Bailing Out The World

Fox News reports the United Nations is budgeting $864 million for peacekeeping operations in Haiti next year.  As George Russell writes for Fox, “One of the stated missions of the stabilization project appears to be making sure that the U.N. takes an active role in ensuring that any aid will not cause a new Haitian economy to have large disparities of wealth among the population.”  I’m not exactly sure what that means, but the United States’ share of paying for it will come to $234.8 million.  The UN budged includes both military forces and “nearly 400 new, and often very highly paid, temporary civilian positions in the U.N. peacekeeping bureaucracy,” producing “a considerably more top-heavy civilian and military component among the peacekeepers.”  I think they throw in the Asian cholera for free.

The government of Haiti isn’t the only one in need of global financial assistance.  Ireland asked for a bailout this week, following a run on its banks.  The bailout package is worth 10 billion euros (about $13 billion dollars) immediately, with another 25 billion euros (32.5 billion dollars) available.  The bailout comes through the European Union and International Monetary Fund.  More bailouts are on the horizon for Portugal, and possibly Spain.  Greece is already a shivering basket case, kept alive by infusions of foreign money.  The Associated Press reports European investors are “relieved by the implication that the EU and IMF might be assembling a larger bailout fund.  Guess who the largest stakeholder in the IMF is? 

The Irish bailout does not sound like a particularly sound investment.  CBC News says the Irish are angry about a rescue condition that stipulates they must pull $23 billion out of their cash and pension reserves, to “shore up” their public finances, which were drained when the Irish government subsidized risky investments by their banks.  (That sounds vaguely familiar, doesn’t it?)  The interest rates are said to be too high for Ireland to repay.  Author Fintan O’Toole is quoted as saying, “This is not a rescue plan.  It is the longest ransom note in history: do what we tell you and you may, in time, get your country back.”

Thus, Ireland bailed out her banks, the IMF is bailing out Ireland, and if Spain collapses, the IMF will need a massive bailout.  All eyes will slowly turn toward the old gentleman in the star-spangled top hat, who will look up from a futile struggle to balance his checkbook, cringing as the demands for cash are mixed with stern warnings that he’d bloody well better not tell them how to spend the money.

This brings back fond memories of our own domestic bank bailout.  Remember the Troubled Asset Relief Fund?  That was a $700 billion fund designed to prevent the collapse of the American banking system, a rich soil of risky investments and subprime mortgage loans, from which grew a large number of banking mushrooms that were “too big to fail.”  The Congressional Oversight Panel now tells us TARP funds “disproportionately benefited foreign banks.”  It seems “the Treasury gathered very little data on how bailout funds flowed overseas, which makes pinpointing the exact amounts and sources of the flow of cross-border rescue funds impossible.”

When did the economy of the world become a series of bailouts?  Remember when the government bailout of Chrysler in 1979 was a big story, because it was such a unique situation?  It seems like everyone in the world got the bright idea of declaring certain financial institutions “too big to fail” simultaneously, and those institutions used their official certificates of immortality as collateral at high-stakes investment crap shoots.  When world governments reached into their treasuries to bail out their irresponsible banks, they found nothing but a pile of IOUs from unsustainable pension funds.

Every bailout, both here and abroad, is accompanied by dire predictions of the awful things that will happen if we don’t fork over the money.  It always turns out that nobody accurately predicted what would happen if we did fund the bailouts.  Meanwhile, bailout recipients from Haiti to Ireland insist on taking the money with no strings attached, demanding funds without oversight or control, turning them into money sinks instead of investments.

“While most nations targeted their funds to save individual institutions, America simply flooded the markets with money to stabilize the system,” said the COP report on TARP.  Much of that flood washed up on foreign shores.  Nobody knows where all of it went.  A lot of cash slops over the rims of those bailout buckets.