Sunday, May 2, 2010
Update: US payment to Greek toxic debt-holding banks now doubles; "Unbelievably big support" for German suit to stop bailout
Earlier this week, the original planned bailout of the Swiss, French, and German banks holding billions in toxic Greek debt included contributions from the EU and IMF of €45 Billion and €15 Billion, respectively. This bankster plan entailed a contribution from the US taxpayer (through the IMF) of some $3,417,000,000. This was bad enough--but, amazingly, that amount has since doubled.
The latest EU/IMF bailout packages has risen substantially since earlier this week--substantially meaning that the plan has ballooned from an emergency €45 Billion bridge-loan to a staggering €110 Billion ($146 Billion), multi-year total bailout operation. The IMF contribution has risen from €15 Billion to €30 Billion, and thus the associated US taxpayer contribution has doubled.
The new number for your contribution to the irresponsible Swiss, French, German, Dutch, English, and American bank-rollers of the out-of-control socialist entitlement nation of Greece is:
And to add to this outrage, this is likely just the minimum payment on what will likely be an even larger bailout. Considering that the plan has increased from €60 Billion to €110 Billion in the gap of time from Monday to Friday, it should not be surprising if that €110 Billion skyrockets to €150 Billion, or perhaps €200 Billion in the gap of time from the first payment this month to last scheduled payment in 2012. In fact, an increase is already being reported: today, the Wall Street Journal is reporting that according to unnamed sources of the German newspaper Sueddeutsche Zeitung, Greece will need €150 Billion by the end of 2012--27% more than is currently slated.
Sueddeutsche Zeitung might be on to something, as the Germans are watching their government-sanctioned mugging and transfer-of-wealth very carefully. We US taxpayers should be outraged at the IMF-funneled contribution of $6.834 Billion, but no one even seems to understand that such a transfer is even happening on this side of the Atlantic. Conversely, German taxpayers are well aware of the operation, and are hopping mad that they are made to be on the hook for at least €8.4 Billion ($11.2 Billion) this year alone, and are in for a total of 28% of the total EU contribution. Given the size of the current package, the German contribution equates to €22.4 Billion ($30 Billion). The German people are overwhelming against any bailout of Greek bondholders, but that obviously doesn't mean much to Merkel or the other so-called leaders in the EU. On Friday, the Parliament in Berlin will vote on the measure to grant €22 Billion in aid--which brings us to the second part of my headline.
Germans threaten suit against Greek bailout
While the German and EU leaders are readying to transfer billions from the pockets of their citizens to save the bondholders of Greece, the entire operation is apparently in violation of the euro-zone's founding document, the Maastricht Treaty, in the first place. In fact, a leading German economist and retired professor at Tuebingen University, Joachim Starbatty, declared in mid-April that the entire deal is outright illegal, and he will challenge it.
In his March 28 New York Times editorial piece, Mr Starbatty explained that the euro "began on a grand illusion," and elaborated that:
"Germany and other “euro-optimists” hoped that the introduction of a common currency and the global economic competitiveness it spurred would quickly lead to sweeping economic and societal modernization across the union. But the opposite has occurred. Rather than pulling the lagging countries forward, the low interest rates of the European Central Bank have lured governments and households, especially in the southern part of the euro zone, into frivolous budgetary policies and excessive consumption."
Mr Starbatty continues that "single euro zone economy is false," and warns that, "In short, the euro is headed for collapse." He states that Greece should leave the euro zone, return to the drachma, devalue its currency to increase competitiveness, and allow for re-structuring and re-negotiation of its foreign debt in an "international conference." As Mr Starbatty and others have noted, however, there is no provision within the Treaty that outlines the procedure for exiting the euro zone. But, according to the economist, somebody's gotta go: alternatively, Mr Starbatty states that Germany could leave the euro with the stronger euro zone nations and start their own currency. No where in his article is there any mention of Germany bailing out Greece, and since March, Mr Starbatty's stalwartness against any such measures has only increased with the stakes.
In the case that Friday's up-coming vote in the German Parliament authorizes the extension of €22 Billion in credit to Greece, Mr Starbatty et al have a simple plan:
"We will file a suit at the Constitutional Court against the credit from euro states."
The group not only enjoys considerable support from the outraged German masses, but they are supported--incontrovertibly--by the Masstricht Treaty itself. Read Article 104, paragraph 1 for yourself, and see that the economist is right:
Masstricht Treaty, Article 104, paragraph 1 (pdf, pg 13):
"Overdraft facilities or any other type of credit facility with the ECB or with the central banks of the Member States (hereinafter referred to as ‘national central banks’) in favour of Community institutions or bodies, central governments, regional, local or other public authorities, other bodies governed by public law, or public undertakings of Member States shall be prohibited, as shall the purchase directly from them by the ECB or national central banks of debt instruments."
Seems pretty clear to me--and to Mr Starbatty, and to millions of Germans. Also on board is former Bundesbank governor Wilhelm Noelling, fellow economist Wilhelm Hankel, and constitutional law expert, Karl Albrecht Schachtschneider. As Mr Starbatty told the Wall Street Journal:
"We will make our lawsuit public once the law has been approved by the upper house," he said. "We can't challenge that Greece wants aid but what the government wants to do isn't in line with the Constitution. For this, we need the law. We will then act immediately."
And so Friday may be the day. As for his predictions on whether the suit will be granted the consideration it deserves, Mr Starbatty told a Czech newspaper on Thursday that, "We expect that the Federal Constitutional Court will not reject our suit, because our initiative has unbelievably big support." The bailout plan, meanwhile, has a mere 16% approval among Germans.
Good luck and best wishes to Mr Starbatty and his coalition of constitutionalists.