5:27 PM (8 hours ago)United States to Bailout The European Union (The Beginning of the end)from Audacity Of Hypocrisy by adminThe United States would be ready to support the extension of the European Financial Stability Facility via an extra commitment of money from the International Monetary Fund, a U.S. official told Reuters on Wednesday.
“There are a lot of people talking about that. I think the European Commission has talked about that,” said the U.S. official, commenting on enlarging the 750 billion euro ($980 billion) EU/IMF European stability fund. “It is up to the Europeans. We will certainly support using the IMF in these circumstances.”
“There are obviously some severe market problems,” said the official, speaking on condition of anonymity. “In May, it was Greece. This is Ireland and Portugal. If there is contagion that’s a huge problem for the global economy.”
Read the whole story at CNBC:
US Ready to Back Bigger EU Stability Fund: Official
Published: Wednesday, 1 Dec 2010
2:20 PM ET Text Size By: ReutersTweet LinkedInMore Share
The United States would be ready to support the extension of the European Financial Stability Facility via an extra commitment of money from the International Monetary Fund, a U.S. official told Reuters on Wednesday.
"There are a lot of people talking about that. I think the European Commission has talked about that," said the U.S. official, commenting on enlarging the 750 billion euro ($980 billion) EU/IMF European stability fund. "It is up to the Europeans. We will certainly support using the IMF in these circumstances."
"There are obviously some severe market problems," said the official, speaking on condition of anonymity. "In May, it was Greece. This is Ireland and Portugal. If there is contagion that's a huge problem for the global economy."
The remarks foreshadow a visit to Europe this week by a U.S. Treasury envoy who is expected to visit Berlin, Madrid and Paris to hold talks on the ramifications of the debt crisis.
(Another news report, however, raised questions about the true extent of the US commitment. Read more here).
The developments have echoes of the pressure applied by Washington on European capitals last May to create the near $1 trillion EFSF safety net that was last week used to rescue Ireland after its banking crisis spiraled out of control.
The IMF, whose biggest single shareholder is the United States, has committed 250 billion euros to the EFSF.
While reluctant to dictate to Europe how it should address the unfolding debt crisis, the U.S. government is growing concerned about the global fallout of Europe's predicament.
U.S. Treasurys' prices fell and the euro strengthened against the dollar on Wednesday after the news that the United States would be prepared to support an enlarged EFSF.
Germany, whose leaders have expressed frustration at the market backlash against their plans to solve the euro zone's debt problems, does not want to make the stability fund larger.
The above-referenced article:
IMF Fund: Will They or Won't They Give More?
Published: Wednesday, 1 Dec 2010
2:27 PM ET Text Size By: Bob Pisani
CNBC Reporter
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Will they or won't they give more to the IMF? It may be tough even if they want to.
US stocks popped up midday on a Reuters headline that the US may back a larger euro financial stability package via the IMF (citing an unnamed official), which was shot down by a Dow Jones headline an hour later.
Traders tell me it may not matter: any such increase in contributions from the US to the IMF would likely require congressional approval, which would be difficult to achieve in the current climate.
The US proportion of total IMF funding is about 17 percent. In June, President Obama got an additional $108 billion in a credit line to the IMF as part of a larger $500 billion program. That program was approved by congress. To give more, would require additional congressional approval.
Is there a way around that? Could an additional contribution be sold to congress and the American people? To bail out profligate European countries? That's a tough call.
Read the Reuters Report:
US Ready to Back Bigger EU Stability Fund: Official
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