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The deal was torpedoed from an unexpected direction. At a conference call with the G7 finance ministers, the haircut was vetoed by US treasury secretary Timothy Geithner who, as his payment of $13 billion from government-owned AIG to Goldman Sachs showed, believes that bankers take priority over taxpayers.
Treasury denial (as reported)
Last night, a senior US official said this report was "inaccurate". The official pointed out the ECB and the European Commission (EC) did not want to impose haircuts on bondholders who loaned money to Irish banks. "The ECB and EC were both dead opposed and they are decisive. The US is not a decision maker on European issues," the official said
The official pointed out the ECB and the European Commission (EC) did not want to impose haircuts on bondholders who loaned money to Irish banks.
"The ECB and EC were both dead opposed and they are decisive. The US is not a decision maker on European issues," the official said
The Yves Smith take:
Ahem. Notice the statement. It does not say that Geithner was against the restructuring, merely that his opposition made no difference. But this finesses what Kelly discussed, which is that Geithner effectively undercut the IMF
But this finesses what Kelly discussed, which is that Geithner effectively undercut the IMF
And that's just gibberish. Kelly alleges that US "torpedoed" the rescue plan, the US says the obvious - that it didn't torpedo anything because the ECB is calling the shots and the ECB is protecting the bondholders. The key claim of Kelly is "torpedoed" and that's exactly what Treasury addresses. So what we have is a Kelly claim of "torpedoed" that is (a) unsubstantiated (b) denied and (c) based on a clearly false theory that the US is calling the shots. When you add that to the other problems with Kelly's argument (he even gets the total of treasury payments to GS wrong by a factor of 2 1/2) Smith's silly "ahem" just reduces to "but the script has Tim as the bad guy".
There are plenty of reasons to object to US treasury policies from a left wing point of view, but neither Yves Smiths "timmy is evil" cartoon or Kelly's apparent water carrying for the ECB comes close.
The idea that Kelly carries any water whatsoever for the ECB is just plain ridiculous, given the only water he wants to give the ECB is ownership of the Irish banks in return for the 150 Billion the banks owe the ECB.
Some water carrying. Index of Frank's Diaries
But we only have one unsubstantiated and denied allegation that Geithner vetoed anything. And that allegation is surrounded by checkable inaccuracies.
Whether Kelly is telling the truth, making it up, or carrying someone else's excuse is impossible to tell. What's easy to tell is who benefits: the Germans, the UK and the Irish government all of whom have a convenient scapegoat.
Obama blocked IMF deal to haircut Irish debt. Boycott Obama's speech in O'Connell St - pass the word around
And this at a time when the US and Germany are actually in a known dispute
On a more fundamental level, however, Washington is concerned that, should Europe overreach in its rush to cut government spending, it could endanger the fragile economic recovery that has taken hold on the Continent and around the globe. In particular, the US would like to see countries like Germany and France continue efforts to stimulate their economies.
And the US policy has been, for a while to oppose Euro austerity
"In a letter to G20 leaders last week, US President Barack Obama warned against cutting national debts too quickly, arguing it would put economic recovery at risk" http://www.bbc.co.uk/news/10411167
So the claim is that in contrast to clear US policy, the US treasury department is forcing massive austerity on Ireland and backing up the bond hawks. I guess it is possible, but to me it seems more likely to be disinformation designed to focus popular discontent on an easy target.
Kelly certainly is. And the websites show that he is not the only one in Ireland.
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