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Kelly's claim

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 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

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.

by rootless2 on Tue May 10th, 2011 at 11:31:12 AM EST
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