From an investment newsletter:
"The U.S. dollar is an 'IOU nothing.' But the euro is a 'who owes you nothing?'." The Greek bailout announced by the European Union and the International Monetary Fund over the weekend finally puts the question to rest.
The answer? American and German taxpayers.
Of the 111 billion-euro bailout, the EU will contribute 80 billion euros. Germany, as the largest and most stable EU member, is picking up
28% of that tab. The IMF is paying the remaining 31 billion euros. Since the U.S. is the IMF's largest contributor, at 17.09%, that puts U.S. taxpayers on the hook.The Greek bailout (equal to US$146 billion) was meant to "shock and awe the markets and re-establish confidence," according to the IMF's Paul Thomsen. The mission failed. The euro and European stocks are both down following the announcement.
While the money will meet Greece's short-term liquidity needs, the bailout does nothing to quell fears surrounding Portugal and Spain. It also sets a dangerous precedent of endless money printing.
But don't worry... the EU doesn't think the massive debt hanging over the other PIGS ? Portugal, Italy, and Spain ? matters. Luxembourg Prime Minister Jean-Claude Juncker, who chaired the bailout talks, said Greece is "in no way comparable" to Portugal and Spain. French Finance Minister Christine Lagarde claims, "Greece was a special case."
As it has been written time and time again, when government officials try to calm market fears, they're probably lying. The European crisis is no different. Spain and Portugal are exactly like Greece. Both countries are loaded with debt and in danger of default.