On February 11th, Presidential candidate and Texas Congressman Ron Paul spoke before a group of citizens during the Maine Caucuses. During his speech to the electorate, he informed the audience point blank that not only was the country currently bankrupt, but also that the Federal Reserve is planning on using US taxpayer dollars to help bailout Greece.
“Just look at Europe, the mess they have. They’re rioting over in Greece because they say they have to cut a little bit. So what is the plan? Bernanke’s over there planning to bail them out with our dollars.”
“The country is bankrupt, and the most important thing the American people do right now is admit the truth. We cannot deny the truth, and the truth is that we can’t continue this way,” Paul said. – CNS News
At the same time Congressman Paul was insinuating this projected new policy from the Federal Reserve, the European Central Bank was hailing the parliamentary vote by Greece to impose stricter austerity measures on its citizens to be eligible to receive up to $200 billion dollars in central bank loans. However, like nearly all the rumors of Greek bailouts that have been announced over the past six months, this was appears to have been for naught as earlier today, Jean-Claude Juncker announced that political assurances made weren't enough to agree to a bailout plan.
This action by the ECB leaves Greece edging ever closer to March, and a default on maturing debt that is expected to be either paid off, or trigger a credit event that could devastate Euro and US banks. In November, the Federal Reserve performed a backdoor bailout of European banks when it lowered the dollar swap rates in the midst of a liquidity crisis, so Congressman Paul is already partially correct in the belief that the Fed is purposefully taking steps to assist in bailing out the EU and Euro Zone.
Unlike 2008 when the Federal Reserve used taxpayer money to help bailout Europe and European Central banks during the credit crisis that shocked the global economy, new players in the game are becoming major obstacles in allowing Fed to simply funnel money directly to the banks and help during this current crisis. Over the past three years, many hedge funds have been buying European sovereign debt, and should any of the PIIGS nations default on what they owe when maturity time comes, then it would kick in the trillions of dollars worth of derivative insurance that is tied to many major banks in the US and the Euro Zone.
Ron Paul's announcement that he believes the Federal Reserve is planning to bailout Greece, and subsequently, other defaulting countries in the Euro Zone is not an outlandish accusation, especially due to the fact that the US central bank did this same policy in 2008, and again late last year. The primary purpose behind Fed intervention in the Euro Zone is due to the fact that the private banks, the European central banks, and nation state sovereign debts are all interlaced within the entire global banking system.
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