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US Bailout of Europe Looks More Likely
Last Friday in The Gorrie Details, I wrote “Doubling Down on Stupid,” about the possibility of the US bailing out Europe from its ongoing banking crisis.
Even though the idea of a Eurozone collapse has been in the headlines for the past 12 months or even longer…
And even though Spain’s banks have been bailed out by the Eurozone Finance Ministers to the tune of 100 billion euros, as well as Greece, Ireland, and Portugal before it…
Spain’s bailout is not expected to work or last for very long (some observers give it only a month before more relief will be needed) and Greeks will vote Sunday for their next government, with one party promising to renegotiate the bailout and the other promising to leave the Eurozone.
Either outcome spells more bad news for the Eurozone…
An unsolvable crisis or just a holiday from democracy?
It certainly looks the crisis will never be solved and barely seems to improve before sliding back toward the abyss.
The debt contagion just moves back and forth, passing from one country to the next, from one bailout scenario to the next, never getting cured, like jock itch in a high school locker room.
But the reality is starting to set in that the Eurozone cannot be bailed out by Europe alone, as the possibility of a euro collapse seems more likely--and closer--than ever.
Sadly, there is no relief in sight. Even a proposed European Union banking union is akin to closing the barn door after all the mad cows have left.
And those mad cows are now wandering over much of the Eurozone…and they’re quite spooked.
In fact, plans are now in place to “handle” the break up of the Eurozone by restricting people’s access to money as well as restricting their ability to move from one place to another.
This isn’t just a bank holiday Europeans may be facing, but rather, a holiday from liberty as well…
Pretty scary, huh?
Will political oppression be the result of a Eurozone collapse?
When you realize that the gray men of European finance were able to replace governments in both Greece and Italy overnight without any public vote…
The possibility of political oppression in the wake of the disintegration of the euro is not just a remote possibility anymore.
Political oppression along economic collapse may be in the very near future if the Eurozone banks can’t get their act together..
Once Greece leaves the euro, other nations may well leave the zone one after the other.
That would also mean a deep recession for the Eurozone—perhaps even a deep depression—and not just for Europe, but for the US as well.
And that’s where the US rescue comes in.
Actually, it would be an IMF rescue.
But wait; either way, wouldn’t that mean that hundreds of billions of more dollars will be created that will only worsen the devaluation of the dollar?
The right kind of gold
That’s exactly what it will mean, and probably more.
An if Europe defaults on the loans?
In arguing before Congress in favor of an IMF bailout of Eurozone banks, US Treasury Secretary Timothy Geithner told a skeptical Congress not to be concerned about Eurozone countries defaulting on huge IMF loans, or even the IMF defaulting, because the money would be backed by…gold.
Gold? Whose gold would that be?
Why, the IMF’s gold.
The IMF has gold? Who knew? How much gold does the IMF have?
From the sound of it, I would say quite a lot of it, wouldn’t you?
Of course, the question in my mind, and probably yours too, is…
“Why would the IMF be holding massive amounts of gold?
Gold isn't money; at least Federal Reserve Chairman Ben Bernanke told Congress that it wasn’t.
Therefore, what possible reason could the IMF be holding all that gold if it isn’t even money?
Could it possibly, maybe be that the IMF wishes to store value that can no longer be found in the US dollar?
Which makes me wonder why the US wouldn’t want to back some of our money—you know, the dollars that you and I use every day that buy less and less every year—with gold?
It used to be that way, didn’t it?
But if that happened, that would allow all of us to have confidence in the safety of our dollars in banks and investments…
Can’t have that, now, can we?
But apparently, according to Tim Geithner, gold is money (really, they ought to get their story straight.)
It’s just that gold is not the kind of money that the Federal Reserve wants you and me to have.
So get ready for a US rescue mission to Europe for all the wrong reasons.
The rationale will be thus: in order to prevent a global recession from turning into a global depression, the Eurozone banks must be viable…
That sounds reasonable, until you consider the fact that bailing out the US banks hasn’t solved the crisis here…
It has only delayed it…sort of.
Today, nearly 4 years after the crisis, private sector employment is at record lows…but public sector jobs have risen 12%.
Should we believe that an IMF bailout of European banks will “fix” Europe any differently that the bailout here has “fixed” us?
If you don’t realize it already, you ought to know that the health of banks and the health of an economy are not always the same thing.
But why fuss over details?
Besides, the idea is for the IMF to bailout banks, not the average citizen on the street, not tax payers, not people for God’s sake, capice?
If you're smart, maybe you should buy European assets...before the IMF does.
And those are…The Gorrie Details.