US Role in Greek Bailout

Doing some quick, back of the envelope calculations here. The three year funding provided for the “Greek bailout” is variously estimated as being up to $130 billion, with some 30% coming from the IMF, which (per John Mauldin) is ~40% funded by the US – as in you and I the taxpayers.

So: 130 x .30 x .40 = $15.6 billion. That’s a lot of souvlaki. And in this case the IMF, which is normally senior to other creditors, is subordinate. Groovy. Now, as BBH’s Marc Chandler points out, this isn’t really a bailout of Greece, it’s a bailout of European banks with Greece as the conduit. Remember, this package allows the Greek government to roll over its debt, i.e., not default on current debt.

Who holds that debt? Well, about 75 billion Euro (~$97B) is held by European banks, with French institutions having the largest portion, followed by German banks. Among US banks, JP Morgan is the largest holder, but well down the overall list. You can read the details in the Financial Times.

Remember the warm fuzzy feeling we got when Hank Paulson and Tim Geithner, having taken over AIG, decided they would pay out all the default swaps at par (after the AIG guys had made great efforts to pre-negotiate haircuts), thereby sending taxpayer money directly to both US and foreign banks? This should bring back those pleasant memories.

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