The European Union and the International Monetary Fund to the rescue! The Dow Jones Industrial Average (DJIA) soars and investors breathe a sign of relief. But where’s this $1 trillion in bailout funds for Greece coming from?
On CNBC’s May 10 “Squawk Box,” host Joe Kernen channeled Rick Santelli’s anti-bailout populism, suggesting it was important to note that this bailout was made possible in part by the American taxpayer.
“On one thing, Rick – because you started the whole thing where you said, ‘Are you listening, President Obama?’ about paying for your neighbor’s mortgage,” Kernen said. “Are you, could you really tell the American taxpayer, you can connect the dots between them and Greece? I mean are they paying for some lavish benefits in Greece right now?”
Santelli agreed, but warned there would likely be a call by the IMF for more U.S. tax dollars.
“Well there’s no connect-the-dots,” Santelli replied. “I mean it is a fact. We contribute a little less than 18 percent to the IMF. And the IMF is pretty much using its entire piggy bank, of course to pledge up to €250 billion, no matter how you slice it, Joe. Eighteen percent of that money, or more, because you know, if they go much beyond this, they’re going to have to replenish the coffers.”
Kernen asked why Santelli and the CME Group traders that were instrumental in stirring up the Tea Party movement in early 2009 weren’t more visibly concerned.
“You now what – it’s not been a variable recently,” Santelli said. “They’ve been paying attention to the IMF’s presence in this for the last month and a half. It doesn’t necessarily present the same anxieties as it did the first time around because you know, once you get kicked in the shins every hour for a dozen hours, the 13th hour just isn’t as shocking and doesn’t hurt as much.”
Kernen tried to instigate a more impassioned response from Santelli, but noted that it’s likely a lot of Tea Party activists aren’t realizing American tax dollars are a component of the IMF bailout.
“I don’t think the average Tea Partier knows we’re paying for lavish benefits in Greece for public employees over there, Rick,” Kernen said. “I think maybe you need to tell them.”
CNBC senior economics reporter Steve Liesman suggested if these measures hadn’t been put in place by the IMF, it could indeed be worse for everyone. But Santelli suggested this bailout may not work and we’ll find out what happens when “too big to fail” actually fails.
“We’re going to probably end up seeing the alternative, anyway, Steve,” Santelli said. “Because remember, this is in many ways, we all hope it works. But if it isn’t, there is no grander plan than this. So we might end up finding out what it’s like to let institutions fail in this case.”