There is a major aspect of the ongoing situation in Greece that I feel is being ignored by the American news media. The American news media acknowledges that the IMF and European countries would be responsible for contributing money to rescue Greece. However, the American news media has failed to acknowledge that any IMF contribution to help rescue Greece is likely going to involve a substantial amount of U.S. taxpayer money. Yes, that is correct… U.S. taxpayers are likely going to help bailout another country!
My conclusion that U.S. taxpayer dollars is likely going to be involved in the bailout of Greece is based on how the IMF actually gets the money to contribute to Greece’s bailout. The IMF acknowledges on its own website that “Most resources for IMF loans are provided by member countries, primarily through their payment of quotas”.[1] The U.S.’s payment quota represents 17.09% of all the money the IMF collects from countries.[2] Therefore, the IMF gets some of its money from the U.S and they even acknowledge it.
The rumor today is that Greece may need up to 120 billion Euros over the next three years. The IMF has already agreed to contribute 1/3 of Greece’s total funding needs with the potential to contribute more if needed. Let’s assume that the IMF will contribute 40 billion Euros over the next three years. 17.09% of 40 billion is 6,836,000,000. In dollar terms, U.S. taxpayers would in theory contribute over $8.9 billion towards the rescue of Greece over a three year period. $8.9 billion over three years is not a lot of money when you think about how much the U.S. has contributed to the bailout of major financial institutions. However, this money could be used to rescue financial strapped states instead of a different country.
It’s amazing that the American news media ignores this aspect of the situation because they have made a huge deal out of U.S. taxpayer dollars being used to bailout major financial situations over the past couple of years. Here we have a situation where U.S. taxpayer dollars is likely going to be used to bailout another country for the mistakes they made yet there is very little mention of it and little outrage from the media.
I feel the American news media’s lack of reporting about this issue represents either a lack of understanding of the situation or a major anti-business bias. I think it is unlikely that every member of the media lacks the understanding of what is going on so I suspect that it’s probably the latter.
References
[1] “Fact Sheet-Where the IMF Gets its Money”. 21 Apr. 2010. Last Accessed 28 Apr. 2010. http://www.imf.org/external/np/exr/facts/finfac.htm
[2] “IMF’s Members’ Quotas and Voting Power, and IMF Board of Governors”. 26 Apr. 2010. Last Accessed 28 Apr. 2010. http://www.imf.org/external/np/sec/memdir/members.htm
