Liveblogging from End the Bailouts: A Greek Forum

I’m currently sitting at the Capitol, looking at an empty table that will soon be filled with the likes of Rep. Mike Pence, Sen. Jim DeMint, Rep. Cathy McMorris Rodgers, Rep. Tom McClintock, and others to discuss the Greek bailouts and the impact they’ll have on the US Economy.


There’s a livestream below the fold. Stay tuned until about noon for constant updates from the panel.

Free Webcam Chat at Ustream

10:39 – Chancellor Merkel: This package will do nothing more than “buy time.”

10:40 – Pence: As the largest contributor to the IMF, the US will guarantee tens of billions to bail out these countries. Who will be there to bail out the US, and at what cost? Why should the US borrow money fro China to lend money to countries like Spain and Portugal?

10:44 – Pence credits McMorris-Rodgers with being the first to bring the issue to the table in the House.

10: 46 – McMorris-Rodgers: The European crisis was caused by too much spending and borrowing, and will not be fixed by even more spending and borrowing. (paraphrase) A Euro-TARP is NOT the answer. Every member of Congress should go on record – a yay or nay on whether taxpayer money should go to Euro-TARP. “The only thing too big to fail is America itself.”

10:47 – “The difference between California and Greece is about three years.” – Tom McClintock

10:48 – “Prolonging those unsustainable policies will deepen the ultimate day of reckoning. It’s not a matter of if those policies will fail, but when, and will they take America with them?” – Tom McClintock

10:49 – Marvin Goodfriend speaks – policy expert from Carnegie Mellon. Says “the last thing they can claim is that this was a surprise… They punted on mechanisms to get ahead of the problem.”


10:51 – “This was a crisis in the making for quite a number of years, and we’re facilitating irresponsibility…” – Marvin Goodfriend, Carnegie Mellon

10:53 – “The reforms are not in place in Greece, and we have no confidence that putting a band-aid on the gaping wound of their economy will fix the problem.” – Rep. Tom Tiahrt

10:55 – Pence introduces Paul Singer of Elliott Associates. Resume a mile long. Pence credits him for being about “the business of the American people.”

10:57 – The motivation of the Euro was to sneak in sovereignty to the European nations through the back door. “Creating sovereignty backwards.” Says “The problem with the Euro is that it ties together countries with wildly different economies…” – Paul Singer

10:59 – “Tier Two Countries” are borrowing at the wrong rate. The rate is too low, they’re being encourage dto borrow at the wrong rate. The markets were encouraged to be indiscriminate in their lending, creating all sorts of problems.

11:02 – Needs to restructure it’s debt and labor systems, needs to grow. Greece is going to have more deflationary conditions. Unemployment will go up. The conditions for Greece to heal are not being produced. “The currency union was a bad idea, is a bad idea.” – Paul Singer

11:03 – “Need a system in which bad behavior, unsound policy is punished in the marketplace.” – Paul Singer


11:04 – “Markets, which are being criticized for contributing to the problem, they’re not. It’s just not true The governments are simply railing against those who would criticize the unsound policy.”  – Paul Singer (Dude. Sound familiar?)

11:10 – “As for the effect on the Euro, it’s not totally clear to me that the failure – the default of Greece in this context – would need the upending of the Euro immediately.” – Randy Quarles

11:11 Randy Quarles of the Carlyle group is also a policy expert on the panel. FYI.

11:16 – “Americans are realizing our taxpayer dollars are going to COUNTRIES that have been irresponsible, and probably borrowing money to do that… start with putting some limits on what can happen.” – Sen. Jim DeMint

11:19 – Donald Marron of Georgetown University and Brookings Institute is giving his opening statement.

11:20 – Marron asks what the root causes are. Answers: It was unwilling to pay for what it was using. Shifted the burden to it’s people and hid the numbers. “We are not Greece, but we have the same problem… we are going to have to make those hard choices.”

11:25 – “I’m not here to sell you that the US is like Greece… but it would be better to address our problems in advance.” – Marron

Discusses three different kinds of bailouts:

  • Succeed in solving the problem, and you get your money back.
  • Solve the problem, and you don’t get all your money back. “The purpose of TARP.” (Defends the bank part of TARP.)
  • Don’t solve the problem and you don’t get your money back. Says Europe runs the risk of being this type of bailout. If we’re running the risk of being one of the lenders, someone is going to take losses, and it’s going to be us.

11:27 – Pence refers to this as being “deja vu all over again” for some in Congress.

11:29 – “Let’s not put ourselves in a position where we’re forced to make a decision in a weekend.” – Marvin Goodfriend

11:34 – “Well organized unions have made it difficult for them to make deep cuts in spending.”  – DeMint on Greece. He continues: “The US is very different in that we may not go through a very slow decline, but because we’re the leading economy in the world, a few dominoes could fall that could make it difficult for us to sustain where we are…. I just want to make sure we’re fulfilling our responsibility at the Federal level…” Talks about taking cues from Greece and not being caught off guard by weaknesses we’re unaware of.

11:39 – If you told the people of the US and Germany the truth about what’s going on, the political pressure would be strong. – Paul Singer


11:40 – Governments are writing out checks as if confidence is infinite… Let’s act like we actually have to pay debt back and not go right to the line of what we can get away with today. – Paul Singer

Confidence is NOT infinite… at some point, it turns in delusion.

11:46 – Rep. Tiahrt says Greece won’t kill the EU because it isn’t a lynchpin, and is discussing the differences between them and the US. Our economy is much more influential. Quarles responds: Countries that adopt spending policies that are greater than they’re willing to pay for end up in trouble. “If the logic is that we can start spending more because we’ll eventually close that gap… I don’t think that’ll happen in the United States.”

11:57 – Tiahrt asks how much we’re on the hook for as a result of these policies – what are the consequences of us bailing out the Greek people?

“Maybe the discipline should be pushed back into Europe so they can deal with it… I think the IMF was an escape valve. I think that’s the big picture. Can we facilitate the building of Europe so they have the ability to handle their own problems. I don’t believe the main cost of doing this thing. It is postponing the day of reckoning. Down the line that cost will be much bigger for Europe and the US.” – Marvin Goodfriend

11:59 – Singer responds as well: “There would have to be some support, or at least managed insolvencies, of the banks that hold this debt… There would have to be some money spent by somebody to support those banks.”


12:01 – Singer continues: “I’m not in favor of complete lassiez-fair when it comes to gov’t action… the credit of Germany, etc is NOT infinite. It looks infinite at a time when markets don’t collapse. It can look infinite but it’s not. And when they do lose confidence, it happens in a woosh.”

12:04 – Quarles points out that at certain periods, private companies have had better credit than the US government. Says it isn’t a principle markets have ever operated on before.

12:05 – “We’re helping outsource the discipline that the European Union should be able to enforce by being dragged into this.” – Marvin Goodfriend

12:09 – Pence mentions that some say there will be no effect to American taxpayers at all. Brings up that the US pays 17% of the IMF. Asks Quarles to predict the likelihood of default, given political realities, the “nature of the beast” in the EU, the IMF, etc… how concerned should American taxpayers be?”

“The risk of our share of the IMF not ultimately being repaid is quite low, because the IMF has priority in all of these transactions in being repaid, formally and institutional priority. The IMF is paid before anyone else. One thing that the last 2.5 years should have taught all of us is that nothing is riskless. Many things that have never happened before have turned out to happen. So I think that the more immediate and more likely consequences as Marvin pointed out… the uncertainty that is created in markets because of government actions… merely delays actions that ultimately have to be taken. It is pretty unlikely that the actual cash wouldn’t get repaid, but the risks are not nonexistent.”


Singer jumps in and says it isn’t free for the US to be involved in the enforcement.

12:13 – Wrapped up. Sirens going off through that whole last segment. My head almost exploded. So, thoughts? Is Greece the proverbial “canary in the coalmine” for us?


Join the conversation as a VIP Member

Trending on RedState Videos