Posted by Charleston Voice, 06.01.12
Now the US bankster mob is bullying the European mob to just 'give the people a TARP!' A program which has proven disastrous for our country, impoverishing, indebting generations to infinitude.
The US TARP program many of you'll recall was the bailout bank giveaway that our own congress bequeathed to financial insiders receive our earnings for years to come. The same program that DC offices received calls from angry, enraged constituents shouting "No Bailout!" Constituents' complaints by congress ignored, business as usual in DC.
Let's see if our European ancestral heritage has more common sense than us Americans. Will they, too, fall for the TARP equivalent?
See related: Banks Pressured to Buy Government Debt
By SUDEEP REDDY
WASHINGTON—President Barack Obama, who was swept into office amid a financial crisis, is trying to avoid being swept out by one.
Obama administration officials are stepping up efforts to push Europe to quell an escalating debt crisis that poses serious risks to the U.S. economy just five months before the presidential election.
U.S. officials are trying to convey lessons from the 2008 global crisis to ease Spain's debt troubles before they cause more financial turmoil and harm to the world global economy. In private meetings, they are urging officials in the 17-nation euro zone to take swifter action to calm markets, reassure depositors about their banks' health, and prevent some of Europe's largest countries from suffocating under high borrowing costs and weak economic growth.
A key lesson from the crisis, U.S. officials say, is act quickly and decisively to stabilize the financial system and prevent investor panic.
For instance, U.S. officials want Europe to use the continent's rescue fund— now around €700 billion ($866 billion)—to provide assistance to governments struggling with soaring borrowing costs. Allowing the rescue fund to directly recapitalize banks, instead of forcing the struggling governments to borrow first from the rescue fund, would help prevent bank failures and enable the banks to continue lending, which would help support economic growth, the officials believe. Under this approach, the governments wouldn't have to boost their own debt loads by borrowing from the fund.
The U.S. channels much of its advice through the International Monetary Fund, in which it is the largest shareholder. The IMF has been urging Europe to use the rescue fund for that purpose, but the idea is opposed by Germany and other euro-zone nations.
The U.S. and IMF urge Europeans to move more boldly toward tying their national economies more closely together.
"Decisive steps toward more complete financial integration would complement the growth agenda" and pre-empt a cycle in which government debt woes exacerbate bank weakness, IMF Deputy Managing Director Nemat Shafik said in a speech Thursday. "Such steps would involve providing banking support from a common resource pool independent from national sources, sooner rather than later."
U.S. officials also have pushed Europe to build a larger rescue fund, or so-called firewall, believing a bigger war chest would ease investors' concerns about governments beyond long-troubled Greece.
Now risks are rising that the financial turbulence in Spain—Europe's fourth-largest economy—could deepen even before Greek voters go to the polls in two weeks to decide their fate in the currency union.
Treasury Secretary Tim Geithner met with Spanish Vice President Soraya Sáenz de Santamaria on Thursday. That was a day after one of his key deputies, Treasury Under Secretary for International Affairs Lael Brainard, met with top officials in Madrid during a trip through five cities in Europe. She met with officials in Paris and Berlin—the two capitals leading Europe's response—on Thursday.
On Wednesday, Mr. Obama and leaders from Germany, France and Italy held an hourlong videoconference to discuss the euro-zone crisis, following up on a meeting of the Group of Eight major advanced economies hosted by the White House earlier in the month.
"We've been publicly supportive and privately pushing," said Edwin Truman, a former Treasury official now at the Peterson Institute for International Economics. "We don't have a lot of leverage."
The week's meetings were planned before Spain's borrowing costs shot up this week. But they underscored the administration's rising worry about how the euro-zone crisis could drag down the weak U.S. recovery for the third straight spring.
In a Gallup poll released Thursday, 71% of Americans said they are at least somewhat concerned about the effect of the European financial crisis. The data suggested worries could rise as the troubles weighed on U.S. markets and gained more attention in the U.S. Among the 16% of people who said they are paying very close attention to the news about Europe's financial situation, 95% said they are concerned.
Among the U.S. fears: a cascading crisis across the European banking system, triggered by Spain, could cross the Atlantic and hit the U.Sfinancial system. That could translate into less business investment and hiring and less bank lending, potentially triggering another recession.
U.S. officials believe American banks are far sturdier and able to withstand a new round of turmoil from Europe. But they recognize it is hard to predict what could go wrong.
A version of this article appeared June 1, 2012, on page A6 in the U.S. edition of The Wall Street Journal, with the headline: U.S. Presses Europe on Banking Crisis.
Source WSJ
