As the European debt crisis picks up steam and batters world markets, various reports are surfacing that the US taxpayer is on the hook for billion of dollars in bailout funds via the International Monetary Fund (IMF). The United States provides approximately 20% of IMF funding, which means the taxpayer could pay $8 billion to prop up Greek banks.
More precisely, it is being reported that taxpayer dollars will be utilized to rescue top European banks throughout the EU in order to contain their dangerous exposure to Greek debt. And if this contagion spreads to Portugal, Spain, Italy, and Ireland, as many believe, US taxpayers could be providing a whole lot more through additional IMF bailouts.
If confirmed, several critical questions arise.
For example, how will the U.S. afford a massive, intercontinental "Too Big to Fail" scheme? We're running $1.6 trillion deficits, mired in $13 trillion of debt, and floundering in 16.9% real unemployment. A record number of Americans are on food stamps, and record foreclosures are still battering the housing market.
Will we borrow more from China and Japan?
Will we raise taxes to fund the European bank bailout?
Will we just print the money out of thin air (at the Federal Reserve)?
And what if other nations around the globe begin to come under severe economic pressure as a result of the debt contagion? Will we be forced to bail out their banks as well?
Or, what if the debt contagion spreads here to America, and we're forced to consider yet another Wall St bailout to avert a total meltdown?
For now, readers should closely monitor the situation, ask the tough questions, and keep a watchful eye on the actions of the current Administration, Congress, and the Federal Reserve.