns to his Vomit and the Sow returns to her Mire,
    And the burnt Fool’s bandaged finger goes wabbling back to the Fire;

    And that after this is accomplished, and the brave new world begins
    When all men are paid for existing and no man must pay for his sins,
    As surely as Water will wet us, as surely as Fire will burn,
    The Gods of the Copybook Headings with terror and slaughter return!

    — R. Kipling (1919)

  4. bill says:

    And what do they do when the money runs out ??

    Socialism has failed and they refuse to acknowledge it.

    Obama-Speak, the fusion of sophistry and Newspeak. It’s not a gift, it’s just lies.

  5. P. Aaron says:

    The bailouts for Fannie & Freddie were much bigger than expected too. That didn’t help. But they are getting so big that they might not fail.

  6. Mithrandir says:

    It is amazing how the media and government HIDE THE REAL COST of all these bailouts and stimulus packages.

    They give the low-ball number first, and cut up the package to hide the overall number.

    Incrementalism works every time, as when you increase the temperature of the frying pan 1 degree a day, you won’t know when to jump out of it when it’s too hot.

    We are also on the hook for 25% of the U.N. budget, ???$ of NATO’s budget, + our generous bail-out package to HAITI, and puppeteering with our foreign aid every year…..

    HOW MUCH MONEY do we REALLY give away every year to non-Americans? I wonder….


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